403 



agriculture's externalization of social overhead costs. 

 Unemployment and poverty are at high levels; educational, housing 

 and municipal services are impoverishedd. The Basin's rural 

 communities are in many respects poorer places to live than before 

 the advent of federal water. 



Environmental Externalities of Irrigated Agriculture 



Cheap federal water and power, states' unrestricted granting of 

 water rights, and the lack of water consumption regulation have 

 provided little incentive to efficient irrigation practices, adding 

 surface and ground water quality degradation to the external costs 

 imposed by irrigated agriculture on the Basin's small communities. 

 Over one third of nearly 500 residential wells tested in two 

 counties in the Mid-Columbia were recently found in violation of 

 EPA drinking water standards for nitrates;^ ground water supplies 

 have been mined in several locations, affecting municipal water 

 supplies; and a 1992 EPA survey revealed contamination from 

 irrigation runoff in all tributaries in the Columbia River Basin. 

 The primary cause of these externalities is inefficient application 

 of irrigation water. 



Hydropower Opportunity Costs of Irrigation 



With the full utilization of the Basin's hydroelectric resources in 

 response to growth in energy demand in urban areas, hydroelectric 

 opportunity must now be added to the external costs generated by 

 water and power subsidies to irrigation on the Basin. The 

 hydropower generating value of the Basin's water is a function of 

 the elevation of its location in the dam system, measured in terms 

 of total dynamic head. In 1993 BPA pays 60.64 mills per kWh for 

 new thermal resources to meet firm demand.' In a low water year, 

 this makes one acre-foot of water diverted by the Bureau of 

 Reclamation behind Minidoka Dam in the Upper Snake River worth $106 

 in incremental energy cost terms, and renders its consumption in 

 the production of hay or pasture an example of inefficient economic 

 allocation of the hydro system's water resources: i.e., the 

 hydroelectric value of the water is greater than the value of the 

 hay it produces. 



On the Bureau of Reclamation's Columbia Basin Project irrigators 



' Long-Term Effects of Irrigation with Imported Water on 

 Water Levels and Water Quality, U.S. Geological Survey, Water- 

 Resources Investigations Report 93-4060, 1993. See also. 

 Characterization of Ground Water in Umatilla County, Oregon 

 Department of Environmental Quality, Grondin, 1993. 



* 1993 Final Rate Proposal; Documentation for the Wholesale 

 Power Rate Development Study. WP-93-FS-BPA-04A, p. 239, July, 

 1993. 



