Cook, Neil R.

English

Research Papers in Economics

SOUTHERN  JOURNAL OF AGRICULTURAL  ECONOMICS  December,  1970
THE FEDERAL  ROLE
IN SMALL AREA PLANNING
Neil  R. Cook*
INTRODUCTION  ment is greatest,  or if the  national  interest is defined
as  development  of  local  areas  at  the  expense  of a
Water  resource  planning  is accomplished  at several  reduction  in total national  income.  National efficien-
levels-individual  projects  and  small watersheds,  sub-  cy,  no  matter  how  defined,  is  not  served  by  maxi-
basins, regional framework plans, and finally, national  mizing local benefits  in all areas.
planning  at the Water  Resource  Council and congres-
sional  committee  levels,  in  ascending  geographic  It  is  even  doubtful  if  local  benefits  are  always
scope.  All  planning  efforts  are  in  some  measure  maximized  under  present  planning  methods.  In  the
guided by the statement in Senate Document 97 that,  water resources  field,  the word  "comprehensive"  has
"All  viewpoints  (national,  regional,  state  and  local)  often been used to mean that all aspects of the local
shall  be  fully  considered  and  taken  into  account  in  situation  were being considered.  One  connotation of
planning  resource  use  and  development"  [1].  How-  the word is that all agencies (federal, state, and local)
ever,  the consideration  of various viewpoints does not  are involved  in the planning  effort.  This  often means
necessarily  make  them  compatible.  A plan  once for-  that  all  agencies having  an interest in water  resource
mulated  favors  a particular point of view over others.  development  are  involved, which does not necessarily
The  local point of view  generally carries more weight  imply  that  all  those  interested  in  local  economic
than  the  national  point  of view  because:  (1)  more  developments  are  represented.  Water  resource  de-
projectscan be justified on the basis of their net value  velopment  within  the  local  area  may  be  given  far
to  local interests rather than the public  at large,  and  greater  emphasis  than  its  probable  contribution  to
(2)  the  local  economic  effects of a project  are more  overall economic  welfare warrants.
readily  identifiable  and more easily analyzed than are
the net national effects.  The  special  task  force  report  to  the  Water  Re-
sources  Council  recognized  the  distinction  between
Although the local viewpoint is the one most often  local and national  benefits  and suggested  a  classifica-
emphasized,  projects  are  nearly  always  justified  on  tion of the benefits into four accounts-two of which
the basis of national  benefits  regardless of the mix of  are  the  national  income  account  and  the  regional
local and national  benefits. Normally, costs and nega-  account  [3].  However,  mere  recognition  of  this
tive  effects  outside the  immediate area have not been  distinction  will  not  eliminate  the  controversy.  The
subtracted.  Local  and  national  benefits  are  inter-  Bureau  of the  Budget  and congressional  committees
mixed  in  such  a  way  that  they  cannot  be  readily  will,  in time, assume  a particular  posture  toward  the
separated.  Part  of  the  problem  is  that  economic  criteria  for  project  feasibility.  Once  this posture  is
analysis  has  not  progressed  to  the  point  that  true  recognized  by  those  seeking federal  funding  of proj-
national  benefits of specific projects can be estimated  ects,  they  will  adjust their accounting  procedures  to
with the  resources available  for planning.  However, a  conform to this posture.
general  concept  prevails  that  what  is  good  for  the
local  area  is  good  for  the  nation.  This  is  true  only  It  is  in  the  self interest of the  construction  agen-
when  local  development  takes  place  in  an  area  in  cies,  the  state  agencies,  and  the  U.  S.  Congressman
which  the  marginal  efficiency  of  resource  develop-  representing  a  particular  district  to estimate  benefits
*Neil  R.  Cook  is  leader,  Southern  Resource  Group,  Natural  Resource  Economics  Division,  Economic  Research  Service,  U. S.
Department of Agriculture, Little  Rock, Arkansas.
The views  expressed are those of the author, and not necessarily  those of the Economic  Research  Service or the U.  S. Department
of Agriculture.
129in  any  manner  necessary  to  get  projects  approved,  rather than  for special interest groups represented by
The question  arises as  to whether the evaluation of a  other  delineated  areas.  In  water  resources,  for  in-
project  from  a  national  viewpoint  might  be  better  stance,  a governor's  representative could bargain with
placed  in  the  hands  of an agency  answering only  to  other  states'  representatives  on  such  matters  as  the
the Bureau of the Budget.  allocation  of  water  or  the  construction  of drainage
channels,  etc.  with  the  express  objective  of  maxi-
It  is  understandable  that  construction  agencies,  mizing welfare of the state he was representing.
Congress  as  a  body politic,  and individual legislators
might  be  reluctant  to surrender this decision-making  Many  states  do  not  have  the  expertise  to  make
capability  (power)  to  the  Executive  Branch  (the  comprehensive  economic  development  plans,  but
Bureau  of the Budget). However, this power could be  they  could  be helped with  federal grants.  Ideally,  an
counterbalanced  if  a  countervailing  change  were  adequately  funded  economic  planning group within a
made.  The  change  in  planning  procedure  outlined  state should  be responsible  to the office of the gover-
below  would  be desirable  from  the  standpoint  that  nor  to  reduce  unwarranted  pressure from special  in-
the self-interest of local  areas could  be fully utilized.  terest  groups.  The  opportunities  for  comprehensive
planning  among  states  should be more or less  equal-
NEEDED CHANGES IN EMPHASIS  ized through federal assistance.
It  is  proposed  that  local  units  of government,  Some  states  are  too  large  and/or too  complex to
probably  at  the  state level, be given more  flexibility  develop one grandiose  comprehensive  state economic
to comprehensively  plan  for the  economic growth of  plan. In that case,  the state would  have to develop  a
their  regions.  "Comprehensively",  in  this  context,  planning  system in which groups of people with com-
means the consideration in a technical modeling sense  mon interest,  as well as the capacity for implementing
of all  means available,  presently  and in the future, to  their plans,  would be given primary responsibility for
maximize  longrun economic growth and development  developing  their  own  economic  plans.  This  is,  in
of the area. Flexibility would require the provision of  effect,  the concept  envisioned for  states in their rela-
federal  grants-in-aid to develop  plans for future  state  tionship to the Federal Government.
and  federal  projects  of all kinds-not water  resource
projects  alone.  These  plans would  take into account  THE FEDERAL ROLE
the  present  status  of the  resources  of the state,  the
educational  level  of the state's residents in relation to  It has  already been  suggested  that an independent
the  rest of the nation, the state's comparative  advan-  agency,  responsible  only to the Bureau of the Budget,
tages in  commerce, and its peculiar  complexities, best  should  be designated  to analyze the compatibility  of
identified  on the local level.  The state planners would  state  plans  with  national  plans,  and  that  federal
appraise  the state's competitive position with the rest  grants-in-aid  for  state  planning  would  be  essential.
of the country  and the world.  These plans would be  However,  the  kinds  of  analyses  that  could  best  be
sophisticated  enough  that  (1)  various  alternatives  performed  by  the  Federal  Government  need  more
could  be  analyzed,  (2)  parameters  could  be updated  elaboration.
and refined,  and (3) the sensitivity of critical variables
could be tested.  It  is  felt  that  a comprehensive  plan  for economic
development  at  the  national  level  is  not  feasible.
Water  resource  projects  would  be  only  one  of  Nevertheless,  under the proposed  plan the  Bureau of
many  means to promote  economic  development that  the  Budget  would  be responsible  for  appraising  the
would  be  investigated.  The  state  model  would  be  feasibility, from a national viewpoint,  of projects pro-
sufficiently  detailed  that  many  alternative  projects  posed  by  individual  states for  federal  funding.  The
within  a  given  geographic  area  could  be  analyzed.  Bureau  of the  Budget  would  have  to  have,  at  the
Project costs from  the state viewpoint  should be con-  least, a national posture on federal budget allocations.
sidered,  explicitly,  in  analyzing  the  alternatives.  The  planning, programming,  and budgeting  approach
Federal  costs  would  be  tallied  separately  from state  is  a  general  method of defining  broad  budget  alloca-
costs.  tions  in  a  national  framework,  but additional  plan-
ning would doubtless be needed.
The  primary disadvantage  of formulating  plans on
the  basis of state  boundaries  is  that entities such  as  One  suggestion  is  that  each  executive  agency,
hydrologic  basins, pocketsof poverty,  functional eco-  except  the  Bureau  of  the  Budget,  would  develop
nomic  areas,  and  geographic  areas might  be severed.  framework  plans from the  national viewpoint for the
On  the other hand, the reversion to almost arbitrarily  programs  under  its jurisdiction.  The framework  plans
defined  state boundaries  could be advantageous.  Each  would  indicate  the  best  distribution  of physical  fea-
state  would  be  able  to  formulate  its own objectives  tures and/or budget  allocations  for  the  particular
and  set  goals for  the general welfare  of its residents,  function  with  which  the  agency  was  charged.
130Examples  are  the  interstate  and  federal  highway  focus  by the analytical arm of the Bureau of the Bud-
systems,  educational  funds,  health,  and water  devel-  get.  Issues would be more openly  exposed  than they
opment.  The  framework  plans,  as conceived,  are not  now  are.  The  information  needed  to  make  policy
far  removed  from  reality.  Many  already  exist.  A  decisions involving  economics would  be more  clearly
framework  plan  for efficient  production of national  defined, thus improving the efficiency of planning.
food  and fiber needs  is being developed and will have
major  implications with  respect to the need for water  Objectives  and values, both locally and nationally,
resource  development  projects  from a  national  view-  could be more easily identified if viewpoints  were not
point.  mixed.  State,  as  well  as  national  planners,  face  the
problem  that a distribution  of plan features based on
The  analytical  arm  of the  Bureau  of the  Budget  efficiency  often differs from  a distribution  based  on
would  serve  as  the  link between the  national  frame-  equalitarianism.  On the state level, however, the prob-
work  plans  and  the  comprehensive  state  economic  lem  should  be  scaled  down  to  a  more  manageable
development  plans.  They  would review  and  appraise  size.  From  both  a  technical  sense  and  a  political
the compatibility of state requests  for federal funding  sense,  planning the allocation of resources should  be
of  particular  projects  with  the  overall  national  in-  much  easier  on a  statewide rather  than a  nationwide
terest  by  relating  the  individual  features  to  the  basis.
national framework plans.
The President and Congress should be able to exer-
The national  framework plans  and the state com-  cise  better control  over  goverment  spending if plan-
prehensive  plans  would both  be partial  analyses, but  ning on the local level were taken out of the hands of
in  different  senses.  The  national  framework  plans  those  whose self-interests are best served by justifying
would be partial in that they would look at one func-  expenditures.  They  would  have  the  planning,  pro-
tion at  a  time  on  a countrywide  basis.  The compre-  gramming,  and  budgeting  system  to  assist  them in
hensive  state plans would only look at one geographic  making complex decisions on the allocation  of federal
area within the  country. In comprehensive  state plan-  funds  among  functions  and  the  framework  plans to
ning,  demand and supply functions,  as viewed by the  assist them  in  making  decisions on the allocation of
state,  would  be  used.  In  framework  plans,  national  funds among large geographic  areas.
needs  for  the  particular  product  or  service  and  all
alternative  sources of supply would be considered.  If state  requests  for  federal  funding  of a specific
feature  were  incompatible  with  the national  frame-
The  federal  role  could be extended, under existing  work,  the  state  would  still  have  the  option  of  fi-
legislation, beyond that envisioned  above. Title III of  nancing  or  promoting  it  through  private  interests.
the  Intergovernmental  Cooperation  Act of 1968  [2]  Once  the feature  was implemented,  it  would  have  to
permits  federal  agencies  with  special  competence  to  be  considered  in  national framework  planning.  Con-
provide  services  to  state  and  local  governments  on  versely,  the  national  framework  would have features
request.  Under the  Act, the  Bureau of the  Budget or  incompatible with  state plans. Again, if the feature in
other  executive  agencies  could  assist  in the  develop-  the  national  plan was established or implemented,  it
ment  of  state  comprehensive  plans.  This  assistance  would have  to be  considered  in future state planning.
would  be  especially  appropriate  if  the  anlaytical
framework  of the state plan was similar to that which  Although  a  comprehensive  national  economic
the  Bureau  of the  Budget  would  use  in  judging the  development  plan at the present  time is too complex
compatibility  of  the  completed  state  plan  with  the  and dynamic  to be quantified in an analytical model,
national  frameworks.  By  changing  demand  and  continual  Congressional  review  of national  goals and
supply  parameters,  a  properly  constructed  model  objectives  is vital in the planning approach envisioned
could be used in the analysis of several viewpoints,  here.  Emerging  and  changing  national  goals  must be
enunciated  and  legislation  formulated  before  the
Shifts  in  planning  responsibility  in  the  direction  administering  federal  agencies  can  begin  developing
suggested  would  be  consistent  with implementation  and/or  incorporating  their  delegated  missions  into
of the planning, programming, and budgeting systems  national framework plans.
started  several  years ago  in agencies  of the Executive
Branch.  Yet,  it  would  also  be  consistent  with  the  Immediate  adoption  of all  features of this propos-
clamor  for greater  rights by states to plan  their own  al,  presented  herein,  is  neither  possible nor  feasible,
destinies.  but  a gradual  shifting in  this direction is conceivable.
A  first  step  is  recognition  by both state and federal
State  plans  might  not  be  consistent  with  federal  interest  of the  effect  that  diverse  self-interests  have
plans.  In  most  cases,  it  would  be  an  indication  of  on  establishing  operational  planning  goals.  Present
irrationality  if they were.  The difference  between the  planning  efforts  could  begin by making two different
national  and local viewpoints would  be brought  into  plans-one based on the state's or region's interest,  the
131other  based  on  national  efficiency  in  the  broadest  small area  planning  is examined  in the light of experi-
sense. A second step would be a gradual strengthening  ence  gained  in  the planning of water  resource devel-
of the analytical  capability  of the Bureau of the Bud-  opment  in small  areas.  The main hypothesis  is  that
get.  A  third, and perhaps more drastic, step would be  federal  construction  agencies  currently justify water
an increased emphasis  on grants to states for compre-  resource  development  projects  on  the  basis  of local
hensive  state  economic  development  plans,  rather  rather  than  national  benefits.  It  is  proposed  that
than for special purposes such as state water plans.  national  interests  would  be  better  served if an  inde-
pendent  agency, responsive to the U. S. Bureau of the
SUMMARY  Budget, appraised the compatibility of comprehensive
local  economic  development  plans  with  national
The  role  of the  Federal  Government  in  overall  framework plans.
REFERENCES
1. 87th Congress,  2nd Session, Policies, Standards, and Procedures in the Formation,  Evaluation, and Review of
Plans  for Use and  Development of Water and Related Land Resources, S.D. 97, 1962.
2.  Intergovernmental Cooperation  Act of 1968, Public  Law 90-577, Sec. 3-2, Title  III.
3.  Special  Task Force  Report to Water Resources  Council, Procedures  for Evaluation of Water and Related Land
Resource Projects, June 1969.
132

THE FEDERAL ROLE IN SMALL AREA PLANNING

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