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Requirements for extensions of project facilities to meet increased needs for domestic and industrial water accounted for some of this rise in cost. The major increase, however, is due to a climb of about one-third in the construction cost index during this period. With the backing of the Supreme Court and plans for an eminently qualified project as a Federal development under Reclamation law, Arizona is now ready and rightfully demanding to go ahead. The Central Arizona Project is a major proposal in Secretary of the Interior Udall's Pacific Southwest Water Plan. Consequently, the efforts to obtain Colorado River water for Arizona are two-fold. You may understandably ask: Why should Arizona proceed in two directions at the same time; why does not Arizona devote all of its energies to one line of attack and thus not divide its efforts? I think you will find answers to these questions by looking at the overall water situation which confronts not only Arizona but the entire Pacific Southwest today. Arizona Governor Fannin has advised Secretary Udall that he is in basic agreement with the Pacific Southwest Water Plan because it includes the Central Arizona Project in its initial phase. The Governor sees the wisdom of the two-pronged approach to authorization of the State project. Other Governors in the Colorado River Basin have agreed generally with the regional approach to the solution of our water problems rather than for each state to go it alone. The water situation in Arizona is typical of that throughout the Pacific Southwest--probably worse than in some states. Approximately half of all the water in central Arizona is obtained by overdrafting or mining irreplaceable groundwater supplies. This area is not only using practically all of the available natural streamflows and the groundwaters that are replaced, but also an equal amount of water that has been stored underground for ages and is not being replaced. Thus, we are spending all of our water income, and in addition, an equal amount from our inherited legacy of groundwater. This mining of groundwater totals over 2 million acre-feet per year. Water to be imported by the Central Arizona Project from the Colorado River would only partially offset this overdraft. Water shortages outside central Arizona are of much lesser magnitude but certainly of equal importance to the other areas. All areas are equally entitled to any additional water from the Colorado River. The same water problems that exist in Tucson today are found in most of the State's smaller communities. The Central Arizona Project plan contemplates that Colorado River water would be transported directly to Tucson. This cannot be done economically for smaller cities at higher elevations. But water can be made available to those cities through exchange agreements. Water can be imported to the lower elevations where it can be used directly while water available in the higher elevations, but now appropriated downstream, can be released for use in the upper areas. Cities like Kingman which are closer to the Colorado River than the proposed Central Arizona 2Epson Perfection 4870 Photo, 400 dpi, 8 bit, 14,389,248 byte