Corps of Engineers Should Reevaluate the Elk Creek Project's Benefits and Costs

GAO was requested to review the Army Corps of Engineers' benefit-cost analysis of the Elk Creek Project under construction in Jackson, Oregon. The review focused on the latest benefit-cost analysis which was prepared in 1981 for the fiscal year (FY) 1982 budget.

GAO questioned the 76 percent of the $5,457,000 in annual benefits estimated by the Corps in 1981 for the FY 1982 budget. Specifically, GAO questioned whether the: (1) flood control benefits developed in 1974 reflect a subsequent lower potential population and property value growth rate and more stringent flood plain zoning laws passed by local governments in the Elk Creek flood plain area; (2) Corps included water supply benefits without assessing the future water needs predicted by the Rogue River Basin communities; (3) Corps developed recreation benefits in 1973 and 1974 on the basis of now outdated recreation use patterns; (4) Corps based irrigation benefit estimates on an irrigation plan discarded in 1975 by another Federal agency because it was no longer economically feasible; and (5) Corps computed area development benefits for the county in which the project is to be constructed and a neighboring county. GAO is not questioning the fish and wildlife benefits other than those related to irrigation. However, some agencies have expressed concern about the possible adverse effects of the project on water quality and the fishery in the Rogue River. GAO found that project costs are understated by $65,000 annually because, contrary to applicable benefit-cost procedures, costs associated with interest on construction expenditures and the acquisition of project lands and timber were not updated.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Hugh J. Wessinger Team: General Accounting Office: Community and Economic Development Division Phone: (202) 275-5489