Omaha World Herald November 4, 2004

BY DAVID HENDEE

LINCOLN - Nebraska has prospered for decades by using water from Lake McConaughy for growing corn, generating electricity and, as an afterthought, luring tourists.

That mix, however, may not be the best use of the state's largest reservoir or be best for the future of Nebraska now that deep drought in the West highlights the fragility of the water resource, an economist said Wednesday.

"Communities grow by attracting people, especially very productive, highly educated and skilled people who command high incomes," said Ernie Niemi of Eugene, Ore., an expert on the relationship between regional economies and the environment.

In Nebraska, he said in an interview, a Lake McConaughy flush with water can be a powerful people magnet and economic engine that dwarfs its historic role as a huge irrigation pool.

Niemi said economic policies that harm the environment, or that deplete natural resources, hurt the economy in the long run. That's because the quality-of-life benefits of water, for example, are forceful influences in attracting people to live in a particular place, he said.

Niemi is vice president and project manager at ECONorthwest, an economics and consulting firm. He spoke to nearly 40 people from across the state at the University of Nebraska-Lincoln's East Campus Student Union.

Rep. Tom Osborne, R-Neb., has asked UNL crop, irrigation and economic experts to study drought and water issues in Nebraska. UNL ag economist Ray Supalla and others invited Niemi to Nebraska to help jump-start the study.

Niemi said he is not suggesting that Nebraskans - or Central Nebraska Public Power and Irrigation District, which owns and operates McConaughy - stop using water from the reservoir for agriculture.

"I'm not