Efficient Investments in Water Resources: Issues and Options
Widespread support is beginning to develop for fundamental redirection of the federal government's water resources policies. Traditionally, the federal government has played a major role in choosing, financing, and paying a large share of the costs of water projects. In contrast, the responsibilities of state and local governments and private users have been relatively small. This extensive federal participation was appropriate for the early development of the nation's major river basins, waterway transport systems, and western regions.
Summary
Widespread support is beginning to develop for fundamental redirection of the federal government's water resources policies. Traditionally, the federal government has played a major role in choosing, financing, and paying a large share of the costs of water projects. In contrast, the responsibilities of state and local governments and private users have been relatively small. This extensive federal participation was appropriate for the early development of the nation's major river basins, waterway transport systems, and western regions. It appears less so today as water investment priorities continue to shift from construction of new projects toward the management, repair, and modernization of facilities now in place and to projects of increasingly local character. The Congress, therefore, faces the task of reorienting federal water policies to conform to these changes.
Two components are central to any such policy reorientation. The first is greater state and local responsibility for project costs, financial arrangements, and project selection. The second is increased user fees to recoup those portions of project cost that provide private rather than public benefits. Taken together, these policy changes could lend strong incentives to states, local governments, and private beneficiaries to work with the federal government to ensure that the most cost-effective projects are built and maintained.
Many legislative approaches to carry out such a reorientation are possible. This paper concentrates on three that appear closest in intent and structure to those that have recently been considered by the Administration or the Congress:
- Establishing a self-sustaining federal loan fund to replace annual appropriations for local water resources projects.
- Replacing federal grants for projects of local interest with block grants to states, allowing greater local choice of investments.
- Targeting the remaining federal project grants toward water projects that are national in character.