Discussion: Economic Considerations in Formulation of Natural Resource Policies

Abstract

ple quantification of intangibles may mislead the public rather than improve the information on which it bases its decisions. Third is the problem of considering alternatives in situations where, because of institutional restraints, different alternatives have greatly different incidence of benefits and costs and reimbursement requirements between interest groups and levels of government. The choice between structural measures largely financed by the federal government and nonstructural flood control measures largely financed by local interests is an illustration of this problem.6 Fourth, the interest and discount rates to be used in planning continues to be a subject of controversy. The spread between rates proposed by advocates of the use of the opportunity costs of the private market and rates proposed by advocates of social time preference is so great that choice of either alternative would drastically change the formulation of water resources plans. Since plan formulation and evaluation are so sensitive to interest and discount rates, we can expect choice in this area to be closely related to policy decisions reflecting many aspects in addition to economic efficiencies. However, we need research to provide much more information about the consequences of alternative decisions and to determine the cost of departing from various economic norms. In summary, it is my view that considerable progress has been made and that the Water Resources Planning Act gives us a new organizational thrust, new approaches, and new opportunities to make even more progress toward the combined goals of economic development, quality of environment, and well-being of people.