be direct benefits and $1.4 million would be indirect and public benefits. There are many other additional beneficial impacts to be induced by or stem from the increased production of irrigated land. A study made by the University of Nebraska and released in 1968 entitled "Economic Impact of Irrigated Agriculture on the Economy of Nebraska," reveals that for each dollar of increased production due to irrigation, a total of $6.68 of economic impact occurs in Nebraska. The total impact of the O'Neill unit on the economy of Nebraska is estimated to be $67.5 million annually. But I should point out here that we did not analyze the stimulative effect of any other Federal programs that might be contemplated.

This impact is in the form of new business activity and is spread to all segments of the economy in the State. Locally, it represents business and new employment opportunities in an area that is basically rural and in need of such economic inducement if the young people of the area are to be retained. Congressman Martin referred to the outmigration which is occurring. In the five-county area in which facilities for the O'Neill unit would be located, the population has gone down 19 percent from 1950 to 1970 and the unemployment and underemployment of human resources have been a major factor in this loss of population.

In its report on H.R. 780, 91st Congress, regarding the Merlin division, the committee asked that in future reclamation project authorization testimony, we should take note of the employment benefits created by the development of the project in any case where unemployment or underemployment in the immediate county or region is greater than the national average. In keeping with that directive we have made such an evaluation within the constraints of present policy and procedures.

According to a study released by the Department of Agriculture in 1969, the median income for the five-county area in which this project would be located was 60 percent of the national median in 1960, or to put it the other way around, the measure of underemployment in the O'Neill unit was 40 percent greater than the national average. This still exists in 1970 as evidenced by the Census population figures for 1970, which show a continuing loss of population.

Construction and operation and maintenance of the unit would provide local employment opportunities for unskilled and semiskilled labor. In addition, there would be a substantial increase in demand for hired farm labor. Local employment benefits have been computed at about $517.000 annually. However, these values have not been used in determining the economic justification of the unit, because it is assumed that employment opportunities elsewhere are the major reason for local population losses.

Norden Reservoir would also provide additional and much needed water-oriented outdoor recreation opportunities which are not readily available to the residents of north-central Nebraska. The reservoir has the potential to be a major weekend and vacation area of statewide significance. The recreation and fish and wildlife aspects of the unit have been fully coordinated with all interested agencies. The water surface as well as some 15,000 acres of acquired lands

adjacent to the reservoir would be developed and managed for recreation and fish and wildlife purposes. Public access to the reservoir and adjacent lands would assure greater enjoyment of the outstanding esthetic qualities of that area. Incidentially, to digress, I know the esthetic qualities of that area because I took my scouts down the Upper Niobrara River area several years ago and I think everybody here would agree it is a beautiful spot.

The Bureau of Outdoor Recreation recommends that the principal recreation facilities include interior roads and parking areas; day use and camping areas; sanitary facilities, and beach and boat ramps. Acquisition of 500 acres of land adjacent to the proposed Norden Reservoir specifically to include Smith Falls on a tributary stream to the Niobrara River. It is the highest waterfall in the State and probably as beautiful a waterfall as one could see anywhere in the Nation.

The Bureau of Outdoor Recreation estimates that recreation use will increase from 216,000 visitor-days annually with initial development to 300,000 ultimately with optimum development. The recreation benefits are evaluated at $381,000 annually.

The fish and wildlife measures recommended by the Bureau of Sport Fisheries and Wildlife will provide for both the mitigation of losses caused by the project and enhancement of those resources. Principal measures would include the development of a trout management area, eradication of the existing fish population and the construction of a small barrier dam to prevent upstream migration of undesirable fish species from the reservoir, all on Fairfield Creek. Acquisition of about 4,700 acres of unique natural wooded habitat is proposed specifically for fish and wildlife management purposes and to otherwise protect and enhance the quality of the environment in that area. The additional use that would result from the proposed measures is expected to be about 24,000 man-days annually for hunting and fishing. The total fish and wildlife benefits are evaluated to be $71,000 annually.

Exclusive flood control space in Norden Reservoir is not justified. However, operation of Norden Dam and Reservoir as planned would provide a desirable degree of incidental flood protection to downstream areas for which the Corps of Engineers estimates the benefits would be $16,000 annually.

The annual equivalent benefits anticipated for all purposes from development of the O'Neill unit total over $6.6 million of which about $5.2 million are direct benefits. The construction cost of the unit, based on October 1970 prices, is $104.4 million. In addition, because of its pumping requirements, $2.7 million of the Pick-Sloan Missouri Basin program's power investment allocated for irrigation pumping has been assigned to the unit. These project costs total $107.1 million. Annual operation, maintenance, and replacement costs are estimated to be $552,000.

The economic justification is based on a Federal investment of $111.6 million. The computed annual equivalent cost of this investment, based on a 100-year period of analysis at 314 percent interest, plus the estimated annual operation and maintenance costs, total $4.3 million. The ratio of total evaluated annual benefits to the estimated

annual equivalent costs is 1.5 to 1.0. The ratio of direct benefits only to costs is 1.2 to 1.0.

It is estimated that construction costs have increased by 9 percent since October 1970-the price level used in our reevaluation statement. On this basis the total project cost would increase to $113.3 as of January 1972. Without any other changes in the economic analysis, benefits under those figures would exceed costs in the ratio of 1.4 to 1 and 1.1 to 1 for total and direct benefits, respectively.

The irrigation costs would be fully reimbursable without interest over a 50-year period. About $20.6 million, or 21 percent of the project cost, plus the allocated operation, maintenance, and replacement cost estimated to average $397,000 annually, would be repaid by the local beneficiaries. Pick-Sloan Missouri Basin program power revenues are in prospect to repay the remaining $77.9 million irrigation. costs within 50 years after the normal development period.

The irrigation service area is included within the north-central Nebraska reclamation district which, because of its limited taxing authority, does not in our opinion constitute a wholly acceptable contracting entity for irrigation repayment. However, this District. has assumed active leadership in the organization of an irrigation district, a legally acceptable contracting entity, under the provisions of Nebraska law. At this point, signatures of resident owners representing a majority of the irrigable lands and land owners in the proposed irrigation district have been secured on petitions seeking the organization of an irrigation district.

In accordance with the Federal Water Project Recreation Act, the north-central Nebraska reclamation district furnished a letter of intent dated July 20, 1971, to administer the land and water areas for fish and wildlife and recreation and to repay the associated reimbursable costs with interest. The reimbursable costs allocated to recreation and fish and wildlife amount to $1.6 million for construction, $49,000 for interest during construction, and $148,000 for annual operation, maintenance, and replacement. The remaining $5.7 million of costs allocated to recreation and fish and wildlife and $340,000 allocated to flood control together with joint operation, maintenance, and replacement costs of $7,000 annually would be nonreimbursable as provided by law.

Repayment of irrigation, recreation, and fish and wildlife costs would thus total $100.1 million or over 94 percent of the total proj

ect cost.

As an integral part of our reanalysis of the proposed development, to which I previously referred, representatives of the concerned Federal and State agencies considered the requirement to maintain increased minimum flows in the Niobrara River below the proposed Norden Dam. As a result, the operating criteria for the proposed Norden Reservoir have been revised to provide substantial increases in minimum flows over the 15 cubic feet per second originally requested by the Bureau of Sport Fisheries and Wildlife. The revised operating procedures which were used in the reservoir operation study presented in the April 1971 reevaluation statement would provide for minimum flows to maintain the basic environmental integrity of the Niobrara River Valley. The intent of these proce

dures is set forth in the reevaluation statement and is concurred in by representatives for the State of Nebraska by memorandum dated November 25, 1970, contained in the reevaluation statement.

Consistent with the agreement among the State and Federal representatives, the Department recommends that H.R. 868 be amended to require that the unit be constructed and operated in a manner to achieve the objectives set forth in the April 1971 reevaluation state

ment.

The proposed Norden Dam would be located on the Niobrara River about 110 miles above its confluence with the Missouri. Its location is squarely on the 100th meridian which runs north and south across the whole United States really, and is considered to approximate the boundary between the subhumid east and the semiarid west and the species of flora and fauna indigenous to each. However, because of climatic variability, principally precipitation, this division is not precise but is more of a transition zone, extending across the midcontinent from north to south where either semiarid or subhumid conditions can prevail from year to year. We would like to point out this is a transition zone and it extends at least 100 miles in each direction.

The adoption of new reservoir operating criteria will assure adequate streamflows to maintain a foundation of natural ecosystems and the scenic appearance of the 110-mile reach of the river from the proposed Norden Dam to the Missouri River as it runs into Lewis and Clark Lake.

Norden Dam and Reservoir would inundate from 6.300 acres of the river valley including 19 miles of the Niobrara River. The natural stream environment would be replaced by that associated with a large body of water. About two-thirds of the existing wooded areas, including many white or paper birch trees, acquired for the reservoir would never be inundated.

The 120-mile reach of the river upstream from the headwaters of the proposed Norden Reservoir to Antelope Creek has been identified by both the Secretaries of Agriculture and Interior as a potential addition to the National Wild and Scenic Rivers System as a scenic river. Should this be found desirable, the designated reach of the river would not be affected by the construction and operation of the proposed O'Neill unit. The proposed reservoir and appurtenant development for outdoor recreation use and fish and wildlife management would provide an excellent terminal facility for this scenic reach of the river. This large body of water would add a new dimension to the scenic beauty of the Niobrara River Valley.

The impact of construction and operation of the proposed development upon the human environment has been examined pursuant to the National Environmental Policy Act of 1969 cooperatively with several Federal and State agencies having expertise and responsibilities related thereto. I have already identified the principal measures which would be taken to maintain and protect the natural environment, for which some concern has been expressed. I have also discussed the many favorable effects the proposed development would have on the human environment.

Construction and operation of the O'Neill unit would have certain adverse environmental impacts. Conversion of 19 miles of the Niobrara River and some side tributaries from a river to a reservoir would result in the loss of the type of stream fishery and wildlife habitat present. Existing farming and ranching operations together with the people associated with them would be dislocated or relocated away from the reservoir area.

The return flows from irrigation would cause a slight increase in the concentration of dissolved solids in the downstream residual flows; but it is anticipated that the resultant water quality would be well within acceptable State-Federal standards.

Concrete lined sections of the proposed O'Neill Canal, if required, would be hazardous to wildlife, especially deer. Measures to reduce or eliminate this hazard will be studied prior to construction.

The human and natural resources of the area are utilized predominantly in an agricultural economy. This relationship is not expected to change materially in the foreseeable future, either with or without the development proposed. Nondevelopment of the resources, which is not recommended by any concerned State or Federal agency, would forego extensive benefits and continue the inefficient use of human and natural resources.

A more detailed statement of the effects the proposed development would have on the human environment has been prepared pursuant to section 102 (2) (C) of the National Environmental Policy Act of 1969. A copy of that statement accompanied the Department's report on H.R. 868.

Principal attention would be given in postauthorization planning to an assessment of the irrigation development from existing wells to determine the adequacy of the ground water supplies to avoid duplication of facilities and to assure the optimum development of the related land and water resources of the area. Analyses would also be made to determine the extent to which lining canals and laterals or using an underground pipe distribution system would be justified. Repayment contracts would be negotiated and executed with the appropriate contracting entities prior to initiation of con

struction.

Development of the O'Neill unit is strongly supported locally and by the State of Nebraska. This was evidenced at the field hearings held by this subcommittee. Subsequent actions have strengthened this support. As previously mentioned, landowners are well along in the process of organizing an irrigation district which would be the principal irrigation contracting entity. The Nebraska Soil and Water Conservation Commission endorses the authorization and construction of the proposed O'Neill unit as a principal element of its State water plan framework study and an optimum development of the land and water resources of the area. On February 22, 1972, the Nebraska Legislature unanimously adopted the framework study of the Nebraska State water plan and also memorialized Congress to authorize the O'Neill unit and provide preconstruction planning funds.

Therefore, Mr. Chairman and members of the committee, we believe the O'Neill unit to be highly desirable water and related