Title: Annual Report 1964, Resources for the Future, Inc.
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Title: Annual Report 1964, Resources for the Future, Inc.
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Abstract: Jake Varn Collection - Annual Report 1964, Resources for the Future, Inc. (JDV Box 43)
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Full Text
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RESOURCES FOR THE FUTURE, INC. is a non-profit, tax-exempt corporation char-
tered under the laws of the state of New York, with headquarters in Washington, D. C.
It was established in October 1952, with the co-operation of the Ford Foundation. Its pur-
pose is to advance the development, conservation, and use of natural resources through
programs of research and education. Some of its programs are carried on by the central
staff; some are supported by grants to other non-profit institutions. Most of its studies are
in the field of the social sciences. From the beginning the work of Resources for the Future
has been financed by grants from the Ford Foundation.


Library of Congress Catalog Card Number 55-40198


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Resources for the Future



ANNUAL REPORT

For the year ending September 30, 1964














1755 Massachusetts Avenue, N.W., Washington, D.C. 20036


December, 1964










Board of Directors


Chairman, Reuben G. Gustavson

Horace M. Albright
Erwin D. Canham
Thomas H. Carrollt
Edward J. Condon (honorary)
Joseph L. Fisher
Luther H. Foster
Hugh L. Keenleyside
Otto H. Liebers
Leslie A. Miller
Frank Pace, Jr.
William S. Paley
Laurance S. Rockefeller
Stanley H. Ruttenberg
John W. Vanderwilt
P. F. Watzek




Officers





President, Joseph L. Fisher
Vice President, Irving K. Fox
Secretary-Treasurer, John E. Herbert


f Died July 1964.











Staff


President, Joseph L. Fisher
Vice President, Irving K. Fox
Administrative Officer, John E. Herbert


Allen V. Kneese
Robert K. Davis
John V. Krutilla
Edward J. Cleary*
Vincent Ostrom**

Sam H. Schurr
Sterling Brubaker
Orris C. Herfindahl
Jay G. Polach
Perry D. Teitelbaum

Marion Clawson
R. Burnell Held
Jack L. Knetsch

Harvey S. Perloff
Lowdon Wingo, Jr.
Edgar S. Dunn, Jr.**
Robert Warren**

Hans H. Landsberg
David B. Brooks

Francis T. Christy, Jr.
Vera F. Eliasberg
George O. G. Lif*
Neal Potter*

Henry Jarrett
Vera W. Dodds
Nora E. Roots


WATER RESOURCES






ENERGY AND MINERALS






LAND USE AND MANAGEMENT




REGIONAL AND URBAN STUDIES





APPRAISALS


SPECIAL PROJECTS





PUBLICATIONS


* Part-time appointment.
** Temporary appointment.










CONTENTS


SOME NEW DIRECTIONS ............................... 1
By Joseph L. Fisher



A SUMMARY OF THE YEAR.............. .......... 10



THREE SPECIAL REPORTS


Neglected Alternatives to Flood Protection ................ 15
The Changing Federal Role in Urban Development ......... 25
Potentials and Problems of World Fisheries ................ 33


THE YEAR'S WORK IN REVIEW


Water Resources .............. ........... .. .... 42
Energy and M inerals ............... ................... 52
Land Use and Management ............................ 62
Regional and Urban Studies ............................ 71
Appraisals and Special Projects .......................... 82
Resources Education ............... ................... 88
Publications ................ ......................... 95



FINANCIAL STATEMENTS .......................... 107










SOME NEW DIRECTIONS


JOSEPH L. FISHER













THIS FALL, RESOURCES FOR THE FUTURE began its third suc-
cessive five-year program of research and education on the development,
conservation, and use of natural resources. Five years seems to us in Re-
sources for the Future a convenient period for looking ahead; not so long a
time as to make future predictions completely uncertain, yet long enough
to sustain an attack on some difficult problems. During the past ten years
our aim has been to establish a new research and educational institution
on the American scene; to engage a number of difficult problems within our
chosen field which are important to the economic growth and welfare of this
country; to complete a cycle of studies within our own staff, and by grants
to help scholars in universities do research they and we regard as important;
to assist some younger men and women to acquire professional competence
in research through educational fellowships; to present our principal findings
in publications that are both scholarly and readable; to advise with leaders
of government and private enterprise from an objective viewpoint when
called upon to do so; in short, to add our bit to knowledge, policy, and
progress in the resources field.
But looking ahead to the next five years, what appear to be the major
opportunities for Resources for the Future if it is to continue to grow in
professional stature and public effectiveness? This question does not imply
an intention to turn away from established principles of objective research
and needed education. Similarly, there is no idea of abandoning well-tested
methods of operation which have served well in the past. These methods
include a combined resident staff and university grant program; the selec-
tion of research projects which seek to illuminate underlying causes of
present difficulties and explore realistic alternatives for meeting foreseeable
difficulties and opportunities ahead, through programs that range from the










basic and general to the practical and specific; and a full collaboration with
research scholars and educators who share in a broad sense our own pur-
poses and convictions. But where does this now lead? To what broad
problems shall we in Resources for the Future turn our attention in the
years ahead? While the following reflections relate principally to the Re-
sources for the Future program, I hope they will find a sympathetic re-
sponse from many persons outside RFF who also are concerned with resource
matters.
First let me take a quick look backward to see the road Resources for
the Future has traveled thus far. Ten years ago, when our program was
getting under way, there was great concern in this country about running
out of resources, or at least encountering steeply rising costs for oil, many
metals, and lumber and other forest products. The Second World War
with its heavy drain on raw materials, the difficulties met in many parts
of the world in re-establishing productive economies after the war, the
postwar baby boom, the cold war and its requirements for large military
programs-all these factors led many observers to the view that even in
affluent America the sheer quantity of resource materials would prove to be
inadequate to meet needs, let alone expectations. RFF addressed this
central issue by preparing a series of studies of the various resources, both
on a national and regional scale, in which past trends of demand and supply
were studied and possibilities for the future were projected. In this way
special problems were identified-a prospective shortage of a particular
commodity in a particular place or at a particular time, for example-but
on the whole we concluded that there would be no shortage in any of the
main resource categories. New discoveries, increased yields, development
of satisfactory substitutes, more effective conservation, and larger imports
could be expected to step into almost any foreseeable breach.
As events have unfolded, the resource outlook for the United States has
eased, at least in the time perspective of the next several decades. New
discoveries of underground petroleum in various parts of the world, im-
proved prospects for obtaining oil through secondary recovery techniques
and from shale and tar sands, the opening of major new iron ore deposits
and the upgrading of domestic taconite reserves, improvements in nuclear
reactor technology leading to lower costs of nuclear power production,
further gains in farm productivity, a much more favorable reappraisal of
the nation's forests, and improved prospects for development and manage-
ment of water supplies have been among the principal features of this
change in outlook. Of course the need for vigorous development, wise con-
servation, and efficient use of natural resources remains, regardless of any
shift in the general outlook.
In recent years several other large problems have come more clearly
into view-problems no less basic than that of the quantitative adequacy
of resources to meet the future demands of the United States which first


r









engaged RFF's attention. One such question arises out of the fact that the
broad resource outlook in much of the world, especially in the less developed
countries, is far less favorable than it is in the United States. Yet the United
States depends on many of these other countries for certain essential raw
material imports, as well as for markets and investment outlets. What is
the nature of these interdependencies which are so important to all the
countries? What international resource policies will nurture fuller develop-
ment and better relations among the countries? In resources as in other
matters the United States is part of a world system; and the livelihood of
our citizens is linked with that of people everywhere.
Another problem we are led to is that of declining resource and environ-
mental quality, whether it is water or air pollution, pesticide damage to
wildlife or disfigurement of the countryside. Related to this, and to no
small extent the cause of it, is the phenomenon of urban and industrial
growth which sets a whole series of difficult problems for land use planning,
water development, and conservation generally. In the following para-
graphs I shall indicate how Resources for the Future expects to try to
respond to these problems primarily through its research activities.


During the next few years we plan to give more attention to the resource
and economic development problems of the world generally and a few
selected countries in particular. Most of our completed studies have been
focused primarily on the United States, though it often has been necessary
to look abroad at some situations and trends that affect this country
directly. Our most comprehensive study to date, Resources in America's
Future, published in 1963, concluded that, broadly speaking, resources
would be adequate to meet the needs of an expanding U. S. population
for the next several decades provided scientific and technological progress
continued unabated, provided policies were reasonably well chosen and
administered, provided adequate programs and investment in resources
development and conservation were forthcoming, and provided a reasonably
efficient world trading and investing system could be maintained by means
of which this country could obtain supplies of certain raw materials from
abroad. But in this study, and others that dealt with particular resources,
little was said directly or in depth about the resources situation and outlook
of other parts of the world. Some two-thirds of the 3.2 billion people in
the world at the present time live in economically less developed areas
where per capital incomes range from a few hundred dollars a year down
to less than fifty dollars. Many of these places are densely populated,
and it is obvious that, in the classic Malthusian sense, people press hard
on the available natural resources. What about the resources future of
India, Pakistan, numerous countries in Africa and the Middle East, and
in many parts of Latin America? What policies, developmental invest-










ments, training and educational programs, administrative organizations,
and international arrangements may be critical in setting these countries
on the road to rapid resource development and economic improvement?
Such questions as these will absorb a considerable share of our attention
in the period ahead. Important for their own sakes, they also bear sig-
nificantly and sometimes directly on events and issues in this country.
Already we have probed a number of overseas situations and problems to
find some directions worth pursuing. We shall, of course, be building on
the knowledge already accumulated by others.
Resources for the Future already has laid a modest groundwork in a
rather rough and sketchy look at world resource trends (Fisher and Potter,
World Prospects for Natural Resources: Some Projections of Demand and
Indicators of Supply to the Year 2000) which was in press at the end of the
program year. This reconnaissance survey indicates that in most of the
less developed countries during the last ten or fifteen years the level of
per capital energy consumption has risen. Coal is fairly widely available
over the world, and large reserves await development. Oil has come on
rapidly in recent years in the Middle East, in northern South America,
and more recently in North Africa and other places. Large hydroelectric
potentials await development in Central Africa, the Mekong Basin countries
of Southeast Asia, and elsewhere. Nuclear power from fission reactors is
crossing the threshold of economic development in this country and is
close to the threshold in some of the other economically advanced countries.
It may be expected to find application in less developed places once the
market justifies installation of large, economical stations or progress is
made in developing useable smaller reactors.
Policy problems abound in the international energy field, partly because
the sources of supply are not ubiquitous even though fairly widely dis-
tributed. For example, Western Europe is becoming increasingly depend-
ent on oil supplies from the Middle East, a politically unstable region.
This is of concern because of the obviously close tie between cheap energy
and both economic development and national security. Some of these
problems are economic; many are political. As noted later in this report
(pages 53-56) Resources for the Future has under way a variety of studies
into the complexities of the world energy and minerals economy.
The outlook in the less developed countries for food provides less reason
for optimism. Here our broad survey is inconclusive; apparently it will
be nip and tuck for most of the people of the world whether they will be
able to gain significantly in terms of per capital consumption of calories
and proteins. The bulk of the population of Asia, Africa, and Latin Amer-
ica is only slightly, if any, better off now than it was twenty-five or thirty
years ago. Viewed in world terms, the amount of new land brought into
agriculture has been insignificant over the past three decades, while in-
creases in yields have barely managed to keep up with population growth.









During the most recent crop year, according to the Food and Agriculture
Organization, world production of crops increased less than population.
Undoubtedly, the foreign aid in food extended since the war by the United
States and other countries has helped, but this can only handle a small
part of the problem. Apparently little success has been achieved in the
heavily populated and less developed regions of the world in combining
more abundant energy supplies, capital equipment, practical technology,
and all the rest, with improved farm labor and management so as to enable
these countries to achieve any kind of take-off in agriculture. And a
take-off in agriculture may prove to be a necessary precondition, or at
least accompaniment, of a take-off in industry and the economy generally.
We in RFF hope to be able to contribute to an understanding of the
difficulties which lie in the path of greatly accelerated food production
without which the whole future of the human enterprise on earth is in-
creasingly in jeopardy. We hope also to address on a selective basis some
of the trade, investment, and other international issues relating to timber
resources and fisheries. In each case we shall be looking especially for the
bearing of world trends on resource problems of the United States. For
the most part, our internationally oriented studies will be carried on pri-
marily in this country, but not exclusively. Already we have begun a
modest research effort in Latin America in co-operation with the Institute
for Economic and Social Planning, an organization associated with the
United Nations and located in Santiago, Chile.


A second line of investigation to which we are drawn concerns the quality
of the environment, particularly in the United States, although any lessons
learned may be of value elsewhere. The issue is posed dramatically by Secre-
tary of the Interior Stewart Udall in his recent book, The Quiet Crisis:

America today stands poised on a pinnacle of wealth and power, yet we live in a
land of vanishing beauty, of increasing ugliness, of shrinking open space, and of
an over-all environment that is diminished daily by pollution and noise and
blight.

The environment in many places has deteriorated under the pressures
of an ever denser population, numerous growing industries, and a set of
attitudes carried over from earlier times when good environmental house-
keeping may not have been so necessary. Water pollution has become
close to pandemic, and air pollution in the urban areas already is a plague.
The large increases in agricultural yields over recent decades have re-
sulted in large part from wide-scale application of chemicals to promote
growth, kill insects, and eradicate disease. These benefits have been ac-
companied by costs, one of the heaviest being the loss or threat of loss of an-
imals, birds, and fish. In the long run, the health of people, too, may suffer.










It is important to avoid becoming so alarmed by these matters that
capacity for constructive action becomes paralyzed. The need is for
objective and careful assessment of the factors and trends, and a patient
search for the means of dealing with them. One approach is through sys-
tems analysis by means of which the significant factors involved in, say,
a problem of water pollution may be considered in an interrelated way
and in terms of specified standards of health, economic efficiency, and the
like, in a search for the "best" solution to the problem.
Already RFF has pushed a certain distance into problems of environ-
mental quality, particularly in problems concerned with water pollution.
Allen V. Kneese's book, The Economics of Regional Water Quality Manage-
ment, was published during the year. Some of the other work under way
involves examination of several of the major pollution-causing industries
and a study of water quality problems in a particular region. Extending
this work at the methodological and case-study levels, we believe, can go
far in giving shape to this whole subject-matter area and can be of use
in connection with the very large research and planning funds the govern-
ment is now prepared to devote to it.
Over the coming years we also plan to give some attention to several
other kinds of environmental pollution, notably air pollution, pesticides,
and the effects of modern civilization on the rural environment. This
latter, perhaps the most elusive of them all, recognizes that population
growth, large cities, industrial development, increased leisure for outdoor
recreation, and the like combine to place new and heavy demands upon
the rural and natural landscape in ways hardly dreamed of by our fore-
fathers. Cities thrust out into the countryside frequently in an unplanned
manner, with little regard for over-all aesthetic effects. Sheer economic
efficiency of metropolitan complexes also leaves something to be desired.
The millions of Americans who spend a large portion of their leisure time
out-of-doors likewise cause damage to the rural environment, frequently
out of ignorance; their search for recreation is slowly eroding away the
very values they seek. Parks are misused and overused, certain fish and
wildlife populations are depleted, wilderness is becoming hard to preserve
as such, and industries and people alike mess up the landscape. The
empty beer can has become almost as much a feature of the rural landscape
as the beautiful flower.
The wide variety of threats to the quality of the environment may well
embrace the gravest U. S. resources problems of the next generation. The
various quantitative resource studies we have made so far indicate that
with prudence and foresight there need be no general shortage of resources
for the foreseeable future in this country. However, the more we have
examined the quantitative outlook the more we have seen that the really
difficult resource problems for the future in this country are likely to involve
quality. In Resources in America's Future we said, "Simply having enough
oil, metals, land, and water would not spell a satisfactory life for most


F









people.... The relationship of people to resources, which usually has been
expressed in terms of quantity, needs to be restated for modern times to
emphasize what is happening to the quality of resources."
For these reasons in the years ahead we shall do what we can, within the
limitations imposed by our commitments to other important lines of work,
to mark out social science approaches to these qualitative problems, to
assess the trends and the benefits and costs to society that seem to be in-
volved, and to consider new schemes of management or perhaps even al-
together new institutions for dealing more effectively with environmental
pollution and disfigurement. Now, at the end of RFF's 1964 program year,
we are planning to focus our 1966 Forum on some of these qualitative prob-
lems.


A third problem area which we expect to probe more deeply may be
described as urban-resource relations. Already Resources for the Future
has undertaken, through its own staff and by means of grants, a number of
investigations into those problems of water resources, land use, and outdoor
recreation that are urgent today because of the rapid growth of metro-
politan population. But so far, we and others with similar interests have
only scratched the surface of what is one of the most powerfully moving
trends of modern times.
The present outlook for birth and death rates and immigration suggests
a population increase in this country from the present figure of 192 million
to 245 million in 1980 and to 330 million or more by the year 2000. Vir-
tually the entire increase is expected to be in metropolitan areas. Annually
in this country, several hundred thousand acres of farmland are shifting
over to urban and suburban uses. That part of the total population
classified as rural is static or even declining. The problems of urban living
are legion: commuting from home to work, financing local government,
maintaining vigorous central cities, providing jobs for more and more
young people from rural parts of the country who want to work in cities,
maintaining individual and public morality and responsibility in the face
of the psychological and cultural shocks imparted by the urban arrange-
ment, and providing both the necessities and the amenities of life for city
dwellers in the form of pure water, clean air, and healthful outdoor recrea-
tion. These are only some of the problems of growing cities that challenge
the imagination of research and the wisdom of decision makers.
No one research organization can hope to deal with all of these elements
and at the same time go deeply enough into them to see clearly the true
nature of the difficulties. RFF will continue to give particular emphasis
to the urban-resource relations as they find expression in such matters as
urban water supply, recreation for city people, and water and air pollution,
and the numerous problems connected with urban land use.
We hope to pay special attention to the problems in the suburban and










outer fringes of the growing metropolitan areas where shifts in land use
are dramatic, conflicts sharp, and monetary stakes high. What are the
more sensible patterns for the expansion of cities into the rural country-
side? How may the most constructive roles of the land developer, the high-
way planner, and the local and regional agencies of government be identi-
fied? What kinds of guidance of urban growth will be helpful, according
to what standards of judgment? What new institutions may be needed
if the metropolitan areas of the future are to be more efficient and more
pleasant than those we now have? Can the inconsistencies of massive
federal aid programs in highways, urban renewal, open space, and welfare
be harmonized so that each metropolitan area may become one instead of
many-one functioning, liveable, attractive whole instead of a confusion
of separate pieces?
In particular, is it possible to identify a few factors a proper understanding
and planning of which can guide the development of the whole metropolitan
complex? In one speculative paper, Harvey Perloff and Lowdon Wingo
of RFF have suggested that an understanding of the transportation net-
work, the provision of essential utilities, and the arrangement of open space
make up the skeleton of metropolitan areas to which all the rest must be
related. Underlying any such approach to achieving better urban areas
must be the wishes of the inhabitants; consequently it is most important
that the people concerned have an adequate knowledge of the trends and
possibilities.
The RFF program will lay particular emphasis on research into urban
economic matters, ranging from pure theory and methodology to a variety
of more practical studies and demonstrations. In this connection, the
Ford Foundation recently provided us with a grant, for use over the next
five years, to continue the research program in urban economics which we
had launched earlier. We shall also continue a modest program of Ph.D.
fellowships in urban economics, not only for economists but for geographers,
political scientists, engineers, and others concerned with urban matters;
and shall make a number of research grants to university scholars to help
them to undertake particular studies. As in the past, the Committee on
Urban Economics, made up of distinguished scholars from universities and
research institutes, will continue to guide the program.
Over the coming years we hope that these varied activities centered on
urban economics and more broadly on urban-resource relations can add
significantly to our understanding in this most complex of fields. Such
understanding, we believe, is the only road toward better urban policies
and, ultimately, better urban living.


Just as there is much unfinished business for resources conservation and
development, so there remains much for Resources for the Future to try


I








to do. Three lines of work have been outlined here along which we shall
intensify our effort during the coming five-year period. These will not
be the sum total of our program since we shall be pursuing other lines as
well, some growing out of past activity and some addressed to new prob-
lems. These involve all of the major resource categories: land including
agriculture, forestry, and outdoor recreation; water in its several inter-
related uses, energy and minerals. We shall also be concerned with ad-
vancing resource educational programs through fellowships and support
of conferences and seminars. A few of the new lines of study we hope to
undertake, or help others with, may be mentioned: some examination of
U. S. agricultural policy, a field we have dealt with little thus far; the man-
agement of land for wildlife values; a deeper look into the international
economics and politics of energy and minerals; selected instances of new
technology as it may bear on raw materials and their use; additional ap-
praisals of resource and economic development potentialities in selected
regions; and a number of legal, administrative, and institutional barriers to
more favorable development and use of resources.
These are a few of quite a number of projects in prospect. In pursuing
them we look forward to joining forces with individual research scholars
and teachers in the universities and elsewhere, many of whom have been
concerned with resources for a long time, in our quest for deeper understand-
ing of the part resources play in society.
Our program necessarily will continue to spread over a wide front, because
in substantial degree we want to help scholars and educators concerned
with natural resources to develop their own ideas and approaches. But
we shall try to retain a focus on certain broad problems such as the three
sketched in this essay. Running through all our activities will be a con-
tinued devotion to objective research, to well-chosen educational activities,
to understanding those resource problems which must be understood if
public and private policies are to be improved. Especially we hope to
demonstrate through our program the numerous constructive ways in
which research and analysis can put the nation on the road to better con-
servation, development, and use of natural resources for human welfare.
These are our aims for the next five years.










A SUMMARY OF THE YEAR













RESOURCES FOR THE FUTURE in September received a supple-
mentary grant of $900,000 from the Ford Foundation for five more years'
support of research on urban economic problems under the direction of the
Committee on Urban Economics. By the end of that period it is expected
that this new field of work will be so well established that guidance and
encouragement by a special committee will no longer be necessary. Since
1959, when an earlier grant from the Ford Foundation enabled Resources
for the Future to organize the Committee and finance its activities, most
of RFF's work in the urban economics field has been conducted by the
Committee under the chairmanship of Harvey S. Perloff, director of RFF's
Regional and Urban Studies program. The Committee is made up of
scholars from various universities. Its work is described on page 77.

-Forty-one grants and two research agreements, totaling $645,600, were
made during the year to universities or other non-profit organizations.
In addition, just over $67,000 was awarded in RFF's fellowship programs.

-Nine research studies, some of which had been prepared under grant,
were published or sent to press during the program year; three paperbacks
intended for general adult and student reading also were published, and a
fourth was in press at the close of the year.

-One of the published studies, dealing with the economics of regional water
quality management, presents a systematic approach whereby economic,
engineering, and institutional procedures can be used to solve the problem
of maintaining conditions in a river basin that will yield the greatest over-
all net benefits (see page 42). The book is being used as a guidepost for
research now in progress on case studies of stream pollution problems in
particular basins. Other studies deal with the interaction of water quality
management and industrial use of water. Because improving the quality
of a stream can change the stream's entire environment, RFF's current


r









research on the costs and benefits of land and water improvement for
outdoor recreation is closely related to this group of studies.
Two projection studies were completed during the year and manuscripts
are in draft form. One deals with requirements and supplies of water in
the United States on a regional basis, and the other with the economic
demand for irrigated acreage. Another study, focusing on institutional
arrangements, concerns the effects of rural-urban water transfers.

-Several studies reflect RFF's increasing concern with world resource
problems and their bearing on the U. S. economy. One is a pioneer effort
to appraise the demand for natural resources in the year 2000 and assess
the adequacy of supplies. This study, which is very much of a reconnais-
sance survey because of the great gaps in available data, was in press at
the close of the year (see page 85). The edited papers of the 1963 RFF
Forum on Natural Resources and International Development were pub-
lished in March (see page 91).
Several other RFF projects look beyond the national borders. A group
of seven studies deals with international trade and investment in energy
and mineral raw materials-patterns of world energy, development of the
world aluminum industry, U. S. foreign investments in minerals, the world
petroleum market, the Soviet oil and gas industry, the world iron and
steel industry, and the world electric power industry. A recently com-
pleted study of the economic and legal problems confronting world fisheries
is now being prepared for publication. A study of natural resource plan-
ning and development in the U. S. S. R. has begun, as has a study of produc-
tion and exports of cotton, an important commodity in two contrasting
Latin-American countries.

-A modest program of research and training in Latin America was begun
during the year. It is being conducted co-operatively with the Latin
American Institute for Economic and Social Planning, a unit of the United
Nations Economic Commission for Latin America. A member of the RFF
staff, Lowdon Wingo, Jr., and a member of the faculty of the University
of New Mexico, Nathaniel Wollman, are spending a year at the Institute's
headquarters in Santiago, Chile, studying Latin-American problems of
urban and river basin development.

-A study of the human and resources problems of East Kentucky, a
region that is part of the depressed Appalachian area, was published early
in the year (see page 72). An inquiry then was begun into one possible
way in which the Appalachian economy might be benefited-through
management of its forest lands for lumber, recreational, and watershed
values.










-The edited papers and discussion of a 1962 conference of RFF's Com-
mittee on Regional Accounts were published in June (see page 75). Papers
from conferences on Public Expenditure Decisions in the Urban Community
and on Human Resources in the Urban Economy, both held in 1962 under
the sponsorship of the Committee on Urban Economics, were published
during the past program year (see page 79). A new survey, bringing up
to date an earlier RFF listing, catalogued the research and graduate educa-
tion programs in urban and regional problems currently or recently under
way at ninety-nine U. S. universities (see page 81). The manuscript of
a broad survey of the relatively new field of urban economics was revised
with the expectation of publication in 1965. The papers presented at a
second conference on urban public expenditure decisions, held in 1964,
are being edited for publication. A study of the interrelationships among
metropolitan, regional, and federal systems in providing municipal-type
services was begun during the year.

-Another group of studies deals with domestic energy and minerals prob-
lems. Two econometric analyses of the process of petroleum exploration
and the behavior of drilling costs, to be published in a single volume, were
in press at the end of the year (see page 59). New studies in this group
relate to the structure of government energy policies, petroleum production
regulations, and petroleum import policy and conservation.

-Three studies of land use problems were completed and the manuscripts
were under review at the year's end. Two deal with soil conservation-a
broad review of the problems encountered during thirty years of govern-
mental efforts to control soil erosion, the current situation, and the prospects
for soil conservation in the future; and a detailed historical study of the
administration and performance of soil conservation programs. The third
brings together the findings of an independent committee that investigated
ways of improving present systems of land use data collection and analysis.
A study of the conversion of rural land to urban was begun during the
year.

-Focusing directly on education: Twelve fellowships were awarded to
doctoral candidates who are studying natural resource problems through
social science approaches, and five other fellowships were awarded on the
recommendation of RFF's Committee on Urban Economics. Preparation
of two books for students and general readers began with grant support.
One is concerned with man's use and management of natural resources,
the other with water resource development. Three paperbacks that present
results of RFF research in brief, simplified form were published during the
year. One deals with land use in general in the United States, another
with outdoor recreation, and the third is based on the 1000-page 1963 RFF










projections study, Resources in America's Future. A fourth paperback, on
minerals prospects and problems, was in press. A graduate course in
natural resources development was conducted by the RFF staff, many of
whom also participated in university seminars and addressed citizens' groups.

-Thomas H. Carroll, president of The George Washington University and
a director of Resources for the Future since 1961, died last July. His
connections with RFF long antedated membership on the Board, for as a
senior staff member and then vice president of the Ford Foundation he
had been closely associated with the organization from its very early days.

-Edward J. Condon, one of the original members of RFF's Board of
Directors, resigned from active membership early in the program year.
His election to honorary membership, however, continues his association
with Resources for the Future.

-RFF staff members served in varying ways with several groups appointed
to advise the President or various agencies of the federal government. Mr.
Fisher was appointed to the President's Group on Domestic Affairs. He
is chairman of the Oil Shale Board appointed by the Secretary of the
Interior to advise him on prospects for oil shale development in Colorado
and nearby states, and is a member of the National Aeronautics and Space
Administration's Advisory Committee on the Economic Implications of
the Space Program. Mr. Perloff completed a period of full-time service
as a member of the Committee of Nine, Alliance for Progress, in the course
of which he was on leave of absence from Resources for the Future. Mr.
Held, on two months' leave of absence, served as a consultant to the Re-
sources Program Staff of the U. S. Department of the Interior on a study
of alternative uses of the Cascade area in the state of Washington.

-During the program year, Mr. Fisher was appointed member of the
Board of Governors of the Pinchot Institute for Conservation Studies.
Mr. Schurr at the close of the year accepted a visiting appointment for the
1964-65 academic year at the Center for International Affairs, Harvard
University. He will work in the broad field of international economic and
political implications of U. S. foreign trade and investment in energy and
mineral raw materials-an area which is of mutual interest to both Re-
sources for the Future and the Harvard Center. Mr. Schurr will continue
to direct the RFF energy and minerals program while at Harvard.

-Allen V. Kneese was appointed director of the water resources research
program, to enable Irving K. Fox to devote more time to over-all program
planning and administration as vice president of Resources for the Future.










-During the year, two temporary appointees joined the staff. Robert
Warren is working in the field of urban economics, on a year's leave of
absence from the University of Washington. Edgar S. Dunn, Jr., who is
co-author of an earlier RFF book on resources and regional growth, is
continuing his studies of regional economic growth.

-Five visiting scholars, who are working with the RFF staff for a year or
less, began their research close to the end of the program year. Stanley A.
Cain is Charles Lathrop Pack professor of conservation and professor of
botany at the University of Michigan; Gerald Manners is lecturer in
geography at the University College of Swansea, University of Wales; A.
Allan Schmid is associate professor of agricultural economics at Michigan
State University; Wilbur R. Thompson is professor of economics at Wayne
State University; and James G. Yoho is professor of forest economics at
Duke University.


I









Three Special Reports







NEGLECTED ALTERNATIVES
TO FLOOD PROTECTION



Since 1957, the relatively neglected problems of flood plain
occupance have been studied systematically by a group of ge-
ographers at the University of Chicago under the direction of
Gilbert F. White. The program, which has been supported
by grants from Resources for the Future, has just drawn to a
close with completion of Mr. White's monograph Choice of
Adjustment to Floods, published in November as one of the
University's Department of Geography Research Papers.
It is a companion volume to a study by Robert William Kates,
Hazard and Choice Perception in Flood Plain Manage-
ment, published earlier in the series. The article that follows
presents a few of the salient points of the two books against
the background of the whole flood plain study-its aims, scope,
and results to date.




Over the past three decades the gigantic efforts to prevent floods in the
United States have been accompanied by an equally striking increase in
flood damage. Since adoption of the Flood Control Act of 1936, the federal
government has spent about $5 billion for storage dams, levees, and other
engineering methods of evening out stream flow or holding swollen rivers
within bounds. During the same period the average annual toll of flood
losses has more than doubled. In 1960, estimated damage from floods
about equaled the year's federal expenditures for protection-$300 million.
This retrogression cannot be blamed to any large extent on technical
shortcomings of engineering protection. Those works, on the whole, have
done their job well. Although there is wide variation in dollar estimates
of the protection provided, nearly all observers agree that average annual
flood damage in recent years has been far less than it would have been










without a large-scale program of flood control. Some of the indirect re-
sults of the control program, however, may have worked in the opposite
direction by encouraging more people than would otherwise have done so
to build on flood plains in the belief that the hazard of flood damages had
been entirely removed rather than greatly reduced.
But the tendency to build is obviously strong in any case. The main
reason for the steady increase in yearly damage is simply that many flood
plains in the country are being used more and more intensively: every year
there are larger property values to be protected. This may not, of course,
be the whole story. There is some evidence, for instance, of a trend during
the past thirty years toward more or bigger floods than there were pre-
viously. It is likely also that some of the rise in flood damage has been
apparent rather than real because better methods of gathering and analyzing
data are taking account of information that used to be missed. It seems
clear, however, that these and other possible factors can have only minor
effects on the whole situation.


That is the record up to now. Will it inevitably continue?
Some of the evidence points that way. In many cities the level flood
plains have advantages that may wholly or partly offset their vulnerability
to floods. They are often easy to build on, close to the center of things,
and generally accessible. Thus, the prospect of larger population and
greater economic activity in the future suggests more intense use of flood
plains. It can be expected as part of the price of economic growth.
If only the technical factors are considered, it is likely that almost any
area could be protected against any conceivable flood through more storage
dams, levees, and other engineering works. But there are strong economic
and political obstacles to such a development. By any standards that
have heretofore been considered seriously, the costs would be prohibitive.
Under present federal procedures, a flood control project can be approved
if the estimated value of prevented losses is greater than the estimated
costs over a fairly long term (usually fifty years or more). A major factor in
calculating benefits is, of course, the avoidable damage from floods that are
statistically probable over a given period; it is the rare, large floods that do
the greatest damage, yet to guard against them everywhere would cost far
more than the value of the property to be protected. Although the present
criteria are by now widely accepted, there are still critics who point out that
most of the costs of flood protection are spread over federal taxpayers
throughout the whole country, while most of the benefits go to the residents
of particularly hazardous areas.
Moreover, not all communities eligible under the cost-benefit criterion
ask for federal flood control projects, for to do so entails an obligation to
pay for operation and maintenance of the protection works (except for









reservoirs) after they are built. Some towns are apathetic to protection.
On the other hand, there are several methods of reducing flood losses,
besides building dams or levees, that have never been widely used or even
thoroughly studied. They range from zoning and other methods of regu-
lating use of land to designing buildings whose lower floors would suffer
little damage in case of flood and to such simple commonsense actions as
shifting goods and equipment to higher levels or totally removing them
when serious floods are on the way. Some require public decisions; others,
purely private action. All of them concern, in one way or another, the
way in which people occupy and use the flood plains. Whether or not
widespread improvements in flood plain use could actually reverse the
trend toward larger losses is an open question; plainly, however, action
along those lines must be incorporated into an efficient program to deal
with flood damages.
In addition to opening new possibilities for cutting flood losses, study of
the neglected alternatives can improve analysis of the already widely
practiced methods of protection. At present the benefits of dams and
other engineering works usually are computed on the assumption that
nothing else would be done; there is no comparison with the effects of
simpler, usually lower-cost methods, some of which might be adopted with-
out government encouragement.


In the earlier phase of the University of Chicago flood plain studies,
emphasis was largely on the bare facts: how people used urban and agri-
cultural land subject to floods; what physical hazards they faced; and what
methods, if any, they used to cope with their problems. The research
filled out the valuable but scattered studies in the existing literature. (Out-
standing among these, incidentally, was Gilbert White's Human Adjustment
to Floods, published in 1945 as the first result of his long-standing interest
in alternatives to engineering works for protection.)
The two closing studies in the series have gone farther into interpretation.
The evidence indicates, Mr. White notes in his new study, that in the
great majority of cases the choice of people in the United States who use
land subject to floods is between engineering works for protection and
bearing the losses from occasional overflow-that is, doing nothing. The
many alternatives between the two extremes-flood forecasting, emergency
evacuation, elevation of buildings or changes in their structure, regulation
of land use-though practiced in scattered places are usually ignored in
community decisions. Why is this so? The search for answers goes deep
into human motives and individual and group behavior, far beyond the
surface logic of cost-benefit calculations and other rational economic choices.
The companion studies of Robert Kates and Mr. White both use the
data from case studies of the same six areas-detailed inquiries in LaFol-










lette, Tennessee, and reconnaissance surveys in five other towns subject
in varying degrees to flood damage-Aurora, Indiana; Darlington, Wis-
consin; Desert Hot Springs, California; El Cerrito-Richmond, California;
and Watkins Glen, New York. Why were certain adjustments chosen and
others not among the various alternatives open? Five lines of inquiry
that go beyond the typical cost-benefit approach seemed appropriate here.
(1) How do the managers of flood plain properties regard the risks they
run? They are the people who make the private decisions and participate
strongly in the public community decisions, and their perception of the
flood hazard is not necessarily that of the hydrologist, engineer, or economist
professionally interested in flood control. (2) What do the managers see
as the range of choices open to them? Here again, their perception need
not be identical with the views of the professionals. (3) How much do
the managers know about the technology of other adjustments beside
flood protection? (4) Do government analyses of economic efficiency take
account of the full range of possible adjustments in a community and of
the gains and losses each alternative would imply for individual establish-
ments? (5) What institutions, patterns of thought, and other social guides
affect choices of alternatives?


Mr. Kates's study concentrates on the first three points-the manager's
own perception of his risks and choices. On the basis of intensive inter-
views and observation in LaFollette and more limited inquiries in the five
other towns, he finds that the people whose property is at stake see things
quite differently from scientific and technical personnel who make a career
of studying and combating floods.
In LaFollette, for instance, where there were serious floods in 1929 and
1950 and moderate flooding has occurred a few other times, users of the
flood plain are by no means agreed that they face a corresponding hazard
in the future even though a widely available TVA report suggests that
probable flood frequency will be no smaller than in the past. The managers'
personal experience and general knowledge of floods in the area did seem
to color their expectations, but not so much as one might expect.
LaFollette, a town of about 7,200, lies at the base of the Cumberland
Plateau about forty miles north of Knoxville. Its flood plain is part of
the small (about 26-square-mile) drainage basin of Big Creek which de-
scends through a gap in the mountains that rise 800 feet above the plain.
Most of the buildings on the flood plain are commercial. Seventy-one
managers of commercial property and thirty-eight residential occupants
were interviewed at some length. In response to the question "Do you
think that there will be another flood while you are in business or living
here?" nearly as many answered "no" as "yes," and a sizable proportion
were uncertain (see the table opposite). While two or more personal ex-











periences of floods on Big Creek led almost everyone to expect future floods,
lesser degrees of knowledge or experience appeared to be not nearly so
convincing. People who live on the flood plain were more optimistic than
those who do business there.

Analysis of Replies by 109 Respondents to Questions Concerning Future
Flood Expectancy


Information




No knowledge and no
experience...........
No knowledge but ex-
perience elsewhere.....
Knowledge but no ex-
perience.............
Knowledge and experi-
ence elsewhere........
One experience onsite....
Two or more experiences
onsite...............


Total.............. 47.7


Commercial Residential
(71 respondents) (38 respondents)

% Future flood % Future flood
expectancy expectancy

Yes No Uncer- Yes No Uncer-
tain tain


5.6 1.4


8.4 11.2 9.8


8.4 1.4
5.6 5.6


11.2 1.4 1.4


32.2 19.6


.... 2 .6 ....

.... 2.6 2.6

5.2 18.4 2.6

7.8 .... 5.2
10.5 21.0 10.5

5.2 .... 5.2


Total
(109 respondents)

% Future flood
expectancy

Yes No Uncer-
tain


.... 4.5 0.9

.... 0.9 0.9

7.3 13.7 7.3

6.4 5.5 2.7
18.3 11.0 7.3

9.1 0.9 2.7


28.7 44.6 26.1 41.1 36.5 21.8


Analysis of the whole questionnaire suggests a number of viewpoints
and relationships of which only a few can be mentioned here. Some of
those who are uncertain about future floods simply have no opinion; others
believe strongly that floods by nature are unpredictable. A number of the
respondents who expect future floods think that there is small chance that
they themselves will suffer damage, either because they believe they have a
special advantage in location or because they intend to move or go out of
business fairly soon. There also is some plain wishful thinking. Some peo-
ple believe that each past flood was unique and unlikely to recur. Others
place more faith than engineers do in recent channel-clearing operations.
As with flood hazards, the actions to reduce flood damage recognized by
flood plain managers are not often identical with the full range as seen by
engineers, social scientists, and other students of flood problems. One
important reason for the difference is the fact that technical personnel and
scholars in the field are always preoccupied with some flood problem some-
where, while the same problems are only occasional for the people who
live or have their businesses on flood plains. Thus, only a minority of
managers in LaFollette deliberately plan to bear losses considered probable










by the experts; the others believe that by one means or another their own
property would escape damage. Only a minority would foresee the full
advantages of a community flood-warning system, of stockpiling sandbags,
of organizing the manpower and transport of a rescue squad, or of enlarging
a viaduct which in 1950 piled up flood waters behind it an extra five and
a half feet. Conversely, many managers have faith in measures held in
scant regard by technical people, such as clearing brush and debris from
the channel, purely improvised flood-fighting efforts, and in insurance
coverage that in fact does not exist.
Both the experts and the managers of property are strongly influenced
by their own experience. Managers in LaFollette staved off damage in
the 1950 flood by barricading doorways with flour sacks and rags; most
of them feel confident that similar action will suffice in the future. Pro-
fessional flood observers have seen such defenses overwhelmed by an extra
foot of water.


The research in LaFollette, plus the reconnaissance surveys in the five
other towns, suggests that the degree of expectation of risk from future
floods, as perceived by the property managers, may influence the kinds
and degree of action taken to a much larger extent than socioeconomic or
other factors. Measures to reduce flood damage are the most generally
perceived and adopted in Darlington and Aurora, where expectation of
future floods is highest. Yet the two communities are otherwise dissimilar;
Darlington is a prosperous farming center and Aurora a fading river port.
Individual differences of interpretation and action are greatest in La-
Follette and El Cerrito, where the moderate frequency of flooding leads
to ambiguous interpretation of the hazard and people are the most un-
certain about future floods. The former town is the commercial center of
a depressed area and the latter an industrial-residential center of cosmo-
politan San Francisco. In Desert Hot Springs and Watkins Glen, few
people expect floods; perception and adoption of countermeasures are
lowest in these unlike towns, the former of which is a growing community
of retired people and the latter a shrinking, low-income town.


Mr. White's monograph, Choice of Adjustment to Floods, concerns the
decisions that occupants of flood plains actually make within the limits
of their perception of hazards and alternative actions. The study aims
not only at helping to guide individual decisions in the future, but also-
and perhaps even more importantly-at better evaluation of public in-
vestment proposals. "There must be," Mr. White writes, "more precise
understanding of the conditions in which choice is made by private man-


1











agers before predictions can be made with any confidence as to the likely
impacts of public policy affecting floods."
Although most people facing flood hazards look upon public protection



LaFollette Aurora Darling- Desert El Watkins
ton Springs Cerrito Glen

TOTAL POPULATION
0L P 7,2001 4,119 2,349 3,000 25,4372 2,813
1960

LAND USE IN FLOOD PLAIN:
COMMERCIAL A A A o
MANUFACTURING 0* A A O
RESIDENTIAL A A
TRANSPORT A
RECREATIONAL O 0 0 0 0 U
EMERGENCY MEASURES IN PRACTICE:
REMOVAL E A A 0
IREAIMENI 0 U U 0 U 0
RESCHEDULING OF
ECONOMIC ACTIVITIES O A A Q0 O
DURING FLOOD
STRUCTURAL MEASURES IN EFFECT:
LAND ELEVATION 0 0 U 0 0 0
PUMPS AND VALVES O A 0 0 0
BUILDING
CONSTRUCTION 0
SAFEGUARDING WATER
AND ELECTRICAL O 0 O U O
SYSTEMS
Channel Upstream Channel Small Channel
PROTECTION improve- reservoirs None improve- levees and
ment ment levees
LAND USE REGULATION:
GENERAL ZONING City None Proposed County City None
County
SPECIAL FLOOD PLAIN Limited sub- Proposed Limited Limited None
division

O None A few cases A Common
I. Estimated for 1961 including area annexed after 1960 census.
2. For town of El Cerrito. Flood plain includes parts of Richmond and El Cerrito.
THE CHART SHOWS how six towns vary in their use of flood plains and in the
adjustments they make to meet flood hazard.










as the only alternative to bearing what losses may occur, many have chosen
other adjustments, and evidence from LaFollette and the other five towns
suggests that their numbers are larger than has been commonly thought.
The figure on page 21 sums up some of the salient points of land use and
adjustments on the flood plains.
Most private decisions on adjustment to flood risks are made without
formal analysis of costs and benefits. The only important exception is
when a flood plain manager has to make up his mind whether to support
a proposal for a federal protection project and this is a mixed case of private
participation in a public community decision. In many instances the cost-
benefit relationship is submerged when adoption of flood adjustments is
incidental to other decisions. For instance, a man may decide to build
a new house in a certain spot and then accept the advice of his architect
to raise the floor level an extra two feet without consciously comparing
the small additional cost with the reduction in his risk of flood damage.
Renovations and repairs that would be undertaken anyhow can be similarly
adopted at little or no expense. A third type of incidental adoption comes
about when a community disaster relief plan, originally set up at the urging
of the national Civil Defense Agency, makes flood-fighting a major item
in its program.


After reviewing the adjustments to flood hazard made by LaFollette
people over the years, Mr. White finds them not unreasonable in the light
of flood experience and the public guides to action that were available.
Major protection work would cost far more than any benefits likely to
accrue, and no other uniform program of adjustment would have offered
enough in the way of economic efficiency to claim strong public support.
The record suggests that the only solution that might prove generally
attractive to flood plain managers would be a selective program of emer-
gency measures and of flood-proofing and other structural treatment of
buildings liable to especially large or avoidable losses. In fact, a few
managers already have moved in this direction. The combined long-term
expectation of flood plain damage in LaFollette probably could be cut in
half by selective flood-proofing alone, at an initial cost far below that of
protective works.
Aside from being economically efficient, such a program would be flex-
ible. This would be a great advantage because of the technological ad-
vances in building materials, equipment design, and communications
methods that might in the future greatly change the relative costs and
effectiveness of protection and of emergency and structural adjustments.
Also, there could be large changes in the structures needing protection;
some might change uses or move off the flood plain altogether. There is
much to be said for a strategy that avoids heavy financial commitments










to reservoir and levee systems, both of which are built to last a long time.
If the most favorable combinations of flood adjustments are to be
achieved, Mr. White concludes, public policy will need to be modified
along two lines: (1) further extension of federal and state concern beyond
protection to such activities as flood hazard information, flood warning,
flood-proofing, and land use regulations; (2) systematic promotion by
public agencies of use of selective adjustments by private managers.



The program of flood plain studies at the University of Chicago has been
from the start a multipurpose effort. Drawing on graduate students of
the Department of Geography along with faculty members and special
fellows, it has combined education with integrated research in a large field.
In addition to the research and writing directly supported by the RFF
grants, related projects have been developed with financial help from other
sources. After receiving their advanced degrees, several students have
pursued flood research in other universities or public agencies.
Action and research by federal and state agencies have been stimulated.
To give only a partial summing-up of the record:
The first study supported by RFF, Changes in Urban Occupance of Flood
Plains in the United States, had some effect upon public thinking about
flood problems and inspired further work and a certain amount of action.
Then the idea of flood-proofing was developed. It was picked up by John
R. Sheaffer, and a grant for his research was made by the Tennessee Valley
Authority, which has been a pioneer in government studies of flood prob-
lems. His report became the basis for new TVA studies in two valley
communities; these, in turn, are the basis for agreements between TVA
and the communities, setting what may become a new federal policy in
supporting local flood-loss-reduction measures.
Concern with information on flood hazard led to the critical appraisal of
the pilot flood hazard map by the U. S. Geological Survey for Topeka,
Kansas. On the basis of this work, the Northeastern Illinois Planning
Commission was encouraged to undertake what has become the prime
example of local-federal flood hazard mapping for an entire metropolitan
area, using techniques for public explanation and interpretation which have
claimed attention from several other cities.
The ideas in the Urban Occupance monograph, combined with those in
Francis C. Murphy's study of flood plain regulation, provided basic
materials for a national conference on flood plain problems, sponsored by
several national organizations, which led to the enactment of legislation
authorizing the Corps of Engineers to make flood plain information stud-
ies. Procedure was worked out in a conference at Chicago. Similar ideas
found their way into the report of the Senate Select Committee on National










Water Resources. Companion work on rural flood plains was supported by
the U. S. Department of Agriculture.
These discussions sparked the Kates study of perception of hazard and
choice, and the related studies of choice of adjustment at LaFollette. These
have been examined with interest by study groups, including those of
local and state government. Among those with which there has been
close contact have been Connecticut, California, Indiana, and Massa-
chusetts, as well as the Delaware River Basin Commission and the Harvard
Resources Study in the Lehigh Valley.
Publication of the two final research papers noted above in this article by
no means marks the end of the venture begun by the Chicago group of
geographers in 1957. The ripples continue to spread outward.










THE CHANGING FEDERAL ROLE
IN URBAN DEVELOPMENT



With the continuing shift of populations to cities, many of the
local and regional economic problems in the United States
are becoming peculiarly urban in character. Although this
trend is widely recognized, little has been done to develop urban
economics as a special field of scholarship. Wilbur R.
Thompson, associated with the RFF staff while on leave from
Wayne State University, seeks in a recently completed study to
draw together salient points from the extensive but fragmentary
literature in a single volume that will help define the field and
point the way to needed research as well as be of use in class-
rooms. The article that follows is based on a chapter of Mr.
Thompson's coming book, A Preface to Urban Economics.




The United States already is a nation of cities and seems destined to be-
come even more of one. In 1920 about half the U.S. population lived in
cities or towns of more than 2,500. By 1960, more than two-thirds of the
population was urban. By the year 2000, the proportion may well be three-
fourths or more. Moreover, the great metropolitan centers are growing
faster than the other urban places.
Thus, the directions that urban growth may take in various places have
strong implications for the nation at large, not only for their effects within
communities where the great bulk of the population lives, but also for their
impact on the economy as a whole and on the distribution of people, indus-
try, and commerce over the face of the country. What is the nature of the
national interest, and what are some of the things the federal government is
doing, or might do in the future, by way of policies and programs?


The goals of urban development in the United States and the ingenuity
and drive behind them have been predominantly of local origin. Almost
every city wants to grow in both employment and population, the presumed
gateways to prosperity. Cities strive for industrial expansion as a source of
profits and payrolls; for high average wage levels to attract a good labor force
and to expand the range of retail and service enterprises; for economic
stability through diversification of industry and other means of avoiding










sharp ups and downs; and, in some instances, for a more even distribution of
income, at least to the extent that expansion of employment brings rapid
upgrading of low-skilled workers.
These community goals are not always compatible; rapid growth and
high average wage rates may both at times be associated with instability.
In time, of course, each community where goals conflict arrives at some more
or less tolerable compromise. The clash of aims among many cities also
interests us here. If some cities succeed in growing faster than the national
average, others have to grow at a below-average rate, or perhaps even de-
cline. If some areas achieve a combination of rapid growth and stability of
employment, the chances are that in other areas periods of cyclical unem-
ployment will be piled on chronic structural unemployment, as in the
distressed towns of Appalachia.
These clearly are matters of national concern. Yet, in the day-to-day
struggle to get ahead or keep from falling behind, municipal leaders can
rarely give more than passing thought to the well-being of the whole country.
At best, the national interest is a by-product that arises automatically out
of the scramble.
True, this in itself may represent a large contribution. More often than
not, perhaps, the general welfare is advanced by the net results of enlightened
local self-interest and interurban competition. Such a belief is wholly con-
sistent with the American faith in the "invisible hand" of competition among
firms and industries to do most of the job by generating economic progress.
With people, goods, and capital able to move freely across state lines, there
is a strong presumption that intercity competition will in most cases work
toward economically efficient allocation of people and activities throughout
the whole country. But not always; and besides, there are times when other
considerations are even more important. The American people have been
agreed for years that the invisible hand sometimes needs guidance, restraint,
or a good nudge.
Against this background, let us review some of the significant federal
policies that bear on urban growth, assess their effects, and speculate on
others that might be useful.


One important area of policy concerns the allocation of population growth
among areas. Each year several million people are distributed or redis-
tributed among the various urban regions. Much of this movement results
from free market mechanisms or from sheer chance, but planning also enters
in. A line of national policy can be discerned, if only dimly. Aimed at re-
ducing unemployment in each area to the national average of unemployment,
federal area development policy is oriented more toward increasing job
opportunities in the depressed areas than in moving people out. There are,
of course, exceptions. Few of our programs facilitate migration from de-










pressed coal towns, cut-over forest areas, and other places that clearly lack
the economic potential to provide employment for a natural increase in popu-
lation. And there is no evidence of any broad intention of encouraging
people to move out. There is an Area Development Administration charged
with bringing industry into depressed areas, but no corresponding machinery
to help bring people to jobs.
A national policy goal that minimizes migration involves a corollary judg-
ment on the size of cities. To promote area development in the character-
istically small communities of depressed areas implies a belief that small
isolated towns are economically viable in the latter half of the twentieth
century, a doubtful position in the light of recent experience. Perhaps
even more significant is the implied position of the large metropolitan area.
A national policy is implied when the federal government actively promotes
policies which discourage the out-migration of the unemployed in the
Detroit or Pittsburgh metropolitan areas, or implicitly approves the con-
tinued growth of New York and Chicago by not moving to contain their
further growth. One can infer that Americans anticipate and approve of
the growth of metropolitan areas at an over-all rate equal to their natural
rates of increase plus the current rate of net in-migration-that is, that the
very big get much bigger. This would seem to be a corollary of the current
lack of interest in interregional growth patterns.
Associated with such a course is a potential structural change that would
bear heavily on regional growth patterns. With increasing size, the urban
areas of the country will probably assemble ever more diversified industry
mixes. The blending of young, mature, and decadent industries should
stabilize local growth and force it into rough conformance with the national
rate. If employment in each of the large metropolitan areas comes to grow
at roughly the national rate, local population would also tend to grow at the
national rate, all over. If this happens, one could expect development of a
system of cities in which no one needed to move to find a job. Not only
would large urban areas grow steadily at the "right" rate to absorb natural
additions to the local labor force, in aggregate, but these large local labor
markets would offer the variety of jobs necessary to match the occupa-
tional preferences, in particular. Interregional migration would not cease
-for people move for many reasons other than economic-but it would
surely be less a social welfare matter. The need for federal leadership in
arranging for a better exchange of labor market information between the
many semi-autonomous local labor markets would come to be less critical
than it is now. The federal role in migration could diminish before it is
responsibly assumed.


Interregional redistribution of income has been an important function of
the federal government from its inception. In the national interest, the










East was called upon to subsidize the opening of the West, as federal services
were provided long before they were economical, for example, mail service,
railroads, military protection. In this century, the regional redistribution
of income has run more from North to South, as an excess of federal tax
payments over federal expenditures in New York and Michigan finances a
favorable balance of federal expenditures over tax payments in Alabama and
Mississippi, lifting the latter states toward parity in schools, roads, rural
electrification, and so forth.
But while interstate differentials in per capital income range as high as two
and one-half to one, interurban differentials are only about one and one-half
to one. Thus, what we have long come to know as interregional income
differentials turn out to be largely urban-rural differentials. And as state
after state empties out its iural areas, leaving only the more productive and
affluent farmers behind, the highly urbanized states will surely come to
exhibit much more uniform per capital incomes.
There is good reason to believe that as the metropolitan areas grow ever
larger and able to support a more diversified mix of industries they will come
to exhibit increasingly similar per capital incomes. This is not to say that
every metropolitan area will produce everything, but only that even random
industry mixes, if large enough, will tend to produce average performance
characteristics. Boston, Baltimore, and Birmingham might all come to
have a similar mix of rich and poor.
Even with such a trend there still would be some differentials in money
income to offset differences in the local cost of living and in local amenities.
Alaska is a prime example. Further, warm climates attract the older people
on low retirement incomes, leaving Tucson and St. Petersburg with an age
distribution of population weighted toward the lower incomes. Still, one
might hazard the guess that a decade or two hence, with most of the popula-
tion living in large diversified urban areas, there will be less need for inter-
regional income transfers, and the federal role in urban matters will turn
largely on other matters.


National stabilization policy is another field of direct federal interest in
patterns of urban development. A trend toward population concentration
in a relatively few, very large metropolitan areas could narrow the worst
swings of local business cycles. As metropolitan areas pass the million
population mark they begin to exhibit highly diversified industrial bases.
Exceptions such as Detroit and Pittsburgh may or may not occur again.
The decentralization of the cyclically sensitive heavy industries which once
were so highly concentrated and which so heavily dominated their host
areas-automobiles, steel, machinery-suggests that local business cycles
may be becoming less extreme.
Probably just as important is the continuing nationwide shift from manu-











facturing to service activities whose market areas are relatively small.
Thus, we may expect that in the age of personal services a growing part of the
local labor force will be producing for local consumption. With consumption
patterns much alike everywhere, the business cycles of the large metro-
politan areas could lose much of their distinctiveness over the next decade



IN SOME WAYS LARGE URBAN AREAS
ARE MORE LIKE EACH OTHER THAN SMALL ONES ARE

Variation in 1950-60 population growth within different size-classes of metropolitan areas
S1.5 -

~1.0--- -




0-
(22 AREAS) (109 AREAS) (55 AREAS) (22 AREAS)
Metropolitan area population size-class. 1960


THE TWO CHARTS on this page, based on data jrom the Decennial Census of
Population, suggest that large urban areas are more like each other in growth rate and
income level than are small ones. These charts show the degree to which cities in the
same size-class resemble each other. Above, it can be seen that the rate of population
growth is very / .,r ..f.o, for small and for middle-sized urban areas, but that when the
size-class reaches a million and over the degree of variation among areas shrinks con-
siderably. Below, income level varies greatly among the smallest urban areas, less so
among the areas in the intermediate size-classes, and least among those in the largest.
Furthermore-though this is not shown in the charts-urban areas in the largest
size-class seem to be growing more alike over time. The variation in growth and income
patterns among these largest metropolitan areas declined by 20 to 30 per cent over the
past decade.


Variation in 1960 median family income within different size-classes of metropolitan areas
0.20



I 0.10. ------ ___ _



50,000-100,000 100,000-300,000 300,000-1,000,000 1,000,000 and over
(22 AREAS) (109 AREAS) (55 AREAS) (22 AREAS)
Metropolitan area population size-class, 1960


H










or two. The resource-based industries, such as smelting, wood products,
and canning, may continue to locate near their raw material sources and
dominate small towns. But this continually more automated manufactur-
ing activity will use even fewer (and more highly paid) workers, and pose
more of a capital planning problem than the human welfare issue tradition-
ally associated with business cycles.
Another factor tending to temper local business cycles is the reduction of
regional differences in the average age of industrial plants. Generally
speaking, it is the older, high-cost facilities that are cut back first and most
and brought back to high levels of operation last. To the extent that manu-
facturing activity, originally clustered in the "American Ruhr" stretching
from Boston to Chicago, has recently moved to the South and West, north-
ern cities entered the postwar period with relatively old industrial facilities,
and the South and West were relatively favorably situated with modern,
low-cost capacity. But, little by little, successive additions and retirements
of capital with heterogeneous life spans are leveling out the age distribution
of capital between the older and newer areas. Thus, another support is
added to the hypothesis that, with time and increasing city size, local busi-
ness cycles will come to mirror the national pattern more closely.
All this could bring about an ironic situation wherein the geographical
pattern of industry may re-form over the next decade or two in such a way
that need for a regional approach to business stabilization may wane before
the federal government has managed to introduce important elements of
regionalism in its cycle policy.


Each of the trends noted above points in the direction of less rather than
more federal intervention. If, in fact, they are borne out, the United States
in the future will become even more a nation of a relatively few large metro-
politan centers, each widely diversified; but with quite similar mixes of stable
and unstable industries and high- and low-paid workers. The need for fed-
eral authority to help redistribute employment and income among urban
regions and to combat localized business cycles might be greatly reduced.
Would this mean a general falling off of federal government concern with
the urban-regional field? Not necessarily, for other activities might have to
be greatly expanded: the promotion of urban efficiency and the quality of
urban life. National economic growth, a primary goal of federal policy, is
the sum of local efforts. Production takes place in actual factories located
on specific sites; it draws on laborers who live nearby and are served by the
local schools and transportation systems; and it is managed by executives
who draw-some more, some less-intellectual and creative stimulus from
their immediate environment. Unless the call for "growth" is pure exhor-
tation, national policy must foster urban efficiency. Granting the impor-
tance of aggregate demand, the supply side of growth-the upgrading of










labor skills, the nurturing of entrepreneurship, the supply of low-cost, high-
quality business services-requires a more searching look at the federal level.
An indispensable role for the federal government may come to be that of
fostering the growth of knowledge about the nature of the urban "production
function" -the relationship between urban size and urban form on one
hand, and urban productivity and amenity on the other. Does increasing
size of a city offer better and better private and public services and facilities?
Or is there a point beyond which the gains are outweighed by such disad-
vantages as high land rents, traffic congestion, and higher labor cost to cover
increased living costs? Is there, in other words, an optimum city size or,
more realistically, a number of different optimum sizes relevant for various
industries or complexes of industries-larger for finance perhaps, smaller for
textiles? To what extent should industrial specialization in urban areas be
encouraged or discouraged for national purposes? Can we have both large
industrial agglomerations for productivity gains and local diversification for
stability and choice, through giant metropolises?
The federal authority might act as the sponsor of innovation designed to
make cities better places in which to live. We might see each of our giant
metropolitan areas as "experimental stations." Federally sponsored ex-
perimentation could bring several advantages. It could overcome, for
example, the limitations of purely deductive analyses with no actual testing
of a phenomenon so subtle and complex as a large modern metropolis, and
the frustration of a comparative empirical effort when there can be no data
on untried new forms. Also, it could avoid the dilemma of unaided local
experimentation: when the full cost is borne by the locality but the payoff of
a successful new device is freely available to all other cities, as are the lessons
learned from a failure in the pioneering city. There could not be a clearer
case of social invention without patent protection.
The federal strategy, then, would be to employ outright grants, grants-in-
aid, and long-term, low-interest-rate loans to encourage controlled efforts to
create interurban differentiation. Rather than supply each urban area with
a pro rata share of highway money and also a share of mass transit money,
the federal authorities would finance automobile freeways in some places
and mass transit in others. Funds for slum clearance and outdoor recrea-
tion facilities and indirect subsidies such as FHA-insured mortgages could
also be varied in form to encourage innovation in urban form: high-density,
stellate, mass transit cities; sprawling, flexible, automobile-oriented cities;
loose networks of federated cities, such as could develop in North Carolina;
and so forth.
Federally assisted experiment also could enlarge families' range of choice
by fostering variety in living arrangements. If, as we have suggested, very
large urban concentrations do permit local residents to find work at home
whatever their vocational interests, distinctive styles of life in the various
urban areas and their subdivisions could become the main consideration in










residential choice. Migration could become much less an enforced response
to money income differentials and job opportunities and much more a matter
of personal preference for a particular place. It might also tend to occur
more between suburbs within an area than between areas.
What is proposed here is simply that Americans explicitly recognize these
legitimate variations in urban form and exploit them in such a way as to
improve them and learn from them. Federal financial aids could-and
probably should-be used to enhance urban differences to achieve both the
short-run end of greater choice and the long-run end of progress through
experimentation.









PROBLEMS AND POTENTIALS
OF WORLD FISHERIES



Eforts to gauge the future contributions of ocean fisheries to
world food supplies are clouded by even more uncertainties
than arise for most land-based resources. Growing demand
and more intensive fishing effort combined with advances in
technology require re-examination of some of the principles of
the law of the sea. Special economic problems are created by
the fact that the high seas fisheries are the common property of
the world community. And in the natural sciences there are
still many unanswered questions of how much food the seas
could produce. Francis T. Christy, Jr. and Anthony Scott
in a recently completed RFF study have explored many of these
questions. The article that follows is based on their forth-
coming book, The Common Wealth in Ocean Fisheries,
especially the background section dealing with productivity.





More than 70 per cent of the earth's surface is covered by ocean. Light
and temperature conditions over most of this vast area are favorable to plant
and animal growth. Yet though fishing is an ancient calling, the sea pro-
duces only a small fraction of the world's food supply. With increasing
problems in protein malnutrition in certain areas of the world and the pros-
pect of large increases in world population, it is not surprising that many
people should think of the oceans as a major source of tomorrow's food.
In fact, some nations are already making sizable investments in fisheries.
Since the Second World War, the total world catch of fish has been increasing
at about 6 per cent per year, which means that it doubles about every twelve
years. The rate of increase has not been uniform among all fishing nations.
The growth in Peruvian output has been by far the most spectacular. In
the fifteen years from 1947 to 1962, Peru's catch increased from about 31,000
metric tons live weight to over 6.8 million, a total second only to Japan's.
Almost all of this catch is of one species-a member of the herring family-
caught in Peruvian coastal waters, processed, and shipped abroad as feed for
livestock. Both Japan and Russia have also been increasing their catch
rapidly and vessels from both nations are now found in almost all of the
world's seas. On the other hand, the output of North America and Eur-
ope was not much greater in 1962 than it was fifteen years before.




r ---------- -




Can the recent rate of increase in world output be sustained in the future
or, if need be, stepped up? Although it seems clear that the oceans can
yield far larger annual harvests than they now do, the long-range answers
are by no means clear. Some of the reasons lie in nature, others in the
economics of fisheries. The data now available suggest that the sea is a
large but not limitless source. Also, people have not as yet found uses for
many kinds of fish, and the sought-after species are not uniformly distributed
throughout the waters of the oceans but are, in fact, restricted to relatively
small areas. Competition tends to become focused on these areas of high
natural fertility. The growth in total catch and the marked shifts in
patterns of output create problems that stand in the way of rational and
equitable development of marine fisheries. The difficulties are further com-
pounded by the fact that the seas and their resources are the common prop-
erty of the world community and that no single fisherman or nation has a
right to exclude others from the waters beyond the territorial seas. Where
the fishery resources are fully utilized the competition tends to become
wasteful, leading to a greater amount of effort than is required or is econom-
ically justifiable.


Almost every broad discussion of commercial fisheries leads back to the
mass of living matter (plants and animals) within the oceans. The charac-
teristics of this biomass depend upon interrelationships between mineral
nutrients, sunlight, photosynthesizing organisms, temperature, and other
basic factors. Differences in the availability of these essentials lead to
differences in fertility and to the concentration of plants and animals in some
areas and diffusion in others. Because plants drift and fish swim, the areas
of concentration are not rigidly fixed, but are subject to significant displace-
ment, both between seasons and between years. And finally, it is not only
the quantity of the living matter that is significant but also the quality in
terms of species that are of economic importance to man.
The phytoplankton (microscopic, free-floating plants) are the basic pas-
ture material of the seas, transforming chemical nutrients and light energy
into organic matter that is consumed by the marine animals. Such plants
can grow anywhere on the oceans, not only on the surface but also down as
far as sunlight can penetrate effectively for photosynthesis to take place.
This depth depends upon the latitude and the transparency of the water:
about 45 feet in high latitudes and as much as 600 feet in the tropics. These
favorable areas make up a vast euphotic zone, within which plant production
can take place given the necessary nutrients.
The natural fertilization of floating marine plants, however, is subject to
different forces than is natural fertilization of plants on land. Organic
matter which decays on the land remains at a level where plant production
takes place. In sea water, the remnants of plants and animals sink towards









the bottom, thus draining the necessary organic compounds to regions
below the euphotic zone. The ultimate release of mineral substances,
through decomposition, therefore occurs mostly in depths of the ocean below
the zone where photosynthesis can take place. Under these conditions
the upper layers of the ocean would become sterile if it were not for the
possibility of turnover and upwelling. Plant production could take place
only where nutrient salts are washed from the land.
In fact, however, plant production is not restricted to estuaries and shallow
coastal waters. The relatively rich deep layers of nutrients are subjected
to scouring forces that lead to the replenishment of the euphotic zones and
to concentrations of plant life in various regions of the seas. Wind, winter
cooling, and turbulence at the interface of different currents serve to "plow"
the lower level of nutrients and raise them to the surface.
One major source of upwellings is the transport of surface waters away
from coastal areas by winds and the effect of the earth's rotation. Where
such transport occurs, the deep bottom waters, rich in settled nutrients,
rise to replace the surface waters. Areas where fertile upwellings of this
kind take place are found along the coasts of California and Peru, and also
along the west coast of South Africa.
Winter cooling also leads to upwellings. Particularly in the North
Atlantic, the falling air temperatures of the winter make the surface waters
denser and heavier than the deep waters so that there is an overturn, reach-
ing in some areas down as far as ten or twelve thousand feet. The sinking
surface waters are replaced by the nutrient-rich waters of the bottom. The
overturn in the North Atlantic also has an important effect on the fertility of
Antarctic waters several thousand miles away in the Southern Hemisphere.
Within the Altantic Ocean, the action of the prevailing winds and the char-
acter of the coastlines induce a flow of surface waters northward across the
equator in amounts that are estimated at about 6 million cubic meters per
second or 45,000 cubic miles a year. As these great quantities of surface
water flow to the north, they are replaced in the Antarctic regions by the
waters from a massive submarine current that originates partly with the
sinking waters of the North Atlantic and partly with a deep flow from the
bottom of the Straits of Gibraltar. While the deep waters flow far south,
they pick up additional nitrates, phosphates, and other matter that have
settled from the surface, thus enriching the masses of water that upwell
around the Antarctic continent.
Another kind of upwelling is caused by the turbulence that occurs where
major ocean currents meet. The warm, northerly Kuro-Shio current meets
the cold southerly Oya-Shio current off the northern islands of Japan and
creates a rich and productive surface water. The high fertility of the Grand
Banks is the result of the same kind of action induced by the collision of the
Gulf Stream and the Labrador Current.










Besides these areas of upwelling, there are extensive regions of high fer-
tility along most of the world's coasts. In these littoral areas the mineral
elements and organic materials that are washed off the land enter the eu-
photic zones of the continental shelves. The shelves decline gently to a
depth of about 600 feet, and then drop off, usually precipitously, into the
continental slopes. The plants and animals associated with the ocean
bottom (the benthic organisms) thrive in the shallow waters of the continen-
tal shelves because the decaying organic matter and the nutrient salts that
settle to the bottom are taken up and continuously recycled by the living
organisms.
The continental shelves and the areas of upwelling have high natural
fertility. The rest of the oceans, however, representing the major part, is
quite low in the production of phytoplankton and, consequently, does not
support a large animal population.
Within the fertile areas of the ocean there is a tremendous variety of
animal life, ranging in size from the microscopic zooplankton to whales.
Some of the animals spend their adult life fixed to the bottom of the seas
while others range over entire oceans. And each animal has its own par-
ticular requirements for temperature, salinity, and food. The interrelation-
ships among these animals, and between them and their environment, are
very complex and, as yet, little understood. The phytoplankton, dependent
upon light energy and nutrient salts, is a source of food for the zooplankton.
This then may be consumed by herring which in turn may become a source
of food for the larger predatory animals such as tuna. This process is
commonly described as the "food chain," each successively upward link of
which is made up of smaller numbers of animals of larger size. But the
relationships are not really that neat and simple. Some of the largest
animals of the sea, the blue whales, live on some of the smallest. Some fish,
as young, consume larger animals than they do when fully grown. Some
consume both small and large fish of a large number of species. And at
different stages in their life cycles, they may be both prey and predator.
The term "food web" is therefore more descriptive of the interrelationships
in the marine ecosystem than "food chain."
It is generally true, however, that the total mass of the smaller plants and
animals is greater than that of the larger animals. As Lionel Walford has
pointed out, it takes at least ten pounds of plankton to make a pound of
whale or of herring. (Living Resources of the Sea, Ronald, 1958.)
And it may take ten pounds of herring, more or less, to make a pound of
tuna. This is because most of the food that is consumed is devoted to
metabolic processes and only a little contributes to the net growth of the
animal. The weight gained relative to the amount of food consumed varies
widely among the animals of the sea and, even for specific animals, again
may vary widely according to the nature of the food, the conditions of the
environment, and the age of the animal.










Simply for the sake of illustration, let us assume that there is a "food
chain" from phytoplankton to tuna as described above, and that the feed
efficiencies at each link are 10 per cent. On these assumptions, one pound
of tuna would require the consumption of ten pounds of herring, which
would require consumption of a hundred pounds of zooplankton, which
would require consumption of a thousand pounds of phytoplankton. Thus,
there would be a ratio of a thousand to one from the base to the top of the
"chain." However, only a portion of each link may be consumed by each
higher link, the remainder dying of other causes. To quote Mr. Walford
again, "... in the North Sea about 2 million tons (wet weight) of herring
are based on from 50 to 60 million tons (wet weight) of zooplankton annu-
ally." This is a ratio of twenty-five or thirty to one between consecutive
links, rather than the ten to one assumed above for feed efficiencies. Al-
though there is certainly not enough information to derive such figures for
most fishes, if any, at all periods of their life cycle and under all conditions, it
is clear that the annual crop of the lower links must be considerable in order
to support the higher links, or the predatory fishes.


Wide recognition of the abundance of the lower forms of life is probably
one of the reasons for the popular belief in the vastness of the ocean's food
resources. This faith, however, fails to take account of the fact that there is
little or no demand for plankton itself. Further, it neglects the enormous
costs of harvesting plankton in commercial quantities. Thus far, and prob-
ably for many decades to come, man finds it more attractive and economical
to harvest the large species that, directly or indirectly, have already filtered
out the basic organic materials of the ocean. Moreover, not all of the larger
species are utilized by man, and not all of the areas of high fertility lead to
the kinds of fish that are in demand. Many varieties labeled as "trash"
fish, particularly by the Western nations, are avoided by the fishermen or
returned to the sea when caught. In short, the oceans are not a limitless
storehouse of food materials. There is a wide range in natural fertility, with
many areas little more than deserts in terms of animal life. And even where
animal life is abundant, the portion of it that is economically useful to man
is very small.
Just how small, or large, is a difficult question to answer. Present output
is about 45 million metric tons, live weight. Estimates of potential output
range from about 60 million tons to twice, or four or more times the present
level. The lower figure has been derived by assuming that most of the
catch will come from the continental shelves at an average yield of 20 pounds
of fish per acre. This average, based upon records from the major fisheries
of the North Atlantic, was made prior to the unprecedented development of
the Peruvian industry where output is estimated to be on the order of 300
to 350 pounds per acre,










The wide variations in estimates are due to differences in assumptions
about the kinds of species that will be demanded and also to different, but
unexpressed, anticipations of the costs of supply. The lower estimates
refer to the current patterns of demand and they implicitly assume current
techniques and cost structures. The figure of 60 to 70 million metric tons is
thus an estimate of supply. The higher figures to a greater or lesser extent
ignore the effects of demand and costs and refer primarily to potential
physical output. While we cannot come up with a definitive picture of the
future situation, we can, at least, draw two conclusions that are of signifi-
cance for the future.
First, while the oceans may contain a vast and relatively untapped amount
of organic life, the resources at present in demand are definitely limited both
as to their total availability and as to their distribution throughout the
oceans. This suggests that world competition for the resources will become
more severe and will tend to be concentrated in certain areas.
Second, the most pressing problems of supply concern not the total avail-
ability of all fish that someone, somewhere, may want, but the specific
availability of certain kinds of fish. For example, a high demand for salmon
has led to strong pressures on that fishery resource. The cost of catching
salmon has risen, and so has the price; this, in turn, tends to reduce consump-
tion and lead to the substitution of other species in the market, and perhaps
even to the demand for previously unutilized species of fish. This is the
natural course of events and provides a safety valve for the release of pres-
sures on scarce resources. However, what is important is not the ability of
the total resource base to adjust in this fashion, but the transitional problems
that are created for the participants in the industry and also the international
controversies that can be avoided only by foresight and by continual co -oper-
ation in facilitating the process of adjustment.


For particular species, not only salmon but several others (for example,
blue whales, Pacific halibut, and fur seals), it is clear that the resource has
been depleted. Whale and salmon stocks are very low at present, and the
yields are much smaller than they used to be or than they could be again
under management controls. The Pacific halibut and the fur seals were
formerly severely depleted, but international agreements on management
measures have permitted the stocks to recover and the annual yields to
increase.
As demand for fish increases throughout the world and as fishing fleets ex-
tend and intensify their operations, the problems of depletion are becoming
more severe and widespread. The usual economic restraints that impede
depletion of renewable resources that are under single ownership do not
apply to marine resources that are the common property of all fishermen.
Because no one fisherman or nation can exclude other fishermen from the

38


__ _















































THE FISHERMEN of many nations have exploited the productive grounds of the
Northwest Atlantic for several centuries. Today, competition for cod, haddock, and
other groundfish on the Grand Banks and Georges Bank and along the coasts of New-
foundland and Labrador is greater than ever before. Thirteen nations are now members
of the International Commission for the Northwest Atlantic Fisheries and, in addition,
the Japanese have also started fishing in the region. Increased activity has led to de-
clining abundance and to instances of damaging congestion. The regulations estab-
lished by the International Commission have not been successful in preventing decreases
in catch per unit of effort; nor will they be unless they include restraints on the amount
of effort. Such restraints, now under study by the Commission, are difficult to apply
where there are many nations, with widely varying views on capital and labor costs,
in competition for the same and for ('i ;'.. i.! but related species of fish. There is need
for research on the economics of management and on forms of international agreement
to bring about more rational and orderly exploitation.



39










high seas fishery, there is no incentive to restrain one's effort. Where a
fishery is depleted, it is necessary to cut back on present catch in order to
improve future yields. But no individual fisherman will voluntarily and
unilaterally take this step because any fish that he leaves today will be taken
by others tomorrow; nor will any group of fishermen from any single nation.
Open and unrestrained competition on most of the major fishing grounds is
therefore damaging to the resource.
In order to prevent this, management is required; and, where fisheries are
in international waters, management requires international agreement and
control. A number of such controls have been tried, and more often than
not they have succeeded in improving the physical yields from the fishery.
The record of international amity and co-operation on marine fisheries is
encouraging. However, there are serious questions of whether the manage-
ment goals selected have been in the long-range interest of the world com-
munity. In almost every case, the objective has been to obtain the largest
physical yield that can be sustained.
Sustainable yields vary, of course, with the amount of effort applied. At
low levels of effort, yields are low and the fish population and additions to it
are both high. There is also a high natural mortality that keeps the popula-
tion relatively level over time. At higher levels of effort, there will be higher
yields, and at some point there will be a maximum yield that can be sustained
over time. At levels of effort beyond that point, the population will be
lower, additions will be low, and the catch that can be taken and sustained
will also be reduced.
Where effort is applied beyond the point of largest sustainable catch,
there is obvious waste since a greater yield could be obtained with less
effort. The maximum sustainable physical yield, though it has been the
objective of most management treaties, is not an economic goal because it
takes no account of the costs of the effort or the values of the yields. Only
under the most peculiar conditions would the sole owner of a fishery find
that his profit would be greatest at the point where the physical yield is
highest. Economic efficiency will almost always be obtained at a point
where less effort is applied.
This can be shown by examining the economic consequences of exploit-
ing a common property resource such as a fishery. The chief consequence
is that there will tend to be an excessive application of capital and labor.
The fishermen are operating as individuals, each seeking to achieve the
greatest difference between his own revenues and costs. But with no
restrictions on the number of fishermen that can enter the industry, any true
profit will attract additional fishermen. This will mean that the total
revenues will be shared by more and more producers until no true profit at
all remains to be distributed. If fishing grounds were not open to all comers,
fishermen might arrange to apply effort only to the point where maximum
net economic revenue was obtained. Then the industry might utilize capital


__









and labor efficiently and produce a profit. Economic efficiency, therefore,
implies some restrictions on the number of producers.
That is the theory. In practice, large difficulties stand in the way of
reaching a goal of maximum net economic revenue. If entry into an inter-
national fishery is to be restricted, who is to be permitted to participate and
how much effort should be applied? Two countries contemplating the
same fishery may rightly make different choices about the intensity and
combination of fishing activities. Given the same knowledge of the oceans
and their biology, one country may decide, for example, that to catch a large
volume of small fish will maximize the net economic revenue of the region;
another may favor a smaller volume of larger fish, perhaps of another
species that might be ecologically competitive. Such a situation can arise
whenever the two countries differ in the relative valuations they place on
labor, capital, and each of the possible types of fish. In Japan, for example,
the cost of labor relative to the cost of vessels and equipment is less than it is
in North America. Again, the Japanese valuation of cod relative to that of
halibut exceeds the North American. It is not surprising that Japanese
ideas about the best use of the Bering Sea and the Gulf of Alaska are at odds
with those of Canada and the United States.
These are real difficulties, but it does not necessarily follow that improve-
ments in economic efficiency are beyond reach. It seems quite possible to
find ways of distributing the profit to be gained by restricting effort among
the participants that will leave each better off than he would be under the
conditions of unrestrained competition. But this has not yet been clearly
demonstrated. There is need for considerable economic research in this
area, as well as on many other aspects of international fishery exploitation.
Such research must be undertaken soon, for the problems of congestion
and the possibilities of open conflict are growing very rapidly. There are
already serious controversies over the extent of territorial waters. Foreign
vessels are being impounded by coastal states in many areas of the world.
Congestion, which is a clear manifestation of economic inefficiency, is be-
coming severe on some of the major fishing grounds. And as demand rises
and technological innovation takes place, there will be more significant and
widespread depletion of fish stocks.


---I










The Year's Work in Review






WATER RESOURCES



The Quality of Water: Economics of regional water quality management-
Miami River pollution-Thermal power industry-Recreational costs and
benefits-Water quality management in Great Britain. Projections of Re-
quirements and Supplies: Water requirements and supplies, 1980 and 2000-
Economic demand for irrigated acreage. Planning, Investment, and Insti-
tutional Arrangements: Columbia River-Transfers of water in the West-
Northern California's water industry-Inland waterway transportation-
Electric power system operation-Flood plain hazard.




THE CHIEF PRESENT-DAY PROBLEMS of water resources result from
heavy demand and from conflicts in demand stimulated by a vigorous
economy, expanding population, and widespread industrialization. They
frequently involve wide-ranging effects in an entire river basin or even be-
tween river basins. Much of Resources for the Future's current research
in water resources is geared toward finding solutions to a cluster of problems
in several broad areas: (1) managing the quality of water, a matter that
is becoming increasingly urgent and that involves municipal, industrial and
agricultural water supply, and water-based recreation; (2) allocating and
reallocating water supplies in situations where there are conflicting de-
mands; (3) shaping institutional mechanisms so that appropriate decisions
concerning water utilization can be made in today's rapidly changing en-
vironment. Related research deals with measuring water supply and
demand, controlling flood damage, and planning navigation systems.


The Quality of Water


The results of a study of the economics of water quality management
were published in August under the title The Economics of Regional Water
Quality Management. In this book, Allen V. Kneese develops concepts


I




Iu


and outlines procedures for planning a management program tailored to the
physical, hydrological, and economic circumstances of a watershed.
Federal participation in pollution control activities is increasing and the
U.S. Public Health Service has started to conduct comprehensive water
quality investigations which will eventually include all of the river basins
in the country. State and interstate activities have been accelerated, and
research pertaining to water quality in the natural sciences and engineering
has expanded greatly. It is clear, however, that research of this character
is not enough. There is ample evidence that the costs imposed upon water
users through the discharge of wastes into watercourses are large, and po-
tential costs are increasing rapidly. The costs of pollution abatement,
moreover, are not readily allocated when the benefits from waste disposal
facilities are enjoyed by all the water users of a stream, whether or not they
have contributed to the heavy investment incurred.
Various means have been used to supplement the normal interaction of
market forces, which cannot operate effectively in such a situation-appeals
to civic responsibility, proceedings against damage in courts of law, federal
financial inducements to municipalities, federally financed storage to aug-
ment low flows. But efficient use of alternative measures for managing
water quality has been hampered for lack of a systematic balancing of costs
and returns to achieve optimum benefits from the use of water resources.
Mr. Kneese's approach to water quality management proceeds by identi-
fying three main issues: How do we determine the quality of water we
want to maintain for the varying uses of our streams? How do we devise
the best physical systems for achieving that quality? And how do we de-
termine the best institutional arrangements for administering and managing
water quality? In searching for answers, Mr. Kneese deals, first, with the
scientific and technological aspects of water quality; second, with economic
allocation theory as it relates specifically to waste disposal problems, focus-
ing particularly on offsite costs (costs that are imposed on subsequent users
when wastes are discharged into watercourses); third, with the economies
that are possible if waste disposal is planned on a regional system basis;
and, fourth, with the institutional arrangements needed to implement and
administer efficient waste disposal systems.

-Several water quality management case studies, which are being con-
ducted either under RFF grant or by the staff, provide a favorable op-
portunity to supplement, test, and extend some of the concepts and pro-
cedures discussed in Mr. Kneese's book. Two case studies were started
last year-Robert K. Davis' study of water quality planning in the Potomac
River, and Edward J. Cleary's case study of the fifteen-year record of the
Ohio River Valley Water Sanitation Commission in dealing with pollution
problems in the Ohio River.
Other case studies of polluted waters, begun under grant during the year,
are described below.

43















PLANT 2
Waste load 10 lb.


PLANT I
Waste load -10 lb.
Damage -noneT
Charge -$0.50 z PLANT l
Charge$0.50 Waste load-10 Ib.
SDamage none
S/ Charge- $1.50

0 s 0. / / *"-. W -
a nit lo 4 l ,--o P LA N T 4
S o t Waste load -10 Ib.
S Damage-$1.00
0 Charge- $0.50





Stre al- 4g _
\^ -


Salinity load -40 Ib.
PLANT 5
Salinity concentration- Waste load-10 Ib.
0.1 lb. per gal. Damage-none
Charge- $0.25

MAIN STEM
Streamflow 400 gal.

PLANT 6
Waste load- 10 lb.
Damage none Salinity concentration -
Charge- none if there 0.125 Ib. per gal.
are no further down-
stream damages.

Damage to:*
amage D* Total
by: PLANT 4 PLANT 5 PLANT 6
PLANT 1 $ $0.25 $0.25 $0.50
PLANT 2 0.25 0.25 0.50
PLANT 3 1.00 0.25 0.25 1.50
PLANT 4 0.25 0.25 0.50
PLANT 5 0.25 0.25

NOTE: PLANT 6 -
Assume 0.1 lb. per gal. salinty equals Total $1.1.00 1.00 $1.25 $3.25
$1.00 ldanage at any point of use.
TluTe is no damage to Plants 1, 2, and 3.
Streaunflow i given at levels irulicated. re is no age to P

IN ASSESSING DOWNSTREAM COSTS, the dilution contributed by a tributary
is in most cases essentially irrelevant. In the schematic ll.a, i, .,.,; above, all the plants
could move to a single tributary or the main stem above the point of confluence without
altering downstream main stem costs. On the other hand, such moves would alter the
costs occurring on the tributaries themselves or on the upper main stem. (From The
Economics of Regional Water Quality Management.)


r










A CASE STUDY OF MIAMI RIVER POLLUTION. Two economists at the Car-
negie Institute of Technology are making a reconnaissance study of problems
of waste disposal in the Miami River. The stream flows through a highly
industrialized area of Ohio where industry and local authorities are keenly
aware of the hazards of increasing pollution and of the costs of installing
further purification facilities.
Working with data they are collecting on the uses of the waterway, the
volume of water flow, the types of pollutants present in the stream, and the
kinds and costs of alternative purification methods that might be applied,
the team will examine the feasibility of a full-scale study of the economic
and institutional aspects of water quality management in this important
and complex area. Whether such a study will indeed be feasible depends
upon the kinds of data that are available to them and the outcome of an
attempt to devise an analytical model into which the data will be fitted.
F. Trenery Dolbear, Jr., and Morton Isaac Kamien, assistant professors
of economics at the Carnegie Institute of Technology, are engaged in this
project, under an RFF grant of $10,000 to the Institute.

THE THERMAL POWER INDUSTRY. Several RFF studies are concerned
with the benefits conferred and costs imposed on specific industries by their
water environment. The quality of intake water and the degree to which
wastes may be discharged to receiving waters are important features of
this environment. Accordingly, these studies focus upon the quantitative
aspects of water use and upon the costs imposed by intake quality deteriora-
tion as well as the costs of reducing waste loads by means of optimal com-
binations of measures that include process adjustments and treatment.
One of these studies has been completed by Paul H. Cootner and George 0.
G. L6f, and the resulting manuscript, entitled "A Model for the Estimation
of Water Demand for Steam Electric Generation," is now in final draft.
The type of waste in question in this industry is heat which can be con-
trolled by recirculation. The authors have analyzed the economics of
recirculation which affects needed water intake as well as the waste load.

RECREATIONAL COSTS AND BENEFITS. It is in areas of heavy industry
and dense population, where the need for outdoor recreation facilities is
greatest, that industrial effluents and municipal wastes are likely to have
spoiled the beauty and usability of nearby waters for recreational purposes.
Two sets of problems are involved when decisions would incur the large
public and private-industry expenditures needed to improve the quality of
such waters: first, how to place an economic evaluation on the recreational
use that would be made of the treated water; second, the matter of judging
to what extent and by what means the quality should be improved.
The Delaware estuary is an excellent example of a waterway which can
provide greater recreational opportunity than it now does for the people of

45










an intensively developed urban industrial area. The estuary is heavily
used for waste disposal, and portions of it become devoid of oxygen each
year. Opportunities for fishing, boating, picnicking, and swimming are
limited. On the other hand, the costs of quality improvement are very
high. The costs of improving water quality in this area are currently under
intensive study by the U.S. Public Health Service. The complementary
problem-that of assessing the value of the recreational opportunity of-
fered by the improved water-is being studied under an RFF grant of
$13,271 to the University of Pennsylvania and a research agreement of
$5,333 with Paul Davidson, associate professor of economics. Mr. Davidson
intends to develop and test techniques for measuring the social value of rec-
reational opportunities which would result from improved water quality in
the area. Among the methods to be tried out are several that have been
developed in the course of RFF's staff research on recreational costs and
benefits (see page 69).
If the project, which is of a reconnaissance type, is successful, it will lay
the groundwork for more extensive studies of this and other areas where rec-
reational values are an important factor in appraising proposals to improve
the quality of water.

WATER QUALITY MANAGEMENT IN GREAT BRITAIN. A study of the British
postwar experience with water quality control is being undertaken by Lyle
E. Craine, professor of conservation at the University of Michigan. Mr.
Craine spent three months of investigation in England, and is now complet-
ing his report. The project is partially supported by an RFF grant of
$4,000 to the University of Michigan.

RELATED ACTIVITIES. In the course of their research in problems of
water quality management, staff members prepared a number of papers for
publication and addressed various professional, educational, and citizens'
groups.
Mr. Kneese spoke on current research in water quality management be-
fore the 53rd national meeting of the American Institute of Chemical
Engineers, at San Juan, Puerto Rico; the 36th annual meeting of the Water
Pollution Control Federation, at Seattle; and the Dupont Pollution Abate-
ment Committee, at Wilmington. The first two papers have since been
published (see page 105).
In connection with his study of plans for water development in the Po-
tomac River Basin, Mr. Davis discussed some of the issues at two seminars
of the Robert A. Taft Sanitary Engineering Center, at Cincinnati, and at
an agricultural economics faculty seminar at the University of Maryland.
A paper he presented before the Chesapeake Section of the American
Water Works Association was later published (see page 104).


I










Projections of Requirements and Supplies


Two studies which have recently been completed after several years'
research examine the problems of measuring supply and potential demand
for water in the United States on a common regional basis. Both were sup-
ported by Resources for the Future as a basic part of its water resources
program. Both are primarily concerned with methods for projecting water
use but differ in their approach and in the scope of their objectives.
Nathaniel Wollman's study uses water flow as a common denominator in
calculating prospective supply and use for the years 1980 and 2000. Mr.
Wollman is dealing with broad regions and aggregate demand for all uses
of water. He excludes the possible effects on demand of changes in cost to
water users, because appropriate data are not now available. Only a series
of intensive studies of individual water uses could be expected to yield useful
information on this factor for the various water resource regions. Vernon
W. Ruttan's study focuses on one such use-water for irrigated land-still
responsible for the largest amount of water depletion in the country. Here,
an attempt is made to take account of changing water costs in projecting to
1980 the economic demand for irrigated acreage. Together, the two studies
represent a significant contribution to a growing body of knowledge con-
cerning water supplies and demands. The analytical methods used in the
studies and the projections they produce can be useful in identifying the
relative urgency of water problems and the probable range of demand in
varying situations. The two studies are described below.

WATER REQUIREMENTS AND SUPPLIES, 1980 AND 2000. A manuscript of
the Wollman study was being circulated for review at the end of the program
year. It is the outcome of a project begun in 1958 under an RFF grant to
the University of New Mexico, continued at RFF headquarters while Mr.
Wollman was preparing a preliminary report on research done for the Senate
Select Committee on National Water Resources (published in 1960 as Com-
mittee Print No. 32), and completed during the 1964 year at the University
of New Mexico, where Mr. Wollman is professor of economics. In de-
veloping a systematic framework for analyzing economic problems of water
use, the study establishes major links between economic and physical data
and provides a rough guide to some probable relationships between water
usage and costs based on a set of assumptions relating to future trends in
population, industrial activity, and gross national product.

THE ECONOMIC DEMAND FOR IRRIGATED ACREAGE. A book of this title, re-
sulting from a 1957 grant to Purdue Research Foundation, is being published
for RFF by The Johns Hopkins Press. It represents a pioneer effort to
measure the demand for irrigated acreage in the nation's broad regions in










view of projected requirements for farm output in 1980. With prospects
of much greater demands on the country's water resources for uses that in
some regions will compete with irrigation, there is need for efforts such as
this to determine the economic demand for water in particular uses.
Mr. Ruttan, professor of agricultural economics at Purdue University, is
now on leave, working with the International Rice Research Institute, in
the Philippines.


Planning, Investment and Institutional Arrangements

Several studies investigate mechanisms of planning and institutional ar-
rangements in situations where conflicts are perceived either among dif-
ferent water uses or among different political and economic interests af-
fecting the use of water.
As part of its research in this area, the RFF staff has been engaged in a
study of federal policies which bear on the efficient allocation of water re-
source investment. An article by Irving K. Fox and Orris C. Herfindahl,
entitled "Attainment of Efficiency in Satisfying Demands for Water Re-
sources," published in the May issue of American Economic Review, sums
up the issues that are involved. The article has been reprinted as RFF
Reprint No. 46.

-In the course of their studies of U.S. and Canadian co-operative efforts in
developing the Columbia River, John V. Krutilla and Vincent Ostrom at-
tended a portion of the Canadian government's External Affairs Committee
treaty ratification hearings, held in April and May at Ottawa. Later, they
spent several weeks in British Columbia consulting with officials of the
provincial government and reviewing studies and related materials which
had been prepared by the staff of the Water Rights Branch. Their analyses
of the international aspects of water development, as exemplified by the
Columbia case, are continuing.

TRANSFERS OF WATER IN THE WEST. In many areas of the arid West it is
becoming increasingly difficult to maintain a rationale for using water in
traditional ways (mainly for agriculture), without regard to the land's pro-
ductivity or to farming efficiency. Reallocations of water for municipal,
industrial, and recreational uses, or for irrigation where it is justified, ap-
pear to be hampered by Western water laws and by the lack of mechanisms
which might permit compensation to all affected parties when large-scale
transfers are made.
Research done over the last few years by a group of economists at Colorado
State University and a group of lawyers at the universities of Denver,
Colorado, and Wyoming, under RFF grants to the universities, has shown










that where alternative uses generated by increased industrial activity com-
pete for scarce water, built-in inefficiencies in legal structure and institu-
tional procedures can operate against water transfers. The two teams,
consisting of L. M. Hartman and D. A. Seastone at Colorado State, and
Willis Ellis at Denver, Frank Trelease at Wyoming, and Raphael J. Moses
at the University of Colorado, have brought together a substantial body of
knowledge on the complexities of water rights and transfers. Results
bearing on the subject published during the year are: L. M. Hartman and
R. L. Anderson, Estimating Irrigation Water Values: A Regression Analysis
of Farm Sales Data from North Eastern Colorado, Technical Bulletin 81
(Fort Collins: Colorado State University Experiment Station, 1964); and
Hartman, "Some Economic Aspects of Ground Water Management," in
Proceedings, Biennial Ground Water Conference, Ground Water Recharge
Center, Berkeley, California, 1963.

-In April, Resources for the Future made a three-year grant of $77,759 to
Colorado State University in support of further research by Mr. Hartman,
Mr. Seastone, and Mr. Ellis, which will concentrate chiefly on the social
and economic effects of rural-urban water transfers. What effects, for
example, will a large-scale transfer have on a community served by an ir-
rigation project; or on a downstream community dependent on the return
flow from a project; or on users whose water quality may be impaired by
upstream municipal or industrial pollution? Specific areas of study will deal
with (1) the physical effects on quality and quantity of return flow due to
changes in use, and how these relate to economic values; (2) the side effects
of water transfers on the incomes of people and communities who are not
directly concerned with a water transfer; and (3) the feasibility of imple-
menting improved transfer rules and procedures in view of legal precedent
and attitudes of existing water user organizations.

NORTHERN CALIFORNIA'S WATER INDUSTRY. From 25 to 30 million acre-
feet of water annually are diverted from northern California streams and
recovered from wells for consumptive use within the region, and of this, in
spite of a doubling of urban population in recent years, about 90 per cent
is still used for irrigation. Development of water in the region is under-
taken by an array of separate entities, including local public agencies, de-
partments of local governments, mutual water companies, privately owned
firms operating under public utility regulation, federal and state agencies,
and individual concerns which develop water for their own use. While
there are numerous differences among these entities, not only in legal form
and ownership but also in type of function or scope of related functions
performed, taken together they may be regarded as a regional water in-
dustry.
It is as an industry, therefore, that a team of economists and political

49


L- --- 1










scientists has studied the institutions and arrangements for supplying water
to northern California, measuring the performance of each entity against a
set of economic standards applicable to the whole. A draft manuscript of
the research group's report, dealing with the structure, legal arrangements,
conduct, and performance of the industry, had been completed at the year's
end. The project was conducted under an RFF grant to the University of
California, Berkeley. It was directed by Joe S. Bain, professor of economics
at Berkeley, with the participation of Richard E. Caves, of Harvard Uni-
versity; Julius Margolis, of Stanford University; and Vincent Ostrom, of
Indiana University (currently working with the RFF staff).
A paper of Mr. Ostrom's, drawing on his research into legal aspects of
the California water industry, was published during the year in the Papers
of the Regional Science Association, Western Section, and was later reissued
under the title "Property, Proprietorship and Politics" as RFF Reprint No.
47. Another paper, "1964: Western Water Institutions in a Contempo-
rary Perspective," was presented before the Western Interstate Conference,
held in Las Vegas in September.


INLAND WATERWAY TRANSPORTATION. Research in progress under an
RFF grant to examine the economic structure of the inland bargeline in-
dustry and its position in the nation's transportation system has contributed
to the publication of two papers. Process and Production Functions for
Inland Waterway Transportation and Models of a Bargeline: An Analysis
of Returns to Scale in Inland Waterway Transportation, both by Charles W.
Howe, present methods for evaluating the effects of publicly provided
waterway improvements on the private costs of operating barge transporta-
tion. Barges currently carry about 9 per cent of total intercity ton-miles
carried by rail, truck, pipeline, and inland water. Both papers were pub-
lished during the year by the Institute for Quantitative Research in Eco-
nomics and Management, Herman C. Krannert Graduate School of In-
dustrial Administration, Purdue University.
An evaluation of the economic merits of public and private investments in
navigation facilities is one of the objectives of the, main study, which is
directed by Leon Moses, of The Transportation Center at Northwestern
University.


ELECTRIC POWER SYSTEM OPERATION. A study, conducted under an
RFF grant to Stanford University, which has examined the effects upon
power system planning of new developments in generating and transmission
technology, resulted during the year in publication of Studies in the Long-
Range Planning of Interties between Electric Power Systems. The author,
Edouard Andr6 Sautter, a graduate student in Stanford's Institute in
Engineering-Economic Systems, did research for the study under the direc-










tion of William K. Linvill, professor of electrical engineering. The report
was published by the Institute in July.

THE FLOOD PLAIN HAZARD. Seven years of research, directed by Gilbert
F. White and supported by RFF grants to the University of Chicago, has
produced an impressive body of knowledge as to the nature of flood plain
adjustments and as to ways of evaluating proposed public investment in
modifying the effects of floods. Some of the findings resulting from the
group's research have appeared in print (see page 101); and they also have
been put to good use in several public and private efforts applying to the
management of flood plains.
During the program year, a report entitled Choice of Adjustment to
Floods, by Mr. White, was prepared for publication by the Geography
Department of the University of Chicago. A companion report, Hazard
and Choice Perception in Flood Plain Management, by Robert W. Kates, has
already been published by the University of Chicago.
An essay describing the progress and results of the flood plain project
appears on page 15.

RELATED ACTIVITIES. During the year, members of the staff served as
consultants with governmental and academic groups, and presented a num-
ber of papers dealing with problems in planning and organizing for water
development.
In July, Mr. Kneese was a member of a Water Resources Research panel
sponsored by the Office of Science and Technology, Executive Office of the
President. In March and April, he served as consultant to the Program
Planning Staff of the U.S. Department of the Interior. He presented
papers at a Seminar on Advanced Water Resource Topics, held at the Uni-
versity of Texas; at a meeting of the Ohio River Basin Comprehensive
Survey Co-ordinating Committee, at Pittsburgh; and at the Water for
Texas Conference, at Texas A & M University. The latter paper has
since been published (see page 105).
Mr. Fox chaired a session on education and training at the Water Re-
sources Economic Research Conference, sponsored by the University of
California; and presented a conference summation at the Illinois Conference
on Water Resources Development, Chicago. He addressed the Seminar on
Organization and Methodology for River Basin Planning, at the Georgia
Institute of Technology; the 55th meeting of the Northeastern Resources
Committee, Boston; and the Water Resources Research Symposium, at
West Virginia University. The latter paper has since been published (see
page 104).
Mr. Krutilla chaired the project evaluation task force group at the Water
Resources Economic Research Conference, at the University of California;
served as a consultant to the Delaware River Basin Commission on ques-











tions relating to pumped storage possibilities; and presented a paper on the
theoretical underpinnings of benefit-cost analysis at a seminar sponsored
by the U.S. Corps of Engineers, Washington.
Mr. Ostrom continued to serve as editor-in-chief of the American Public
Administration Review. Following participation in the October 1963
Faulkner House Conference regarding the converging interests in economic
and political theory on collective decision processes, he was appointed to
the Committee for the Analysis of Non-market Decision Making, at the
University of Virginia's Thomas Jefferson Center for Studies in Political
Economy.











ENERGY AND MINERALS




International Trade and Investment: World energy supply, demand, and
trade-World aluminum industry-U.S. foreign investments in minerals-
World petroleum market-Soviet oil and gas-Pricing of Middle East crude
oil-World iron and steel-World electric power. Domestic Studies: Pat-
tern of government energy policies-Regulation of petroleum production prac-
tices-U.S. petroleum import policy-Petroleum conservation-Supply and
costs in U.S. petroleum industry-Coal mine accidents-Minor metals indus-
try. Economic Aspects of Technological Change: Solar energy-Shale
oil-Location of nuclear power plants.




CURRENT RESEARCH into the energy and nonfuel mineral resources is
directed as much to problems of world supply and demand as to domestic
issues. Whether approached by staff or by scholars working under grants,
the two areas of study, and a third dealing with changing technology, are
linked by a common goal: to provide information that will shed light on a
wide range of problems which directly or indirectly affect the formation of
public policy and the course of private enterprise.


F.


II










International Trade and Investment
In Energy and Mineral Raw Materials

Energy and minerals account for almost half of U.S. direct investments
abroad. Such essential materials as crude oil, iron ore, copper, lead, zinc,
bauxite, and ferroalloys are imported to a considerable extent, and the ex-
porting countries-many of them among the developing countries of the
world-depend heavily upon the United States and other industrialized
countries as markets for their products. Several RFF projects, some
conducted under grant and others by the staff, are directed toward the
study of international trade and investment in fuel and nonfuel minerals.
Broadly, they may be grouped into three classes: (1) quantitative research
on past and prospective changes in the levels and international patterns of
supply, demand, and trade for particular energy and mineral raw materials;
(2) research on the organization and performance of the international in-
dustries engaged in producing, transporting, processing and marketing
energy and mineral raw materials; and (3) research on the economic and
political problems arising between the exporting and importing countries
as a result of international trade and investment in mineral raw materials.

-Research for a staff study of the changing patterns of world energy supply,
demand, and trade is continuing under the direction of Sam H. Schurr.
Most of the quantitative data covering the period since 1925 have been
assembled for analysis. Shifts in use among energy sources and among
areas of supply will be examined for their probable effects on the structure
of the world's energy economy over the next two decades.
Perry D. Teitelbaum is concentrating chiefly on demands for energy in
relation to economic development, with particular reference to the less
industrialized countries. During the year he served as a consultant to the
United Nations headquarters in New York, and in that capacity attended
the African Electric Power Meeting organized by the UN Economic Com-
mission for Africa and held in Addis Ababa, October 21-31, 1963. At this
meeting Mr. Teitelbaum presented a paper, "Energy Consumption in
Africa," a statistical analysis of recent trends and patterns in energy supply,
trade, and disposition in the various countries of Africa, based on his con-
tinuing broader RFF study. Jay G. Polach is studying changing Euro-
pean conditions of energy supply, demand, and trade. Grant-supported
projects dealing with various aspects of international trade and investment
in energy materials are also providing information useful to the total study.

-Another staff study under way during the year deals with the probable
development of the aluminum industry in the various regions of the world
over the next fifteen years. Sterling Brubaker, who is conducting the
research, is analyzing both demand prospects and location factors. It is











hoped that the locational analysis will provide useful background for the
evaluation of proposed investment in hydroelectric projects, where these
are linked to the anticipated development of aluminum production facilities
as a market for the electric energy.

U.S. FOREIGN INVESTMENTS IN MINERALS. Foreign investments of U.S.
companies in petroleum and mining and smelting come to about $15 bil-
lion-almost 45 per cent of all U.S. direct foreign investments. While the
foreign exchange, tax revenues and income generated from these invest-
ments are important to the host countries, it is equally true that the United
States relies heavily on these private foreign-based operations to sustain
its minerals supply position. The terms and conditions under which con-
tracts are entered into between the U.S. companies and the host govern-
ments are therefore of great consequence and a continuing source of diffi-
culty as the economic and political environment changes.
In this sensitive area of research a short-term exploratory study is being
undertaken at the University of Oregon with a grant of $7,775 from Re-
sources for the Future, under the direction of Raymond F. Mikesell, W. E.
Miner professor of economics. Mr. Mikesell was chief of the Foreign Re-
sources Division of the President's Materials Policy Commission during
1951-52, and since has specialized in problems relating to U.S. investment
abroad; in recent years, he has directed a series of case studies on public
international loans to Latin-American countries.
Materials are being studied dealing with various types of contractual
relationships between U.S. petroleum and mining companies and the
governments of host countries, especially in countries in Latin America
where the University of Oregon has established relationships with several
economic research institutes. The purpose of this exploratory study is to
pinpoint those problem areas which may warrant further, more intensive
study.

THE WORLD PETROLEUM MARKET. In a study of the world petroleum
market, which has been under way for the past three years under an RFF
grant to the Massachusetts Institute of Technology, M. A. Adelman is
examining the behavior of the international oil industry since World War II.
Changing conditions associated with such factors as excessive supplies,
the entry of new firms into the industry, and shifts in trading alignments,
are persuading governments and industry alike to take a fresh look at their
practices and policies. Mr. Adelman has contributed some results of his
research to various publications. His article, "Oil Prices in the Long Run,"
which appeared in the April 1964 issue of the Journal of Business of the
University of Chicago, was translated from an article in the December 1963
issue of Revue de l'Institut Franqais de Petrole. An essay, "The World
Oil Outlook," which was included in the 1964 volume of RFF symposium

54





l


r -------I











1950
Total-$11.8 billion


1929
Total-$7.5 billion



1963
32.5% Total-$40.6 billion
4.9 1 5.3% 8.2%
4.9%.
Industrialized countries Less developed countries
Total-$25.5 b.lli... / ',i-'15.1 billion


30.40.
Petroleum -i! '
Mining and smelting l. \ 1
Manufacturing \ -= j i
Trade i~it !j '
Other 4.9%
14.7%
BETWEEN 1929 AND 1963, U. S. direct foreign investments grew more than fivefold.
Among sectors of investment, the petroleum industry's growth increased the most-
some twelvefold over the period-while the share of mining and smelting was cut back
considerably. The chart for 1963 also illustrates how direct investments in this year
were distributed between the less developed and the industrialized countries of the free
world-the latter countries consisting of Western Europe, Canada, South Africa,
Australia, and Japan. The largest shares were claimed by petroleum in the less de-
veloped countries, and by manufacturing in the industrialized areas. (Data from U. S.
Department of Commerce.)




papers, Natural Resources and International Development (see page 96),
presented a preliminary view of the set of problems he is studying. Be-
cause of the need for further intensive research on various aspects of the
world oil industry, Resources for the Future has made a grant of
$18,822 to MIT to support Mr. Adelman's work over an additional period.

ECONOMICS OF THE SOVIET OIL AND GAS INDUSTRY. A study of Russian
oil and gas as a major factor not only in the Soviet Union's internal economy
but in the international oil trade has been completed, and a draft manu-
script is undergoing technical review. Robert W. Campbell, who conducted
the study, presented some of his findings at a joint faculty and graduate
student seminar on Economic Calculation in the Soviet Oil Industry, held










in May at the University of Missouri. Much of the discussion turned on
the economic rationality of Soviet decisions in drilling technology. The
study was made under an RFF grant to Indiana University, where Mr.
Campbell is director of the Russian and East European Institute.

THE PRICING OF MIDDLE EAST CRUDE OIL. A study prepared in 1961
under an RFF grant is being revised to include recent data on the price
behavior of Middle Eastern crude oil. The study reviews the history and
rationale of Middle East crude prices since the end of World War II, and
examines the economics and structure of the oil industry and the relevant
government policies of exporting and importing countries. Completion
of a report by Helmut J. Frank, associate professor of economics at the
University of Arizona, is being assisted by an RFF grant of $1,000 to the
University.

WORLD IRON AND STEEL. A study of the economic geography of the world
iron and steel industry was begun in August under an RFF grant of $16,830
to the University College of Swansea (University of Wales). The study
will focus on significant changes in the location of iron ore production and
of iron and steel processing which have taken place since World War II,
together with associated changes in the size and pattern of international
trade in both raw materials and finished products.
The United States, which is no longer self-sufficient in iron ore, imports
about one-third of its consumption, mostly from Canada and Venezuela.
These two countries, together with France, Sweden, and the Soviet Union,
are now world leaders in exports of iron ore. The United States, however,
is still the heaviest producer of steel ingots and castings, although the Soviet
Union, Japan, and Western Europe have made impressive gains in recent
years.
The study will seek to identify the reasons underlying the recent shifts
in production and trade and to assess the direction of future change. Such
an analysis will involve, among other things, an examination in the shifts
with size and geography of the various markets for iron and steel products.
It will also consider the impact of new technology at different stages of
production and transportation, the implications of the industry's changing
resource base, and the effects of government policies.
The project is being undertaken by Gerald Manners, lecturer in geography
at the University College of Swansea. Mr. Manners, who is author of The
Geography of Energy (Hutchinson, London) and editor of South Wales in
the Sixties (Pergamon, Oxford), is working with the RFF staff in Washing-
ton during the first year of his research.

WORLD ELECTRIC POWER. A survey of the world electric power industry
since 1950 and an appraisal of its current situation is being undertaken by










Nathaniel B. Guyol at the Institute of International Studies, University of
California, Berkeley, under a grant of $9,757 from Resources for the Future.
The study will bring together from a great number of sources a compre-
hensive compilation of country-by-country statistical data on various
aspects of the structure and operations of the electric power industry.


Domestic Studies


A number of studies that are under way are focused mainly on domestic
aspects of the energy and minerals industries. Many of these are concerned
with government policies affecting these industries. RFF's research in
this area is probing the origins of some of these policies, analyzing their
economic effects, and examining the degree to which they reflect changing
conditions.
Staff work of an advisory nature is also being done. During the year,
Mr. Schurr completed his work with the Fuels Committee of the Federal
Power Commission's National Power Survey study, continued serving as
an adviser to the Office of Science and Technology and the Council of
Economic Advisers on the Interdepartmental Energy Study, and partici-
pated in a seminar on the Economic Aspects of Petroleum Conservation
Regulation, at Southern Methodist University.
Domestic policies concerned with the nonfuel minerals, especially as they
relate to imports, are being studied by Orris C. Herfindahl. During the
program year, Mr. Herfindahl completed revision of his paper, "The De-
velopment of the Major Metal Mining Industries in the United States from
1839 to 1909," for inclusion in a forthcoming volume of papers presented
last year at the Conference on Research in Income and Wealth. The book
will be published by the National Bureau of Economic Research.

THE PATTERN OF GOVERNMENT ENERGY POLICIES IN THE UNITED STATES.
The conditions under which private business operates in the production of
energy are greatly influenced by governmental policy at both state and
federal levels. A study of those policies that affect the competitive position
of the primary fuels industries, individually and in their interrelationships,
has been in progress for the past two years and will be continued over the
next two years under a further RFF grant of $40,500 to The New School
for Social Research.
The study will make no attempt to propose policy changes, but will pro-
vide background information on the over-all structure of policy for those
interested in understanding existing policies and the possibilities for im-
provements. It is being directed by Louis Lister, research professor at
The New School for Social Research.










REGULATION OF PETROLEUM PRODUCTION PRACTICES. A study of eco-
nomic and administrative aspects of the regulations governing petroleum
production practices, which has been conducted under an RFF grant by
Paul T. Homan and Wallace F. Lovejoy, professors of economics at South-
ern Methodist University, resulted this year in a research report and a
three-day seminar which used the report as background material. The
project is the second organized by the two economists to combine the tech-
niques of research with informed discussion on facets of the petroleum in-
dustry. Their 1962 seminar, dealing with problems of cost analysis, re-
sulted in a study entitled Cost Analysis in the Petroleum Industry. It also
led to the study, "Methods of Estimating Reserves of Crude Oil, Natural
Gas and Natural Gas Liquids," which was in manuscript form at the end
of the year.
Meeting at the 1964 seminar were some twenty individuals concerned
with petroleum as businessmen, scholars, lawyers, and government ad-
ministrators. In the course of the background study, regulations for pe-
troleum production, which differ in their specific provisions from state to
state, were analyzed for their economic characteristics and for their inter-
actions within and between states and in relation to federal petroleum
policies. Among the topics discussed at the seminar were: the effect of
regulatory practices on efficient reservoir development, depth-acreage
schedules, proration formulas and field rules, problems of administration
under the proration system, the matter of exempt vs. non-exempt produc-
tion, secondary recovery, and overcapacity.
A manuscript based on the 1964 report and seminar discussions was in
preparation at the end of the program year.

U.s. PETROLEUM IMPORT POLICY. A new project begun during the year by
Mr. Homan and Mr. Lovejoy focuses on today's system of controls for
petroleum imports into the United States with a view to clarifying the pub-
lic policy issues involved. The 1955 decision to hold petroleum imports
roughly to their proportional importance in 1954, arrived at on grounds
of national security, has since been periodically reaffirmed in broad outline.
However, there are many who argue that national security rests as much on a
favorable climate of international trade as on protection of a strategic
domestic resource, and that the continuation of present quotas on lower-
cost foreign supplies is too costly to the consumer. And there are others
who contend that import restrictions are not strict enough if the vitality of
the domestic industry is to remain as a key element in national security.
The purpose of the project is to provide background material on the exist-
ing system of import controls, define the nature of the private interests it
affects, examine its impact upon the domestic producing industry, and
present evidence of its effectiveness in terms of the various national objec-
tives to which oil import policy should be responsive.










The study is supported by an RFF grant of $18,100 to Southern
Methodist University.

PETROLEUM CONSERVATION IN TRANSITION. A new project concerning
state regulations governing petroleum production will attempt to assess
their current effectiveness and economic efficiency in the light of modern
conservation theory. The study will progress in three stages:
First, modern conservation theory will be applied to the particular nat-
ural and institutional conditions of petroleum production: competitive
production from common reservoirs; dependence of ultimate recovery upon
rates of production; joint production of natural gas; dependence of long-run
petroleum production upon large and continuous investment in exploration
and development; differential taxation of income from oil and gas produc-
tion; regulation of natural gas prices in interstate commerce; and restriction
of petroleum imports.
Second, the differing petroleum conservation practices in the major
producing states will be surveyed, with particular attention to the produc-
ing states whose practices already are perceptibly influencing trends through-
out the country.
Third, the practices and their apparent direction of change will be evalu-
ated against the standards of petroleum conservation theory developed in
the course of the study.
It is thought that the study will contribute to better understanding of the
economics of conservation at this time when petroleum faces increasing
competition from alternative energy sources, and when many observers
are beginning to question some established conservation practices which
seem to increase costs and inhibit adaptive adjustment to competition.
The project is conducted by Stephen L. McDonald, professor of economics
at the University of Texas, under an RFF grant of S35,200 to the Uni-
versity.

SUPPLY AND COSTS IN THE U.S. PETROLEUM INDUSTRY. Two econometric
studies by Franklin M. Fisher, "The Supply Curves of Wildcat Drilling
and of New Petroleum Discoveries in the United States" and "Measuring
the Effects of Depth and Technological Change on Drilling Costs," are
being published in one volume by Resources for the Future under the title,
Supply and Costs in the U.S. Petroleum Industry. The two studies bring
fresh insights to the process of petroleum exploration and the behavior of
drilling costs. They also provide a useful example of the way in which
econometric techniques may be applied to a complex and elusive set of
statistical problems.
The book results from a study of conditions of U.S. petroleum supply
made under an RFF grant to the Massachusetts Institute of Technology,
where Mr. Fisher is associate professor of economics.










COAL MINE ACCIDENTS. A study of the literature dealing with accidents
in U.S. coal mines, comparing them with the record in other coal producing
countries, resulted this year in the publication by the Department of Eco-
nomics at Indiana University of a report by Doris Drury, entitled The
Accident Records in Coal Mines of the United States. The study was directed
by C. L. Christenson, professor of economics, under a small RFF grant to
Indiana University.

THE MINOR METALS INDUSTRY. An economic analysis of the minor metals
has been completed and a manuscript resulting from the research is being
revised after technical review. The study pioneers in bringing economic
analysis to bear on a miscellany of metals, ranging from antimony to zir-
conium, that share the term "minor" only because their annual production
is small. Many of these metals have attained high values in recent years
because of new applications for them in space projects or nuclear reactors.
By classifying these metals into groups based upon source and production
processes, David B. Brooks has been able to identify patterns of supply
among the minor metals. These patterns then form the basis for further
investigation into the firms producing minor metals and into the effective-
ness of competition.
Some of the findings of the study are described in two articles by Mr.
Brooks (see page 103). These and methods of analysis were discussed
at a series of three seminars held by the Department of Mineral Economics
at The Pennsylvania State University, at which Mr. Brooks was guest lec-
turer.


Economic Aspects of Technological Change


The impact of new technology on energy and mineral commodities re-
sults in a continuous state of change in the conditions of demand and supply.
Some of the effects are an important element in the research projects al-
ready described. Others, less easily perceived, are identified with tech-
niques that are not yet fully developed for efficient application. Resources
for the Future is sponsoring studies of the economic prospects for two such
situations in which technology is the main factor in developing a new
source of energy supply, and is also sponsoring a study on some of the eco-
nomic and social implications of nuclear energy development.

SOLAR ENERGY. A compilation of worldwide data on solar radiation,
undertaken over the past four years at the Solar Energy Laboratory of the
University of Wisconsin, is in process of publication by the University.
The report consists of twelve monthly radiation maps covering all areas of
the world, the underlying tabulations, and some interpretive text. It










results fro.n a project supported by RFF grants to the University and pro-
vides background data for engineering and economic analyses, some of which
are in progress at The Ohio State University under RFF grants. The
ultimate purpose of this latter project is to assess the future economic
position of solar energy, with particular emphasis on the potentials of this
source of energy for some of the less developed countries.
The work of compiling the solar radiation data was directed by J. A. Duf-
fie and George O. G. L6f. Mr. L6f is also collaborating with Richard A.
Tybout, professor of economics at The Ohio State University, in a con-
tinuing study of economic and engineering aspects of solar energy utiliza-
tion.

SHALE OIL. Results of research into the economic potentialities of pro-
ducing liquid fuels from oil shales, done by Henry Steele, associate professor
of economics at Rice University, were published in the Fall 1963 issue of
The Western Economic Journal, under the title "The Prospects for the
Development of a Shale Oil Industry." Mr. Steele compares the esti-
mated production costs of crude oil and shale oil, makes an economic evalu-
ation of the two fuels as alternative energy sources, and draws implications
from their relative cost structures as to their future competitive use. Mr.
Steele's research was supported by a grant made in 1962 to Rice University.

THE LOCATION OF NUCLEAR POWER PLANTS. Stimulated by a proposal
by the Consolidated Edison Company to build a large nuclear power
plant directly across the East River from Manhattan-a proposal that has
since been withdrawn-the Scientists' Committee for Radiation Informa-
tion is examining the problems connected with locating nuclear reactors
in areas of concentrated population. The Committee, which was estab-
lished in New York in 1960, is composed of scientists organized to present
to the general public, accurate, nonpartisan, technical information on
scientific matters that are of civic concern. In this case their aim is to
provide essential background information bearing upon the choices that
lie within the public province when a nuclear installation is being planned.
The project is being conducted under an RFF grant of $21,700 to the
Committee.

RELATED ACTIVITIES. Among the activities of the RFF staff during the
year, some were devoted specifically to economic aspects of technological
change. Several of these are noted here; others are referred to on page 87,
in the section dealing with Appraisals and Special Projects.
Mr. Schurr contributed chapters on energy and on atomic power to two
books which were published during the year (see page 106).
Mr. Lif, as a guest of the Academy of Sciences of the U.S.S.R., gave three










lectures on solar energy to the research staffs of the Heliotechnical Labora-
tory in Moscow, and the Physical-Technical Institutes in Tashkent and
Ashkabad. He served as adviser on the development of solar distillation
of sea water to the Organisation for Economic Cooperation and Develop-
ment, in Paris, and to the government of Spain; and as consultant on solar
energy developments to the Energy and Transport Section, Natural Re-
sources Division of the United Nations Economic and Social Council. He
also served on the Board of the Solar Energy Society. He presented two
papers on solar collector design and solar still operation to a meeting of the
American Society of Mechanical Engineers, in Philadelphia.












LAND USE AND MANAGEMENT



General Studies: Soil conservation in perspective-Governance of soil con-
servation-Land use statistics-Rural-urban f, :: Cattle grazing vs. game
management. Forestry: Forest resources of Appalachia-Douglas fir in-
dustry-Forestry and the U.S. Forest Service. Outdoor Recreation: In-
ternational park systems.




RFF RESEARCH in the field of land use and management resulted during
the year in three manuscripts which were undergoing technical review at
the end of the program year. Two deal with different aspects of soil
conservation; the third appraises the form and structure of land use statis-
tics in the United States. Research was begun on a forestry study and on a
study of the process of converting rural land into urban; and work con-
tinued on two other long-term projects on the economics of outdoor recrea-
tion and the impact of farm policy on agriculture and the rural environment.
Grants were made in support of two of these studies in addition to several
other projects described below.

62










General Studies


SOIL CONSERVATION IN PERSPECTIVE. More than thirty years ago the
United States government launched its nationwide campaign to conserve
the soils of the land. The reasons for the program, its objectives, accom-
plishments and failures, the problems it faces, and some possible new direc-
tions it might profitably take have been the subject of an RFF study over
the past few years. At the end of the program year, a draft manuscript
was being circulated for review.
The central question the study addresses is: Where does the effort to
prevent soil losses stop? There is, naturally, no single satisfactory answer,
for situations will vary from area to area. Accompanying any land use or
change in land use are erosion hazards associated with handling the soil
in different ways. The effectiveness and cost of alternative erosion control
measures and the individual and social adjustments required by each also
require consideration. It is not so much a matter of controlling abnormal
erosion wherever it appears-an impossible task-but of judging the conse-
quences of allowing erosion to continue at various levels.
The job of controlling soil erosion is complicated by conflicting principles
represented by different government programs, some of which are aimed at
increasing basic land productivity and current output, and others at regu-
lating current output to market needs at desired prices. R. Burnell Held
and Marion Clawson, who conducted the soil conservation study, have
considered problems such as these, as well as the socioeconomic problems
involved in analyzing the role of soil conservation today and its apparent
dimensions in the future.

THE GOVERNANCE OF SOIL CONSERVATION. Creation and administration
of the Soil Conservation Service and related programs of the U.S. Depart-
ment of Agriculture, and the way in which the soil conservation districts
as units of local government have fitted into the over-all administrative
pattern, are the themes of a study completed for Resources for the Future
during the year by Robert J. Morgan, associate professor of political science
at the University of Virginia. The study complements the Held-Clawson
soil conservation study, described above, in providing a detailed account
of the political and administrative background against which the technical
and economic programs have been planned and have functioned.
In view of the broadened role of the Soil Conservation Service and of the
soil conservation districts to include, since 1954, responsibility for small
watershed protection and, since 1962, responsibility for leadership in ad-
ministering the Resource Conservation and Development program, an
unbiased account of how a national agency is created and develops the
political power to achieve some, at least, of its objectives, is of considerable
relevance for land use planning at a time of continuing change.











LAND USE ,TATISTICS. For the past two years, a committee composed
of interested persons from government agencies, universities, and private
institutions has been working to find ways of systematizing the collection,
analysis, and presentation of data on land uses in the United States. The
committee, sponsored by Resources for the Future, and chaired by Marion
Clawson, has operated as an independent body unconnected in any official
way with the agencies and institutions with which the members are asso-
ciated.
Because land use data in the United States have evolved in piecemeal
fashion to meet specific limited needs, analyses and action programs con-
cerned with changing uses of the land often rest on shaky bases. Recog-
nizing the need for accurate, meaningful, current data, the committee set
out to evaluate the concepts and definitions that underlie the classification



-350

Participating farms
300 (10,000)

Conservation
250 payments
(million dollars)
200

-150

100 -- -f -**'-
S1 00\ / Payments per Changes taking place in the
S/participating farm Agricultural Conservation
(dollars) Program since 1936.

1960





FROM 1936 TO 1943, total annual ACP payments to farmers averaged over 8400
million, the greater part of which was earmarked for crop diversion. During this time,
payments for conservation practices, as such, rose from $60 million to slightly more
than $200 million and beginning with the 1944 program year, when crop diversion pay-
ments were stopped, conservation payments expanded somewhat. In the 1953 program
year, a sharp change in the nature of payments began. There was a shift away from
many small payments, often for practices of a temporary kind, to fewer payments for
larger projects of greater longer-run effectiveness. Since 1944, numbers of participating
farms have, in general, trended downward, and since 1953, payments per average farm
have about doubled. (One of the charts prepared for the Held-Clawson soil conserva-
tion study, which is in draft form.)










systems now used, which can vary from one type of land use to another and
from one regional level to another; and to suggest ways in which a nationally
useful program of land use statistics can be formulated. While, in view of
the multi-centered nature of the American culture, no one uniform set of
procedures would be workable or even desirable, the committee believed
that if a reasonably good system of data collection, analysis, and publication
could be devised, the advantages of generally comparable data would be so
great as to warrant a degree of accommodation to uniformity on the part of
public agencies and private organizations.
In June, the committee completed its deliberations and at the end of the
program year a draft manuscript was being circulated for critical review.

THE RURAL-URBAN FRINGE. When a rural area is converted rapidly into
an urban one, the result all too often is both unsightly and inefficient.
Unco-ordinated planning produces urban sprawl, and large-scale land
speculation brings about high costs to the new residents and high prices
for pockets of unused land. Little systematic analysis has been made of
the forces which produce this situation, particularly of the processes by
which capital is created both by direct investment and by asset appreciation
on anticipated income.
Current policies that affect land conversion processes are being examined
to arrive at a better understanding of the effects of the land market and
conversion process on land use patterns, quality of environment, and de-
velopment costs. Some of the fundamental issues concern the character
of property rights in land resources, including questions of access, and the
distribution of costs and gains. Of particular interest are the tax deferral
and preferential assessment procedures for rural-urban fringe areas enacted
by several states.
The work is being done under an RFF grant of $15,000 to Michigan State
University. A. Allan Schmid, associate professor of agricultural economics,
is conducting the research while working at RFF headquarters.

CATTLE GRAZING VS. GAME MANAGEMENT. A land use conflict between
agricultural and recreational interests in the Southern Rocky Mountain
Trench, in British Columbia, is being surveyed under an RFF grant of
$4,390 to the University of British Columbia. The situation is typical of
many throughout the West in areas where game is rich and agricultural
productivity relatively poor; hence, it is hoped that field research will un-
cover a means of approach to the problem that is applicable beyond the
limits of the area studied.
The valley slopes are used by marginal farmers who graze beef cattle
with consequent deterioration of the grass cover and range of the mule
deer and elk, which come down from the high ranges during the winter.
The grazing lands are also used for the production of Christmas trees.


m


_1










The problem is complicated not only by the diversity of uses involved but
by the several provincial government agencies concerned-primarily the
Forest Service, the Department of Recreation and Conservation, and the
Department of Agriculture-each of which operates under different statutes.
The project, which is in the nature of a pilot study, is being undertaken
by Peter H. Pearse and Anthony Scott, of the Department of Eco-
nomics at the University.


RELATED ACTIVITIES. Supplementing their research in problems of land
use planning, members of the RFF staff participated in a number of semi-
nars and conferences, undertook consulting assignments, and prepared
several papers. Joseph L. Fisher presented a paper, "Meeting Future
Challenges in Conservation," to the Soil Conservation Society of America,
at Jackson, Mississippi. Mr. Clawson was consultant to Cornell Univer-
sity on a possible university program dealing with problems of suburban
growth; and he addressed the Honors Colloquium at the University of
Rhode Island on rural and suburban planning. He presented a paper on
the role of the federal government in natural resources at the annual con-
ference of the California Chapter, American Institute of Planners; and
participated in the Resources Seminar of the Department of City and Re-
gional Planning at Harvard University.
Mr. Held discussed emerging problems in the use of land and other re-
sources in an address to a Regional Outlook Conference at the University
of Maryland, and dealt with related problems in published papers (see
page 104).


Forestry


THE FOREST RESOURCES OF APPALACHIA. Forest land constitutes one of
the major physical assets of the chronically depressed Appalachian region.
As an economic asset, however, the forests today are deficient. Not only
have they been downgraded by repeated cutting, but to a large extent un-
favorable topography and the small size of many of the holdings make
efficient forest management difficult. Another factor has been shifting
markets for different wood products which have been much more favorable
to some species than to others. Nevertheless, given the right mix of con-
ditions the Appalachian forests seem to offer one means of improving the
economy of the region.
Under an RFF grant of S20,000 to the School of Forestry, Duke Univer-
sity, alternative ways of improving the economic productivity of the forest
resource of Appalachia and increasing its contribution to the local economy
are being explored. The study will consider the possibilities and limitations


r










of profitable private forestry under different conditions as to site, size of
holding, access to markets, and other factors. It will also appraise the social
gains that might be derived from more intensive forestry and will examine
the potentialities of the forest land for recreation and watershed use. An


APPALACHIA GROWS a sizable share of the hardwood growing stock on productive
forest lands east of the Great Plains, but the region's comparatively low rate of cut
suggests that marketing arrangements for hardwoods as a whole are less than adequate
when compared with the rest of the East. There is quite a range, though, among the
relative regional growth-cut positions of individual hardwood species. Softwoods, on
the other hand, which account for 37 per cent of the timber harvested from Appalachian
growing stock, seem to enjoy relatively greater marketing advantages within the region
than elsewhere in the East. In absolute terms, of course, growth exceeds cut for both
hardwood and softwood species groups throughout the eastern United States.


m










investigation of alternative institutional arrangements by means of which
suitable forms of forestry management might be developed will be an im-
portant element in the research.
The project is being conducted by James G. Yoho, professor of forest
economics at Duke University. Mr. Yoho is working on the study at RFF
headquarters.

THE DOUGLAS FIR INDUSTRY. A report of research into the market be-
havior of the Douglas fir industry is in final stages of preparation. The
study, by Walter J. Mead, associate professor of economics at the Univer-
sity of California, Santa Barbara, has been partially supported by an RFF
grant. In August, Mr. Mead presented some of his findings in a paper
dealing with the relationship between control of timber resources and mar-
ket power, at the Conference on Tax Treatment of Depletable Resources,
held at the University of Wisconsin.

FORESTRY AND THE U.S. FOREST SERVICE. As part of its Regional Cultural
History Project, the University of California, Berkeley, is undertaking a
comprehensive historical evaluation of the Forest Service as a resource
management agency. Information is being collected by recorded inter-
views with men who have occupied key positions in the Service, supple-
mented by data from written sources. Broadly, the material gathered
will deal with three areas: the development of forestry as a profession, the
administrative policies and practices of the Forest Service, and the public
and political pressures that gave direction to the agency's work.
Resources for the Future is assisting the project with a grant of $3,000
to the University. Henry J. Vaux, dean of the School of Forestry is prin-
cipal investigator; Amelia R. Fry is project director.

RELATED ACTIVITIES. Two addresses on economic problems affecting
forest resources were given by Mr. Fisher-one to the 54th Western Forestry
conference, at San Francisco; the other to the Society of American Foresters
conference, at Denver. Jack L. Knetsch presented a paper on values and
prices of outdoor recreation at the Forestry Short Course, University of
Missouri.


Outdoor Recreation


Much of the work Resources for the Future is doing in the field of out-
door recreation fits into the over-all pattern of land use and management
research as pieces relating to changing land uses. The studies of soil con-
servation, urban fringe areas, and forest land, described earlier in this sec-










tion, all deal in part with the needs of an increasing population for recrea-
tional space and with the economic and social effects of using agricultural
and forest land, or land that is close to cities, for recreational purposes.
At the same time, basic studies in the economics of outdoor recreation are
being made in an attempt to establish measures of demand, value, and hence
of pricing that can be helpful in formulating public and private plans for
various kinds of recreation development. Some of the considerations in-
volved are: appraising the allocation of land resources and the shifts among
uses; estimating the payments to various factors of production; examining
the complementary and competitive relation between recreation facilities;
and evaluating the large and growing expenditures made for equipment and
travel and for goods and services marketed in areas near recreation facilities.

-Mr. Knetsch, working with Mr. Clawson, is doing the economic analyses
required for this research, the rationale and scope of which have been ex-
plained in several journal articles (see page 105). One of these, "Outdoor
Recreation Research: Some Concepts and Suggested Areas of Study," by
Clawson and Knetsch, first published in the October 1963 issue of the Nat-
ural Resources Journal and also in the 1964 Proceedings of the National
Conference on Outdoor Recreation, is available as RFF Reprint No. 43.
The outcome of this research will contribute to a broad socioeconomic
study of the future of outdoor recreation in the United States. Some of
the background thinking for the study, in particular that concerned with
the prospects for increasing leisure time, was presented by Mr. Clawson
in a monograph published in April 1964 by the American Academy of
Political and Social Science. It has since been reprinted under the title
"How Much Leisure, Now and In the Future?" as RFF Reprint No. 45.

RELATED ACTIVITIES. A number of papers on outdoor recreation were
presented during the year. Mr. Clawson spoke on recreation values in the
Potomac estuary, at the winter meeting of the Interstate Commission on the
Potomac River Basin; on population and its challenges to recreation, at
the 16th Municipal Recreation Directors Conference, University of North
Carolina; on recreation in an affluent society, at a seminar and public meet-
ing sponsored by the Institute of Government and Public Affairs and the
Department of Economics, University of California (Los Angeles); and
on planning to meet future recreation demand, at a meeting of the Con-
servation Council of Ontario, Toronto. He also chaired a session on out-
door recreation at the Western Resources Conference, held at the Univer-
sity of Colorado.
Mr. Knetsch presented papers on recreation as a purpose of water re-
source projects, at a summer meeting of the American Farm Economic
Association, at Purdue University; basic concepts in outdoor recreation,
at the Louisiana Outdoor Recreation Seminar, at Louisiana State Univer-










sity; outdoor recreation in the market place, at the Virginia Outdoor Recrea-
tion Symposium, at Virginia Polytechnic Institute; and on marketing
research and recreational use of resources, at the convention of the Asso-
ciation of Southern Agricultural Workers, Atlanta.
Robert K. Davis presented a paper on the value of big game hunting in a
private forest, at the 29th North American Wildlife and Natural Resources
Conference, at Las Vegas. A session of the conference was chaired by
Irving K. Fox.

INTERNATIONAL PARK SYSTEMS. A grant of $10,400 has been made to
the International Commission on National Parks of the International
Union for the Conservation of Nature and Natural Resources, in support
of its program through 1964. The Commission is working toward the es-
tablishment of a planning and consultative service for countries-par-
ticularly the less developed ones-who may wish assistance in designing
and managing their park systems. During the past year, under an earlier
grant from RFF, preliminary work was carried out in several countries
including Turkey, Pakistan, and Korea.
William J. Hart is in charge of the project, which is directed by Harold J.
Coolidge, chairman of the Commission.


I










REGIONAL AND URBAN STUDIES


Regional Economic Growth: Symposium on regional analysis-Resources
and people in East Kentucky-The Pacific Northwest-U.S.-Canadian trade
and tariff structure-Patterns of regional growth-Resource availability and
regional growth-Movements of the labor force. Committee on Regional Ac-
counts: Elements of regional accounts-Regional accounts in California-
Informational flow system for California. Committee on Urban Economics:
Urban public expenditures-Human resources in the urban economy-Munici-
pal-type goods and services-A preface to urban economics-Cost-benefit
analysis in town planning-Seminar on models of land use development-Local
and national financial relations-Metropolitan area growth-Urban and
regional studies at U.S. universities-Public policies in urban renewal-
Fellowship program in urban economics.




THE INTERRELATIONSHIPS between national, regional, and local
policies and actions are sometimes hard to see and still harder to under-
stand. Many of the regional and urban studies undertaken by Resources
for the Future during the last few years point to the need for concentrated
research in this aspect of economic growth; several new studies focusing
upon it have been started. The studies of regional growth patterns and
of the regional effects of the tariff structure between the United States and
Canada, described below, examine these interrelationships. At the urban
level, two new studies sponsored by the Committee on Urban Economics
deal with factors bearing on national-urban interrelationships.
RFF's concern for maintaining or improving the quality of the resource
environment is reflected in much of the research done under the regional
and urban studies program. Rapid urbanization in the United States, as
well as elsewhere in the world, is accentuating old environmental problems
and producing many more. One approach to this situation emphasized
in the urban studies is through land use planning that has regard for the
total design of an area in relation to the requirements of the larger region
of which it is a part. Another approach lies in finding ways of communica-
ting the results of research to persons who must make decisions affecting the
quality of the urban environment. The work of the committees on Urban
Public Expenditure and on Human Resources has been useful in this regard.
Further work of this nature has been undertaken by Lowdon Wingo, Jr.,
whose continuing research is directed toward developing techniques of
analysis which can guide public officials and businessmen in making in-










vestment decisions consistent with community objectives. Since July Mr.
Wingo has been working in Chile, where he is examining the question of
social overhead requirements-those of water supply, transportation, and
education, for example-within the context of the problems and poten-
tialities of urban planning in Latin America.


Regional Economic Growth


SYMPOSIUM ON REGIONAL ANALYSIS. Scholars from several universities and
institutions met to exchange experience in conducting research in regional
economic analysis at a symposium held in April at the University of Texas.
A group of regional studies which are approaching completion, among them
several sponsored by Resources for the Future, provided the materials for
a comparison of analytical techniques and a discussion of interpretations.
The symposium was sponsored jointly by the University of Texas and
Resources for the Future, which made a grant of $1,500 toward its support.
It was planned and conducted by Benjamin Higgins, Ashbel Smith professor
of economics at the University, who is making a study of the economic
growth of the Southwest. His is one of a series of RFF-sponsored case
studies of specific regions-Florida, the Manufacturing Belt, the Southwest,
the Pacific Northwest, Alaska, East Kentucky-some of which are already
published and others nearing completion.
Participating in the symposium were researchers from the University of
Texas who, with Mr. Higgins, have worked on the regional study of the
Southwest, and a number of regional analysts from other universities.

RESOURCES AND PEOPLE IN EAST KENTUCKY, by Mary Jean Bowman and
W. Warren Haynes, was published by The Johns Hopkins Press during the
year. The book is the result of research conducted in the course of one of the
RFF-sponsored regional case studies mentioned above. It provides a careful
analysis of the factors-historical, geographic, economic, and sociological-
that underlie the persistent difficulties of this part of the depressed Ap-
palachian area, and defines the limits within which programs of rehabilita-
tion can operate.
The book is divided into two parts. The first deals with the structure of
the region's total economy and social environment. The second focuses on
the coal industry which dominates the industry pattern of East Kentucky:
more than half of the employed male labor force in the most heavily popu-
lated counties is dependent on mining. Here, the cost characteristics of
various sized operating units in the East Kentucky coal fields and sub-
areas are compared to arrive at an understanding of the cycle sensitivity
of the region's field as a whole and its longer-run prospects.


r









Both parts of the book have relevance beyond the geographic area under
study: the first as a guide to understanding the problems of any area left
stranded by the forces of economic change; the second as a study of the
problems posed by continuing adjustments within the coal industry as a
whole.

THE PACIFIC NORTHWEST. Results of some of the research conducted by
James N. Tattersall, assistant professor of economics at the University of
Oregon, under an RFF grant to the University, appeared in the July issue
of the Oregon Business Review under the title "The Oregon Economy Since
World War II." Mr. Tattersall's continuing project deals with natural
resources and economic development in the three northwestern states of
Oregon, Washington, and Idaho.

U. S.-CANADIAN TRADE AND TARIFF STRUCTURE. Research on the probable
effects of freer trade on the structure of Canadian and U.S. industries, con-
ducted during the year by Ronald J. Wonnacott under an RFF grant to the
University of Western Ontario, has been completed. Analysis has included a
comparison of differences in labor cost, transportation costs, taxes, and
capital costs among five Canadian and thirteen U.S. regions. These were
ranked in terms of such characteristics as proximity to markets, resources
and manufactured supplies, and the external economies that present levels
of concentration may provide. Aspects of the study were dealt with in an
article by Mr. Wonnacott, "Wage Levels and Employment Structure in
U.S. Regions: A Free Trade Precedent," which appeared in the August 1964
issue of the Journal of Political Economy.

-The results of this research provide the basis for a new, closely related
study dealing with the changing distribution of income and deployment of
industry that could emerge from a policy of reduced tariffs between the two
countries. In Canada, tariffs result in higher pricing of domestically pro-
duced goods; the effect has been estimated at 32 per cent of Canada's
GNP. At the same time, U.S. tariffs place a barrier on the entry into the
United States of Canadian goods unless the costs of production-for labor
as well as for resource commodities-are substantially less than those in the
United States. Any program which modifies the tariff barriers between
the two nations will not only alter these effects industry by industry, but
also produce changes in the location of industry within the eighteen areas
under study.
Mr. Wonnacott will examine those products in which each country has an
apparent advantage, along with their present importance in international
transactions. A later objective is to appraise the possible adjustments, in
the event of tariff reduction, in relative price levels in the two countries, in
terms of both the exchange rate and domestic wage and price levels.










The project is supported by an RFF grant of $12,600 to the University of
Western Ontario, where Mr. Wonnacott is associate professor in the De-
partment of Economics and Sociology, and a research agreement of $7,400.
Mr. Wonnacott will be assisted in this study by Paul Wonnacott, associate
professor of economics at the University of Maryland and Visitor at the
University of Western Ontario during 1963-64.

PATTERNS OF REGIONAL GROWTH. Using statistical and analytical materials
assembled on a county basis by the Office of Business Economics of the U.S.
Department of Commerce, Edgar S. Dunn, Jr., is studying patterns of
regional economic growth in the United States over the past two decades.
The work builds on the earlier research and analysis he contributed to
RFF's Regions, Resources, and Economic Growth (1960), but the regional
and sectoral breakdowns of the present statistics offer an unusually good
opportunity to probe more deeply into the dynamics of recent and con-
temporary economic growth.
Under a temporary appointment to the RFF staff Mr. Dunn is devoting
full time to this and related studies. He is also serving as chairman of the
Committee on Data Sources and Information Systems, American Statistical
Association.

RESOURCE AVAILABILITY AND REGIONAL GROWTH. In the course of a study
of how the availability of natural resources influences regional economic
development, George H. Borts, chairman of the Department of Economics
at Brown University, has examined the extent to which water scarcity in
different parts of the country) may have diverted the growth of industry
and stimulated economy in the use of water. The focus has been on the
pulp and paper industry.
A second phase of the study deals with the influence of natural resource
scarcity on the growth of a large region. The investigation is being carried
out by means of a growth model in which three productive sectors are de-
scribed, one producing resource commodities, a second industrial goods, and
a third services. The model describes an economy in which the growing
scarcity of natural resources leads to their increasing importation and rising
relative price. Assumptions concerning rates of technological change and
changes in consumer tastes are built into the model. Alternative adjust-
ments can be tested by using available historical statistics.
The work is being done under a 1962 RFF grant to Brown University.

MOVEMENTS OF THE LABOR FORCE UNDER ECONOMIC CHANGE. Resources
for the Future has made a grant of $25,955 to Indiana University in support
of a study of the redistribution of manpower among regions, industries, and
occupations as economic patterns change and the natural resources that
are involved shift in importance.










Beginning in February, George J. Stolnitz, professor of economics at the
University, will spend a year with the RFF staff to work on this project.
As the basis for his analysis, he hopes to develop a new statistical framework
which would enable him to identify to some degree the magnitudes, deter-
minants, and consequences of manpower movements. Such a framework
would be similar in structure to the input-output approach for commodities
and thus could be related to other regional economic data and analyses.



Committee on Regional Accounts


The Committee on Regional Accounts, which was established five years
ago to explore ways of developing a system of economic accounts for regions
and metropolitan areas, brought out its second collection of research papers
in June under the title Elements of Regional Accounts. This is a sequel to
the 1961 volume, Design of Regional Accounts. Both books were published
for Resources for the Future by The Johns Hopkins Press. First introduced
for critical discussion at a conference held in 1962, the nine principal papers
and eleven commenting papers in the current book were edited by Werner
Z. Hirsch. Titles and authors are as follows:

Flows and the Analysis of Regional Development-James M. Henderson, Univer-
sity of Minnesota;
Regional Income Account Estimates-Edwin F. Terry, Federal Reserve Bank of
Kansas City;
Public Finance as an Integral Part of Regional Accounts-Jesse Burkhead,
Syracuse University;
Data for the Public-Finance Sub-Account-Dick Netzer, New York University;
An Accounts Framework for Intrametropolitan Models-Britton Harris, Univer-
sity of Pennsylvania:
The Use of Intrametropolitan Data-William A. Niskanen, U. S. Department of
Defense;
The Measurement of Human Resources in a Regional Accounting Framework-Leo
F. Schnore, University of Wisconsin;
Manpower Movements: A Proposed Approach to Measurement-George J.
Stolnitz, Indiana University;
Toward an Integrated System of Regional Accounts: Stocks, Flows, and the
Analysis of the Public Sector-Harvey S. Perloff, RFF; and Charles L. Leven,
University of Pittsburgh.
Comment Papers: George H. Borts, Brown University; Sidney Sonenblum,
University of California, Los Angeles, and the National Planning Association;
Ruth P. Mack, Institute of Public Administration; Charles E. Ferguson, Duke
University; Harvey E. Brazer, University of Michigan; Lyle C. Fitch, Institute of
Public Administration; Ira S. Lowry, The RAND Corporation; Lowdon Wingo,
Jr., RFF; Hal H. Winsborough, Duke University; Karl A. Fox, Iowa State
University; and Werner Z. Hirsch, University of California, Los Angeles.


L










The Committee's current program is designed to implement the concepts
it has already developed and to encourage the maintenance of regional
accounting activities. Two studies in this direction, concerned with the state
of California, are described below. The Committee's third conference was
scheduled for November 19-21, 1964.
Members of the Committee on Regional Accounts are: Werner Z. Hirsch
(chairman); Harold J. Barnett, Washington University; George H. Borts,
Brown University; Douglas Greenwald, McGraw-Hill Publishing Company;
Edgar M. Hoover, University of Pittsburgh; Nathan M. Koffsky, Economic
Research Service, U.S. Department of Agriculture; Charles L. Leven,
University of Pittsburgh; Herman Miller, U.S. Bureau of the Census;
Harvey S. Perloff, RFF; Sidney Sonenblum, University of California, Los
Angeles, and National Planning Association.

REGIONAL ACCOUNTS IN CALIFORNLA. A method of constructing regional
income and product accounts for states and counties has been developed in
the course of a 1962 project supported by RFF at the University of Cali-
fornia, Los Angeles. Robert M. Williams, chairman, Business Economics,
assisted by H. T. Moody, a graduate student, is conducting the research.
In addition, income and product accounts for the state of California in 1958
have been estimated, and preliminary estimates of the major components
of regional product for Southern California in 1958, 1962, 1963, and 1964,
have been made as part of the UCLA Business Forecast for 1964. The
latter estimates were included in The Prospects for Business in 1964, the
proceedings of the Twelfth Annual UCLA Business Forecasting Conference.
Further work on regional income and product accounts will be conducted
by UCLA's newly established Regional Economic Analysis Project, which
will also undertake the construction of forecasting and growth models for
the Southern California economy. Meantime, Mr. Williams and Mr. Moody
are completing their estimates of income and product accounts for Southern
California for the period 1950 to 1963.

INFORMATIONAL FLOW SYSTEM FOR CALIFORNIA. Under a three-year RFF
grant of $39,926 to the University of California, Los Angeles, a project has
been started to design and implement an informational flow system for the
state of California. It will draw on concepts developed in studies stimu-
lated by the Committee on Regional Accounts and other groups. Two
approaches will be used: the state will be viewed, first, as a system of in-
ternal interrelationships, and second, as it is affected by relationships be-
yond its borders. Thus, current research deals with the kinds of socio-
economic information needed to understand the more critical problems
California can expect in the coming years; and later research will be con-
cerned with the regional disaggregation of national changes-information
that will have relevance not only for California but also for other states.

76










Werner Z. Hirsch, director of the University's Institute of Government
and Public Affairs, and Sidney Sonenblum, research economist on leave
from the National Planning Association to work with the Institute, are
jointly conducting the study.


Committee on Urban Economics


Most of RFF's work in urban problems has been done through or in col-
laboration with its Committee on Urban Economics, which was established
in 1959 under a grant to Resources for the Future from the Ford Founda-
tion. At the close of the program year, Resources for the Future received a
further grant of $900,000 from the Ford Foundation to continue the work
of the Committee for the next five years. Wilbur R. Thompson will be
director of the Committee's program. Harvey S. Perloff will continue as
chairman.
The Committee's membership is composed of scholars who have made
notable contributions to the study of urban economics. The members
meet periodically to co-ordinate and exchange information on the work in
progress in universities and institutions throughout the country; to initiate
or encourage the support of new research; and to devise co-operative ap-
proaches toward the solution of specific sets of urban economic problems.
The Committee is organized along five main lines of endeavor: (1) issues
associated with the structure of urban economies and their relationship to
regional and national economies; (2) issues arising out of the distribution
of an urban area's economic activities among the various parts of the area;
(3) issues concerned with the efficient allocation of the community's
public resources, goods, and finances as they interact with the private
sector; (4) issues dealing with households as producers and consumers of
goods and services; (5) co-operation with the Committee on Regional Ac-
counts, with which the Committee on Urban Economics is closely associ-
ated, in developing a body of urban economic information suitable for
comparative analysis.
To assist the Committee in stimulating research and exchanging the
resulting information in these five areas, two advisory committees operate
in the fields of urban public expenditure and human resources.
Members of the Committee on Urban Economics are: Harvey S. Perloff,
RFF (chairman); Harold J. Barnett, Washington University; Joseph
L. Fisher, RFF; Lyle C. Fitch, Institute of Public Administration; Walter
W. Heller, Council of Economic Advisers; Werner Z. Hirsch, University
of California, Los Angeles; Edgar M. Hoover, University of Pittsburgh;
Howard G. Schaller and Arthur M. Weimer, Indiana University; and Low-
don Wingo, Jr., RFF (secretary).


---










The research conducted or sponsored under grant, results published,
working conferences held, and educational activities pursued under the
Committee's program during the year are described below.

SUBCOMMITTEES ON URBAN PUBLIC EXPENDITURES AND ON THE ECONOMICS
OF URBAN HUMAN RESOURCES. The committee appointed by the Committee
on Urban Economcs to stimulate research in the field of urban public ex-
penditures held its second conference at New York University, February 21-
22, under the chairmanship of Julius Margolis, of Stanford University.
Four main problem areas were dealt with: The Theory of Public Choice,
chaired by Harvey S. Perloff, RFF; The Voting Process and Public Choice,
chaired by Robert C. Wood, Massachusetts Institute of Technology; Eco-
nomic Criteria in Public Service, chaired by J. W. Milliman, Indiana Uni-
versity; and External Effects of Public Services, chaired by Lyle C. Fitch,
Institute of Public Administration.
Papers presented to the conference were as follows:

Comparative Resource Outlay under Public and Private Organization-James
Buchanan and Gordon Tullock, University of Virginia;
Long-run Welfare Criteria-Harvey Leibenstein, University of California;
The Theory of Economic and Political Decision Making as a Single System
-Jerome Rothenberg, Northwestern University;
Voting Behavior on Municipal Public Expenditures-Edward Banfield and James
Q. Wilson, Harvard University;
Statistical Tests of Political Influences in Public School Expenditures and Taxes
-Otto Davis, Carnegie Institute of Technology;
Voting and Choice Among Social Values in a Public Enterprise-Benjamin Ward,
University of California;
Rationalizing Decisions in Water Supply Quality Management in Urban-Industrial
Areas-Allen V. Kneese, RFF;
The Welfare Economics of Urban Transportation Expenditures and Pricing-
Robert Strotz, Northwestern University;
The Social Opportunity Cost of Land-William Vickrey, Columbia University;
Jurisdictional Disparities Between Costs and Benefits of Local Government
Programs in Metropolitan Areas-Benjamin Chinitz, University of Pittsburgh,
and Charles Tiebout, University of Washington;
Theory and Measurement of External Effects of Public Education-Burton Weis-
brod, Council of Economic Advisers;
Spatial Interdependencies in Urban Public Expenditures: A Case Study-Na-
thaniel Lichfield, University College, University of London.

Formal discussions of the conference papers were given by Richard Mus-
grave, Princeton University; Andrew Whinston, Yale University; Bernard
Saffran, University of California; Douglas Price, Syracuse University;
Werner Hirsch, University of California, Los Angeles; Anthony Downs,
The RAND Corporation; George Tolley, North Carolina State University;










Peter Steiner, University of Wisconsin; Otto Eckstein, Harvard University;
Dick Netzer, New York University; Roland McKean, The RAND Cor-
poration; and Jesse Burkhead, Syracuse University.
The 1964 conference papers are being edited by Mr. Margolis for publica-
tion as a companion to Public Expenditure Decisions in the Urban Com-
munity (Howard G. Schaller, editor), an RFF book resulting from the com-
mittee's 1962 conference, published in December 1963.

-Papers and comments presented at a 1962 conference sponsored by the
Committee on Urban Economics and organized by a subcommittee on the
economics of urban human resources, appointed for the purpose, were
published as an RFF book during the program year. Human Resources
in the Urban Economy was edited by Mark Perlman, of the University of
Pittsburgh's Center for Regional Studies, who had chaired the conference.

MECHANISMS FOR PROVIDING MUNICIPAL-TYPE GOODS AND SERVICES. A
study of the interrelationships within and between metropolitan, regional,
and federal systems in providing goods and services at the municipal level
is being made by Robert Warren, of the Department of Political Science,
University of Washington. Mr. Warren, who is on a year's leave of absence
from his university while working on this project at RFF headquarters in
Washington, is assembling and analyzing data with particular concern
for the nature, consequences, and implications of federal programs and
policies relating to municipal-type services for the organization of govern-
ment in metropolitan areas.
An article by Mr. Warren, published in the August issue of the Journal
of the American Institute of Planners, challenges the organizational theory
upon which most metropolitan reform proposals are based, suggesting that
it does not fully explain the characteristics and capacities of decentralized
systems of government and therefore provides no basis for comparing the
performance of such a system with one that is formally centralized. The
article has been reprinted as RFF Reprint No. 48. Other articles resulting
from Mr. Warren's study are listed on page 106.

A PREFACE TO URBAN ECONOMICS. A survey of urban economics, an
educational project of the Committee on Urban Economics begun by Wilbur
R. Thompson in 1961 while working with the RFF staff, is being revised for
publication in the summer of 1965. Last year a review draft, entitled "A
Preface to Urban Economics," was distributed to a limited number of fac-
ulty members teaching courses in urban or regional economics. Their ex-
perience when testing it out in the classroom will guide the final revisions.
Mr. Thompson expects to complete the book, the first of its kind to be
written in this area of study, while working at RFF headquarters in Wash-
ington. Through RFF grants of $20,018 to Wayne State University,










where he is professor of economics, Mr. Thompson will be able to devote
the coming year to extending his analysis of the urban economy to the
"system of cities" which is a major aspect of the national economy.

COST-BENEFIT ANALYSIS IN TOWN PLANNING. For the past two years a
project has been under way to demonstrate how cost-benefit analysis can
be used in the field of town planning and development. Under a grant to
University College, University of London, Nathaniel Lichfield is using
actual current problems in English town planning to show how the analysis
can help in reaching sound decisions on them; concurrently, he is developing
the theory of cost-benefit analysis against the background of the case studies.
During the program year, Mr. Lichfield published several papers dealing
with aspects of his research (see page 103). He is continuing to work on
two case studies, applying cost-benefit analysis to alternative plans for re-
development of the central business district at Swanley and to a proposal to
build an out-of-town department store at Birkenhead. He is also analyzing
a number of Ministerial decisions in cases where private developers are
appealing against refusal of planning permission by local au horities.

SEMINAR ON MODELS OF LAND USE DEVELOPMENT. The Institute for
Urban Studies, University of Pennsylvania, sponsored a three-day sem-
inar on models of land use development, October 22-24, 1964. A grant of
$2,500 was made in support of the project.
The seminar, which was chaired by Britton Harris, associate professor of
city planning, brought together people who for the last five years have
been concerned with research in the field of intrametropolitan organization
and change, to enable them to plan directions of future research.

LOCAL AND NATIONAL FINANCIAL RELATIONS. A small grant has been made
to Canisius College, in support of a research project to be conducted by the
Reverend Donald J. Curran, professor of economics, who was the recipient
of a Committee on Urban Economics fellowship in 1961. Father Curran's
present concern is with the implications of greater federal government in-
volvement in metropolitan development.

METROPOLITAN AREA GROWTH. A study of metropolitan area growth
undertaken by the National Planning Association under a grant recom-
mended by the Committee on Urban Economics, is approaching completion.
By the end of September, computations for historical employment and
population data for every Standard Metropolitan Statistical Area in the
United States for 1950, 1957, 1960, and 1962 had been finished, and projec-
tions to 1976 of employment, population, and personal income were in the
process of being programmed. The study was directed first by Sidney
Sonenblum and later by Mannie Kupinsky.










URBAN AND REGIONAL STUDIES AT U.S. UNIVERSITIES. During 1963, the
Bureau of Community Planning at the University of Illinois sponsored the
preparation of a survey of recent and current research and graduate educa-
tion programs in urban and regional problems. The survey, which was
supported by a grant made under RFF's Committee on Urban Economics
program, was conducted by Scott Keyes, associate professor of regional
planning, who has for some years edited the Bureau's Research Digest. Mr.
Keyes's report, based on questionnaire responses from 244 groups at 99
institutions across the country, was published in May by Resources for the
Future under the title Urban and Regional Studies at U. S. Universities.

PUBLIC POLICIES IN URBAN RENEWAL. Some results of a study of public
action and expenditures and their relationship to private development in
the context of urban renewal, made under a 1961 grant to the University of
California, Berkeley, were published in the February issue of Land Eco-
nomics. The article, "Public Policies in Urban Renewal: An Economic
Analysis of Justifications and Effects," is by A. H. Schaaf, associate profes-
sor of business administration at the University. A reprint of the article
is available as Reprint No. 36 from the Center for Real Estate and Urban
Economics, Institute of Urban and Regional Development, University of
California, Berkeley.

THE FELLOWSHIP PROGRAM IN URBAN ECONOMICS. Five doctoral dis-
sertation fellowships were awarded during the year under a program ad-
ministered by RFF's Committee on Urban Economics. Candidates and
the titles of their dissertations are listed on page 93.

RELATED ACTIVITIES. In the course of the year, Mr. Wingo served as a
member of the following bodies: Technical Review Panel, Pittsburgh Com-
munity Renewal Program; Panel on Model State Planning Legislation,
American Law Institute; Board of the Regional Science Association; Land
Use Committee of the Highway Research Board, National Academy of
Science-National Research Council; Technical Review Panel, Pittsburgh
Regional Project. In May he was guest lecturer at the Bureau of Govern-
ment and Public Affairs, University of California. In August he pre-
sented a paper, "The Role of Infrastructure in Regional Development,"
to a meeting of PLANDES, the Chilean national association of regional
planners, at Santiago.










APPRAISALS AND SPECIAL PROJECTS


Government resource allocation-Radio spectrum-Decade of national plan-
ning-Program in Latin America-Latin-American cotton exports-U.S.S.R.
natural resource planning-World prospects for natural resources-Ocean
fisheries.




SEVERAL OF THE STUDIES undertaken or sponsored by Resources
for the Future, while part of the total program, do not fit into any of the
specialized areas of study in which most of the work is done. Some of
these cross area lines to appraise current and emerging problems to do with
a variety of natural resources. A major staff undertaking of this kind was
the preparation of the appraisal of future resource adequacy in the United
States, which resulted in publication last year of Resources in America's
Future and this year of its briefer, simplified version, Natural Resources for
U.S. Growth (see page 89). Other studies with a narrower resource focus
may be undertaken in an attempt to probe special facets of resource prob-
lems that have worldwide significance. Studies of both kinds that were
begun or completed during the program year are described below.

A THEORETICAL APPROACH TO GOVERNMENT RESOURCE ALLOCATION. Al-
though it is usually assumed that some form of government action is re-
quired to protect the public interest in the use of natural resources, there
are as yet no valid means of determining the circumstances under which
it may be more beneficial to have certain activities carried out by the
government, by private enterprise, or by private enterprise with government
support or regulation.
Methods of analysis which can be used for such a purpose are still a
long way off, but a step toward their attainment is the objective of a study
begun this year by Otto A. Davis, assistant professor of economics at the
Carnegie Institute of Technology. Mr. Davis will attempt to develop a
body of theory for resource allocation in the public sector which will isolate
the relevant political influences and shed light on the decision processes
of public bodies making allocations. His work, which involves the con-
struction of mathematical models, will build upon recent studies of econo-
mists and political scientists in the field of public expenditure theory and
public decision making, including an RFF-sponsored study of federal
government decision making currently being made by Aaron Wildavsky,
of the University of California, Berkeley.










The project is supported by an RFF grant of S29,865 to the Graduate
School of Industrial Administration, Carnegie Institute of Technology.

THE RADIO SPECTRUM. During the last few years increasing pressures on
channel capacity-from educational TV, radio astronomers, electric utilities,
land mobile services and others-have shown that the radio spectrum ex-
hibits much the same characteristics and problems of demand and supply
as any other relatively scarce resource. Yet very little economic research
has been done to explore the efficiency of its allocation and management.
Resources for the Future has made a grant of $23,300 to Hofstra Uni-
versity to enable Harvey J. Levin, chairman of the University's Depart-
ment of Economics, to conduct a study of the economic-physical character
of the radio spectrum resource and of the administrative and regulatory
mechanism which guides its management. Emphasis will be placed on the
scarcity aspects of the resource and on possible incentives for economy
in the use of the spectrum. The fact that the economizing effect of market
price appears to be lacking in connection with the use of the resource
raises the question of whether an equivalent influence can be identified or
created within the framework of the procedures for frequency allocation.

A DECADE OF NATIONAL PLANNING. A study of federal, regional, state,
and local planning as it was conducted by the National Resources Planning
Board and the agencies that preceded it during the years 1933-43 is being
made by Albert Lepawsky, professor of political science at the University
of California, Berkeley. Mr. Lepawsky's main purpose is to provide a
better understanding of the country's experience with planning as an in-
strument of policy making and an implement of public administration. The
study may also help to explain the evolution of more recent and current
planning practice.
When the National Resources Planning Board was terminated in 1943,
having operated during the depression and early war years as the only
national agency in U.S. history to exercise comprehensive and integrative
planning functions, it left a large legacy of trained and experienced men.
Many lines of private and public work today stem from its experience, but
many of the problems it was created to solve still persist.
From its inception, the Board concerned itself with planning beyond
the federal level of government, becoming involved with local and state
planning, regional and metropolitan planning, interstate and river basin
planning, planning in the quasi-public and private sector, and certain as-
pects of international planning. Much of the study', therefore, will deal
with the exercise of the Board's planning functions and the impact of
national planning policies upon each of these government levels.
The project is supported by an RFF grant of $53,500 to the University
of California, Berkeley.













WORLD PROSPECTS FOR NATURAL RESOURCES. In many of the less de-
veloped areas of the world, population is increasing at the rate of 3 per
cent a year. In the more advanced countries there have also been rapid
increases. The capacity of the natural environment and its resources to
sustain desirable levels of economic growth for more and more people is,
therefore, of current concern to those who look ahead for more than a
decade.


(Price-weighted indices, world' average for all food, 1948-52= 100)
0 50 100 150 200 250 300 350

1934-38
NORTH AMERICA 1948.52
1953-57
1958-60

1934-38
OCEANIA 1948-52
1953-57
1958-60

1934-38
WESTERN EUROPE 1948-52
1953.57
1958-60


1934-38
TOTAL 1948-52
Three regions above 1953-57
1958-60


1934-38
TOTAL 1948-52
Four regions below 1953-57
1958-60


1934-38
LATIN AMERICA 1948-52
1953-57
1958-60

1934-38
NEAR EAST 1948-52
1953-57
1958-60

1934-38
AFRICA 1948.52
1953-57
1958.60 Livestock products

1934-38 1 Crop products
FAR EAST2 194852
1953-57
1958-60

0 50 100 150 200 250 300 350

I. Excluding L.S.S.R., eastern Europe, and Mainland China.
2. Excluding mainland China.

Estimated values of food supplies per capital by world regions. (One of the charts illus-
trating World Prospects for Natural Resources.


I










As a means of gaining some understanding of future trends, Resources
for the Future has experimented with an adaptation of analytical methods
previously used for reviewing the course of the U. S. economy, to appraise
the worldwide demand for natural resources and resource products in the
year 2000. The analysis is based on five indicators of scarcity: (1) produc-
tion and/or consumption trends for major resource products, especially
per capital trends; (2) employment per unit of output, as a measure of labor
productivity trends in resource industries; (3) relative price and/or cost trends
for resource commodities as compared to trends of prices and/or costs in
general; (4) trends in exports and imports, or net foreign trade; (5) trends
in the rate of production and use of resources compared to estimated stocks,
reserves, or potential.
Data for these five indicators are reasonably good so far as the United
States is concerned, but for whole continents and for many individual
countries they are scanty and uncertain. Nevertheless the procedure does
shed some light on current scarcities and, carried forward on the basis of
trends and hypothetical patterns of improvement in levels of living, it
provides an orderly background for interpreting speculations about future
resource demand. The study's greatest contribution, however, may lie in
the pinpointing of areas where additions and improvements in the data
are badly needed.
The study, by Joseph L. Fisher and Neal Potter, is being published by
RFF under the title World Prospects for Natural Resources: Some Projec-
tions of Demand and Indicators of Supply to the Year 2000. It is a revised
and fuller version of a paper first presented in May 1963 to the Twenty-
third American Assembly, and later published as a chapter in The Popula-
tion Dilemma, edited by Philip M. Hauser and published by Prentice-Hall.

OCEAN FISHERIES. A study of the problems of the ocean fisheries in-
dustry has been completed, and a manuscript is being prepared for pub-
lication. The Common Wealth in Ocean Fisheries, by Francis T. Christy,
Jr., of the RFF staff and Anthony Scott, professor of economics at the Uni-
versity of British Columbia, deals with a resource which is the common
property of the world community. The economic problems of the in-
dustry are closely bound up with the customs and laws stemming from the
principle of "freedom of the seas," a principle that is being severely tested
by rapidly increasing competition for fishery resources. An essay on
page 33 of this Report describes the scope and some of the content of the
forthcoming book.
In the course of his work in the field of ocean fisheries this year, Mr.
Christy presented a paper, "Efficiency in the Use of Marine Resources,"
to the California Governor's Conference on "California and the World
Oceans." The paper has since been reprinted as RFF Reprint No. 49.











PROGRAM IN LATIN AMERICA. In co-operation with the Institute of
Economic and Social Planning (Santiago, Chile), a unit of the United
Nations Economic Commission for Latin America, Resources for the Future
has begun a program of research on Latin-American problems of resources
and of planning for economic development. During the summer, two re-
source economists undertook assignments for about a year's field research
in several Latin-American countries.
Nathaniel Wollman, who has made studies of water requirements and
supplies foi Resources for the Future and for the Senate Select Committee
on Water Resources, working with Carlos Plaza V. of the Institute's staff,
will appraise practices for river basin planning in Latin America. Part of
the task will be to relate selected river basin development programs to
national economic goals and to suggest ways in which current practices
might be improved. His work is supported by RFF grants of 4-14 100 to
the University of New Mexico, where Mr. Wollman, on leave for this pur-
pose, is professor of economics.
Lowdon Wingo, Jr., research associate with RFF's Regional and Urban
Studies program, is engaged in a study of the factors which influence invest-
ment in urban social overhead, such as water supply, waste disposal, trans-
portation, and education. This type of investment absorbs a substantial
proportion of the new capital available to countries in Latin America.
It is hoped that Mr. Wingo's research will contribute to better investment
decisions in social overhead activities.
In addition, Irving K. Fox and Vera F. Eliasberg have been engaged in
a reconnaissance study of possibilities for developing criteria for investment
in resources surveys and investigations, as an aid to natural resources
planning in Latin America.

LATIN-AMERICAN COTTON EXPORTS. A study of cotton production and
export in two Latin-American countries is being undertaken under an RFF
grant of $4,875 to the University of Chicago. Cotton presents a good
example of a traditional Latin-American export commodity whose behavior
in international trade is not seriously affected by external non-price barriers
to exports. It is thought that an analysis of the factors which have af-
fected the postwar supply and export of cotton from Mexico, where produc-
tion has rapidly expanded, and Brazil, where it has fallen off, may have
relevance beyond the single commodity examined. Some guidelines may
be extracted for the study of key variables in Latin-American economic
growth, so far at least as it is based in agriculture.
The project is directed by Theodore W. Schultz, professor of economics
at the University; the research will be conducted by John M. Davis.

NATURAL RESOURCE PLANNING AND DEVELOPMENT IN THE U.S.S.R. A
study of regional and national resource planning and development in the


__











U.S.S.R. has been begun by Jack C. Fisher, assistant professor of city and
regional planning at Cornell University, under an RFF grant of $9,730 to
the University. For several years Mr. Fisher has concentrated much of
his research on urban and regional development in Yugoslavia and Poland,
and has traveled widely in Eastern Europe. As part of his current project,
which is exploratory in nature, he will compare methods and practices used
in resource planning and development in the U.S.S.R. with those used in the
United States. Mr. Fisher will be conducting a part of his research on the
project at RFF headquarters.

RELATED ACTIVITIES. The report of the Wealth Inventory Planning
Study, sponsored by The George Washington University under a grant
from the Ford Foundation, was published in June. Several members of
the RFF staff contributed to its preparation: Mr. Fisher, as a member of
its advisory committee; Mr. Potter, as secretary and author of the report
for the Study's Natural Resources working group; Orris C. Helfindahl, as
chairman and principal author of the report of the subgroup on Mineral
Wealth; and Marion Clawson, in a similar capacity for the Public Lands
subgroup. The Study's objective was to explore the possibilities for under-
taking a relatively detailed inventory of the national wealth and to develop
guidelines for the collection of the necessary data over the next five or
ten years.
During the program year, Mr. Fisher served as a member of the advisory
committee of the National Goals Project conducted by the National Plan-
ning Association's Center for Priority Analysis. Mr. Potter was con-
sultant on natural resources. The Project is attempting to estimate the
costs to the economy of achieving recognized national goals-from elimina-
tion of slums to the conquest of space-in the 1970's.
Hans H. Landsberg presented four papers, based on his continuing re-
search on the impact of changing technology on resource development, to
the following groups: the University of Rhode Island's Honors Colloquium;
the fourth biennial conference of the American Association for the United
Nations, at Washington; the sixth Western Resources Confelence and the
Rocky Mountain Petroleum Economics Institute, both at Boulder, Colo-
rado. He also conducted a staff seminar at the International Bank for
Reconstruction and Development.










87


am


1










RESOURCES EDUCATION



Natural resources ecology-Paperbacks for general reading-Graduate course
in resources-Citizen's manual on water resource development-Natural re-
sources and international development-Resources fellowships-Urban eco-
nomics fellowships.




THE LINK between the research and the educational aspects of RFF's
program is apparent in other sections of this report. Graduate students
assist in many of the RFF research projects under way at universities;
businessmen, government officials, and scholars exchange knowledge at
seminars held in connection with staff and grant-supported research. Much
of the research-that dealing with flood hazards described on page 15
is typical-stimulates continuing interaction at different levels of decision
making, from community groups to state and federal agencies of govern-
ment. Through informal arrangements with universities, members of the
RFF staff sometimes engage in teaching assignments on various aspects of
resource use and development, and members of university faculties oc-
casionally work at Resources for the Future headquarters on individual or
group research projects.
A few projects, however, are undertaken with resource education as
their direct objective. At the graduate student level, the RFF fellowship
programs offer an inducement to many students each year to focus their
studies on social science aspects of resource use and development and on
urban economics. At the general citizens' level, an effort is made, through
especially prepared books, public forums, and citizens' study programs,
to foster wider knowledge of policy issues posed by resource problems.

NATURAL RESOURCES ECOLOGY. The natural sciences and the social
sciences are being brought together in a study of man's use and manage-
ment of natural resources. The eventual objective is a book for students
and general readers, the manuscript of which is being written by Stanley
A. Cain, Charles Lathrop Pack professor of conservation and professor of
botany at the University of Michigan.
As his basis, Mr. Cain is using a syllabus he prepared for a course in
"Natural Resources Ecology," taught in the fall of 1963. The experiences
gained from this and from earlier years of teaching, research, and lecturing
on the subject, provide the background of this inquiry into the interrela-
tionships of man, natural resources, and the natural environment.












6.7% 2 Billion lbs. of
cotton equivalent
25 3. 1950 20 18.97 -
Industrial
use
.. ... 12.10 Household
8' /6 10 use

7.08
5.94 Apparel
4.4% .3% : use

19.9s: / 1960
S J 1950 1960 1980 2000


19.5': ,'
-___2.5% .2%
IU
1 980 :%1.9%
SCotton 5 .1%

SWool o 2000
Cellulosic '. '
(rayon and acetate) 4
I Non-cellulosic

Other

Trends in fiber consumption: principal uses, and how man-made types share the
total market. (One of the charts illustrating Natural Resources for U. S. Growth.)

Since August, Mr. Cain has been working on his manuscript-specifically,
its social science aspects-at RFF headquarters. He will continue to do
so during part of the 1964-65 year. RFF has made a grant of $13,447 to
the University of Michigan in support of this project.

PAPERBACKS FOR GENERAL READING. Upon completion of Resources in
America's Future (Hans H. Landsberg, Leonard L. Fischman, and Joseph
L. Fisher), RFF's long-range appraisal of the adequacy of natural resources
in the United States which was published last year, Mr. Landsberg drafted
a condensed and simplified version of the 1040-page book. This has now
been published as a 264-page paperback for general reading by The Johns
Hopkins Press, under the title Natural Resources for U. S. Growth: A Look
Ahead to the Year 2000. While retaining the essential information, reason-
ing, and conclusions of the parent book, the shorter version omits the










voluminous statistical appendix, much of the explanation of methodological
procedure, and some of the analysis concerning requirements and supplies
for particular commodities. Fifty-one charts replace the numerous tables
that appeared in the original book.
Judging by the widespread interest the parent book created, RFF be-
lieves that Natural Resources for U. S. Growth will serve a useful purpose
in bringing to a wider, less specialized public its projections of the nation's
resource position at the century's end-for consumer goods, intermediate
products, and raw materials-and the implications for policy that are
involved. Through a co-operative arrangement with Resources for the
Future, the Calvin K. Kazanjian Economics Foundation is distributing
10,000 copies of the edition to selected elementary and high school teachers
of social studies.

-Minerals and Men is the second paperback to be published for RFF by
Johns Hopkins. It was in press at the close of the program year. James
F. McDivitt, associate professor of mineral economics at The Pennsylvania
State University, who wrote this book for Resources for the Future, drew
much of his material from the results of RFF's minerals research. In-
tended for general readers and for university undergraduates and advanced
high school students, the new book traces the course of development among
major nonfuel minerals and explains the relationships between diminishing
sources of supply, continuing technological innovation, and worldwide
patterns of economic adjustment.
Two earlier books for similar audiences, both by Marion Clawson, were
published during the year by Rand McNally and Company. They are
Land for Americans, a condensed, simplified version of the RFF book Land
for the Future; and Land and Water for Recreation, which outlines the prob-
lems posed by a rapidly increasing demand for outdoor recreation and
indicates some of the policy issues that are involved.

GRADUATE COURSE IN RESOURCES. In the spring, members of the RFF
staff prepared and conducted a semester graduate course in Natural Re-
sources Development: Analysis and Policy, at The George Washington
University. Lectures and discussion dealt with the following topics:

Why study resources? Historical account of resource development in the United
States-Marion Clawson and Joseph L. Fisher;
Framework of demand and supply: trends, projections, problems-Hans H.
Landsberg and Joseph L. Fisher;
Policy making process for resources: federal, state, local, private-Vincent Ostrom;
Elements of economic and political theory for resource analysis-Orris C.
Herfindahl;
River system analysis and policy: theory, cases, evaluation-John V. Krutilla,
Allen V. Kneese, Robert K. Davis;










Outdoor recreation: analysis and development of a new industry-Marion Clawson
and Jack L. Knetsch;
Energy resource analysis and policy: United States and the world-Perry D.
Teitelbaum and David Brooks.

A CITIZEN'S MANUAL ON WATER RESOURCE DEVELOPMENT. The results
of more than seven years of work on water resource development in this
country are being assembled by the League of Women Voters for publication
as a book for general reading. From a series of river basin studies prepared
by regional groups as background material for study and action programs,
six have been selected to typify water problems in widely different parts of
the country and to demonstrate the role of citizens in shaping and sup-
porting programs that can solve some of the problems.
In addition to providing information on the physical, economic, and
political aspects of the six basins, the book will include concise reports on
the citizen education and action that grew out of each basin study. It
will also include a section, based largely on the work of the League in the
field of water quality control, dealing with the kinds of education needed
and action found to be effective in influencing decision making at various
levels of government.
Resources for the Future has made a grant of $10,500 to the League of
Women Voters Education Fund to assist in the preparation of the materials
for publication.

NATURAL RESOURCES AND INTERNATIONAL DEVELOPMENT. A collection
of essays dealing with current thinking on resource availability, economic
development, and trade patterns among the large regions of the world was
published this year by The Johns Hopkins Press. It presents in revised
form the ten papers discussed at RFF's 1963 Forum. The book, entitled
Natural Resources and International Development, is edited by Marion
Clawson, who had organized the Forum and who, in addition to his work
with RFF, is vice president of the Society for International Development.
Contributing to the collection of essays are:

D. Gale Johnson, University of Chicago-The Role of Agriculture in Economic
Development;
M. A. Adelman, Massachusetts Institute of Technology-The World Oil Outlook;
Anthony Scott, University of British Columbia-Food and the World Fisheries
Situation;
Demitri B. Shimkin, University of Illinois-Resource Development and Utiliza-
tion in the Soviet Economy;
P. Lamartine Yates, FAO Regional Representative for Europe-Resource Re-
lationships among Countries of Western Europe;
Arthur Gaitskell, member of the Board, Commonwealth Development Corpora-
tion-Resource Development among African Countries;
Joseph Grunwald, Yale University-Resource Aspects of Latin-American Eco-
nomic Development;










Charles P. Kindleberger, Massachusetts Institute of Technology-Terms of Trade
for Primary Products;
Chandler Morse, Cornell University-Potentials and Hazards of Direct Inter-
national Investment in Raw Materials;
Egbert de Vries, Institute of Social Studies, The Hague-International Transfers
of Knowledge and Capital.

PLANS FOR FUTURE SEMINARS AND FORUM. By the end of the program
year, plans were well under way for a series of Seminars on Water Resources
Research, to take place next July 6, 7, and 8, at Colorado State University.
The Seminars are sponsored jointly by Resources for the Future and the
three Colorado universities-Colorado State, University of Colorado, and
the Colorado School of Mines-and will constitute the 1965 session of the
Western Resources Conference which has been held annually in Colorado
for several years.
A number of important research projects on current water problems,
which are in progress at universities and other research institutions through-
out the country, are reaching a stage where they profitably can be sum-
marized and discussed. Stimulation for the series of Seminars has also been
given by the recent passage of the Water Resources Research Bill, by means
of which universities may receive federal funds in support of centers which
will devote their research to problems of water resources. A final session
of the three-day Seminars will be devoted to a discussion of research needs
which might be met by the new university research centers. Earlier sessions
on specialized water problems will be conducted concurrently in order to
permit ample time in each session for thorough discussion of the session's
formal paper. The papers are being prepared by scholars who are among
the most distinguished in the social sciences and hydrology. Allen V. Kneese,
of RFF, and Stephen Smith, of Colorado State University, are organizing
the program.
-Plans for the sixth in the series of RFF Forums, to take place early in
1966, are already in outline. It is intended that this Forum will focus upon
environmental quality problems associated with the use of natural resources,
a topic which is claiming increasing public attention and also increasing
emphasis in RFF's research program.

THE RESOURCES FELLOWSHIPS. Twelve fellowships were awarded during
the program year to doctoral candidates whose dissertations will involve
the application of the social sciences to natural resource problems:

Paul Grant Bradley, Massachusetts Institute of Technology-"Petroleum Devel-
opment and Production Costs and the Characteristics of Petroleum Supply";
(Mrs.) Anne Mayhew Brown, University of Texas-"Resource Development in
East Texas";
Edward W. Erickson, Vanderbilt University-"Risk, Uncertainty and Competi-
tion in the Domestic Search for Petroleum";










Albert Myrick Freeman, University of Washington-"The Distributional Effects
of Water Resource Development";
Daniel H. Henning, Syracuse University-"The Elk-Deer Reduction Controversy
at Rocky Mountain National Park";
James Norman Hool, Purdue University-"Mathematical Programming in Forest
Regulation";
Frank M. Hruz, Stanford University-"Japan's Foreign Mineral Trade: Implica-
tions for the Future Mineral Position of the U. S.";
Bernard Williams Riley, Indiana University-"Natural Resources as a Measure of
Geographic Viability: Two Case Studies in Africa, Ghana and Rhodesia";
Peter P. Rogers, Harvard University-"Resource Allocation by Steepest Ascent
Programming Methods";
Thomas F. Saarinen, University of Chicago-"Perception of the Drought Hazard
on the Great Plains";
Azriel A. Teller, Johns Hopkins University-"Air Pollution Abatement: An
Economic Study into the Costs of Control";
John Elvin Tilton, Yale University-"International Trade Patterns in Non-
Ferrous Metals".

THE URBAN ECONOMICS FELLOWSHIPS. Five fellowships were awarded
to doctoral candidates on the recommendation of the Committee on Urban
Economics (see page 77):

Jay Starrett Berger, University of California at Los Angeles-"Determination of
the Economic Height of High-Rise Buildings";
Donald Gerwin, Carnegie Institute of Technology-"Analysis of Operating Costs
for a Center City";
William R. Mann, Yale University-"Optimizing Government Expenditures on
Juvenile Delinquency";
Jerry B. Schneider, University of Pennsylvania-"An Approach to Urban Complex
Analysis";
John Charles Weicher, University of Chicago-"The Effect of Urban Renewal on
the Cost of Municipal Government Services".

COMPLETED DISSERTATIONS. During the program year, seven RFF re-
sources fellows and one urban economics fellow of previous years presented
dissertations to their universities in partial fulfillment of the requirements
for the degree of Doctor of Philosophy. Two of these were made available
for public distribution. The theses are listed below.
David Bradwell, University of Oregon-"The Timing of Development of the
Saskatchewan River System";
George R. Francis, University of Michigan-"An Assessment of Shackle's Theory
by Applying It to a Case Study of an Investment in Watershed Development";
James Heilbrun, Columbia University (urban economics)-"The Effects of
Alternative Real Estate Taxes on the Maintenance and Rehabilitation of Urban
Rental Housing";










John D. Lafky, University of Texas-"Silver: National and International Prob-
lems";
Richard S. Leavenworth, Stanford University-"Engineering-Economic Aspects of
the Decision-making Process in Municipal Electric Utilities," available as Report
EEP-10, Project on Engineering-Economic Planning, Institute in Engineering-
Economic Systems, Stanford University;
Robert R. Lee, Stanford University-"Local Government Public Works Decision
Making," available as Report EEP-9, Project on Engineering-Economic Plan-
ing, Institute in Engineering-Economic Systems, Stanford University;
Roderick Nash, University of Wisconsin-"Wilderness and the American Mind";
Homer Price, Columbia University-"Position and Prospects of Agriculture in
French Mediterranean: A Regional Case Study".

RELATED ACTIVITIES. Many of the staff members' educational activities
relating to specific areas of their research are mentioned elsewhere in this
Report. Others of a more general nature are listed below:
Joseph L. Fisher addressed the Legislative Workshop Conference of the
New England Board of Higher Education; the Spring Executive Seminar
at Indiana University; and contributed a paper to the International Con-
ference on the Organization of Research and Training in Africa. He was
leader of a discussion group on population sponsored by George Washing-
ton University's American Assembly; lectured at the U. S. Army War
College, the University Symposium Series at the University of Tennessee,
and the Air War College, Montgomery, Alabama.
Irving K. Fox served on a panel dealing with career development in
natural resources, at the Personnel Management Conference held by the
U. S. Department of the Interior. He addressed the Saskatchewan Re-
sources Conference, the Colorado State Seminar on Natural Resources,
the Seminar for Professors of Sanitary Engineering, and, on the subject
of water development in the Potomac River Basin, the Committee of 100
of Arlington County. He contributed a chapter, "The University and
River Basin Development," to Regional Development and the Wabash Basin
(see page 104).
Robert K. Davis dealt with Potomac River problems in an address to
the League of Women Voters Potomac Workshop.




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