409 



user of the discount — revealed that in 1991 out of 400 irrigators 

 in the area, four large farming operations received 20% of the 

 value of the discount. Ten large irrigators captured nearly 50% of 

 the discount in the same area.' Due to the energy-intensive nature 

 of the highly-capitalized irrigation systems commonly found on the 

 larger farming corporations unserved by Bureau of Reclamation 

 projects, BPA's discount chiefly benefits the investors in the 

 larger farming operations rather than the smaller farmers on the 

 Bureau's irrigation districts, where pumping lifts are low. 



Siumary Assessnent of BPA Policies 



Despite the fiscal significance of the potential for hydropower 

 recapture, BPA currently makes no plausible effort at water 

 conservation and recapture. The agency's irrigation energy 

 conservation program. Water Wise, is contradicted by its irrigation 

 discount. 



Due to the concentration of the benefits of both the Water Wise 

 program and the discount in the same class of high-lift pumpers, 

 the ager „y concurrently pays the same irrigators to conserve energy 

 to whom it also discounts the price in a manner which has the 

 theoretical effect of increasing energy demand. What is most 

 likely is that — due to the inelastic nature of water and energy 

 demand in the production of the high-value crops grown by the 

 highly-capitalized farming operations in the Mid-Columbia — both 

 the discount and Water Wise have little or no effect on the 

 investment and irrigation management decisions of energy-intensive, 

 highly capitalized farming operations. Public investments in energy 

 conservation and discounted piimping rates gratuitously subsidize 

 this class of pumpers. If the irrigation discount has indeed 

 induced increased energy demand by irrigators — as •irlier BPA 

 studies of demand elasticities concluded — it is most likely among 

 the class of marginal pasture and alfalfa irrigators for whom 

 energy and water costs constitute the bulk of variable costs . In 

 short, the discount probably induces increased energy and water use 

 among the least economic users of water and power on the Basin, 

 while gratuitously subsidizing the most efficient. 



BPA's policy deficiencies vis-a-vis irrigated agriculture are in 

 part attributable to the relatively new circumstances created by 

 full utilization of its resource base. No longer being in a 

 surplus situation, BPA must now acquire expensive new resources, 

 while repaying past failed resource acquisition debts. Since its 

 inception, Bonneville has generally operated in a situation of 

 energy surplus. This era of abundance fostered many programs which 



* The four beneficiaries in the Umatilla Electric Cooperative 

 service area are: Western Empires Corporation; Mikami Brothers; Big 

 River Farms ; and Potlach Farms ( formerly East Oregon Farms ) . 



10 



