As you may remember, we have a man from the railroads on our board, Mr. Duncan, who is not present today, and then I would like particularly to note we have two people here in Washington now, Carl Bronn, our executive director, and Morley Fox, who is assisting Mr. Bronn.

The CHAIRMAN. Mr. Sorensen, we want to extend a warm welcome to all the members of the Board and the staff who are here this morning.

Mr. SORENSEN. Thank you very much.

Obviously, we are concerned about the reclamation program and water resource development program, and its progress. We know you are, and, in effect, I think you might say "Why are we here before this committee, when probably money is the root of the problem?"

Well, I think I should say that we are here because we look to this committee to provide much of the leadership as to the concepts and the policies which are to be set up in the reclamation program.

The CHAIRMAN. I want to say that the chairman of the Subcommittee on Interior Appropriations is sitting on my right, the Senator from Nevada.

Senator BIBLE. I was going to ask him a question on this a little later. I thought I would let him finish his opening statement.

By way of warning, I want him to tell me how much money we need to fund the projects that have been authorized. I imagine it is a lot of dollars.

Mr. SORENSEN. That is a very dangerous question to ask, Senator Bible.

The CHAIRMAN. I should point out that on my left, Senator Allott is a very able member of the Appropriations Committee. So we are pretty well covered.

Mr. SORENSEN. Well, this is sort of a dual purpose appearance, I think, Mr. Chairman. We certainly appreciate the fact that these Appropriations Committee people are so close to the overall problem. We see, of course, the reclamation and water resource development program as an investment, a Federal investment, and we look around and don't find very many Federal investments that pay the dividends that the program does. We look at a huge backlog of some $5 billion, and then we look at the annual appropriations in the neighborhood of $200 million, and it is quite apparent that this backlog, if we look at $200 million a year to offset it, would be 25 years in completion. Again, I think this committee can put into action concepts which are going to be far reaching. They are going to be the policy that thẹ national Government can follow. We are going to touch on several serious matters today. We are going to start off with probably the most serious. We are going to ask Mr. Bronn to touch on this matter of appropriations and the matter of evaluation of benefits.

Mr. Chairman, I would like, with your permission, to have Mr. Bronn come to the table.

The CHAIRMAN. Mr. Bronn, we want to once again welcome you before the committee. I have a very high regard for the job you are doing, especially your professional competency.

Mr. BRONN. Thank you, sir.

The CHAIRMAN. Any time they take someone from the Corps of Engineers, you know that you are bringing to the reclamation pro

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gram all the intelligence information you need-plus a high degree of competency, and that is a pretty unbeatable individual.

STATEMENT OF CARL BRONN, EXECUTIVE DIRECTOR, NATIONAL RECLAMATION ASSOCIATION

Mr. BRONN. Thank you very much, sir.

May I state also that I was thoroughly debriefed before the transfer. Mr. Chairman and members of the committee: as you recall, records of five committees of the last Congress recommended to the executive agencies a restudy of the process of evaluating benefits from water resource projects. I believe that part of the concern stated in those reports was caused by a belief that much of the good that water resource projects do for the people of this Nation is not evident in the project reports.

This lack of consideration of benefits and inadequate evaluationmay contribute to the appropriation dilemma confronting water resources work.

My purpose, after reviewing some trends in appropriations, is to suggest a broadening of the recognized objectives of water resource planning. Further, I will outline a framework for evaluation which I believe merits study by the agencies as they undertake the reexamination of benefits which you people have suggested.

On the bottom of the first page, there are two charts. The first one, No. 1, on the left, having to do with appropriations, marks a change from 1965 to 1970 in two categories of programs. Major social programs are up 200 percent; whereas, in that same 5-year interval, reclamation construction is down 25 percent.

Whether or not that is serious, and how serious depends upon how badly he needs the water blocked by that slowdown in construction. Chart 2 gives us this picture: The vertical line measures needs in billions of dollars. The first column, A, is the authorized reclamation work still to be funded, about $5 billion. Column B represents feasibility studies which have progressed to the point where we know the estimates are reasonably good, and I have used $22 billion for this. It may be nearer $3 billion, I am told by a phone call this morning.

The rate of inflation at only 5 percent per year on just column A is $250 million annually; whereas, the rate of construction currently is only $200 million annually.

The CHAIRMAN. Trailing $50 million. You have to run to stand still, but you can't run fast enough to even stand still.

Mr. BRONN. That is exactly the situation, sir; we can't, including the inflation factor.

The CHAIRMAN. That is an excellent comparison, though. I think it is extremely helpful to see what the problem is.

Senator BIBLE. At that point, I assume this answers the question that I directed to the President. You have a $5 billion backlog. If you were to fund all the projects that are presently authorized, it would take you $5 billion, if you had it in your hand today. Mr. SORENSEN. Yes.

Senator BIBLE. Thank you.

Mr. BRONN. I talked about the water needs in billions of dollars, as they have been carefully studied and coordinated. Over on page 2, about one-third of the way down, you see "Forecast of needs for land and water," and you will note that in the next 35 years only, our needs for land will double for reclamation and for urban uses. For reservoirs, the needs will increase by 8 million acres; for transportation, 4 million; for wildlife areas by 5 million acres.

Water related to these needs, is compared in the next element, for the year 2000 with 1965. We see that municipal uses increase from 24 billion to 51 billion gallons per day, very nearly double; that is, we shall have to reproduce in just the next generation all the water accumulation and distribution facilities that we now have.

Industry will draw four times as much water. The steam-electric business, four times as much water, from 63 billion gallons to 259 billion gallons daily-four times as much; and for agriculture, roughly a 25-percent increase.

The overall appraisal of this, taking into account other items I haven't shown, is that we shall have to provide for a 300-percent increase in the use of water in the next 35 years.

Now, to go back to this matter of the diverging trends between some kinds of programs and water resource development, we shall look at factors which contribute to these trends. We find that there are some 459 Federal programs, of which the interdependence has not been sufficiently analyzed, and which have not been related

generally to water resource development. The economic constraints. of inadequate water supply have not been adequately examined. I am quoting directly from the recent report of the Water Resources Council itself, at this point.

Another point: The overall economic efficiency is the prime criterion for judging Federal projects, but this is not so for many of the 459 programs competing, as the chairman noted this morning, for Federal funding.

The next big item: Future benefits of water projects are discounted, and at increasingly higher interest rates. In many other programs, benefits are based entirely upon the future, without any discount.

Much of our reservation of land is just lumped as something for the future. But in a water project, any time you put anything into the future, you discount it with an interest rate. This makes our competition tough.

I would suggest that (1) we should examine the interdependence of water resource projects and other Federal programs. (2) Where interdependence is indicated, we should incorporate into water resource proposals the other objectives, where dependence exists. This would make water resource not only multipurpose, but also multiobjective. (3) Where we do have overlapping objectives in water resource programs, we should use the same mode of benefit evaluation as the other programs do.

Now, then, to enlarge successfully the objectives of Federal-State water resource planning may require a new framework for the evaluation of water projects. Before discussing a prospective framework, and some examples of national objectives that might be evaluated within it, I will refer to two items of widespread concern for which water resource projects could provide some aid were there a policy to do this,

First, improvements of the conditions of the poor. After early public discussion of the remedial actions related to the poor which would be concentrated on ghetto areas, authorities are coming to recognize that assistance must also extend to rural areas, and this is confirmed by the data under "Distribution of the poor people."

On the farm are 3.9 million poor people. The nonfarm rural total 9.9 million, giving you about 13.8 million poor in rural areas. Off to the right, the table shows 13.5 million in the central cities and the suburbs. We have small cities with 6.4 million poor, putting this group outside the central city-suburban area. Thus there are 20.2 million poor people outside the central cities and suburbs, versus 13.5 million poor inside. This is from an official Federal report.

To help the rural poor, the Federal report, "From Sea to Shining Sea," which is only a few months old, recommends these things:

The Federal Government be authorized to (1) administer grants to develop new communities, (2) require such communities to meet criteria for environmental equality, (3) preserve a working farmland near cities, (4) establish urban-rural balance as a prime goal of community planning, (5) improve criteria for evaluating benefits and losses for all measurable aspects of environmental quality.

I suggest that the reclamation program can be used to help do all these things if Congress gives the word.

Helping the poor by such a program would also tend to reduce the overconcentrations of population, which is another of the objectives advocated in "From Sea to Shining Sea." The overconcentration of population leads to the second item to be discussed before we look at the prospective framework for evaluation.

This item is the urge of large numbers of people to pile into the cities, an urge which is largely anachronistic, to quote the head of the urban coalition, and former member of the President's Cabinet, John H. Gardner.

If this urge continues, the forecast in the next chart would become a reality-there we see on the left the trend toward urbanization, and on the right the trend of people out of the rural areas. So if this were to continue, in the next 33 years, we would wind up with 90 percent of the people trying to live on perhaps 2 percent of our land, than there would be in rural areas. I don't know of any congressional policy which would tend to avoid that overdensification indicated by the chart.