The federal government supports multiple freshwater programs in the United States and abroad. Although agencies vary in how they describe their freshwater programs (activities, projects, or initiatives), the following terms generally describe the freshwater efforts covered in this review: Desalination—Activities and/or infrastructure related to the process of removing salts from saline water to provide freshwater. Drinking water supply—Activities and/or infrastructure designed to improve access to and quality and availability of clean drinking water. Flood control—Activities related to dredging, hydrologic forecasting, and the construction, operation, and maintenance of infrastructure designed to reduce flood damage. Irrigation—Activities and/or infrastructure related to the diversion, distribution, delivery, and drainage of water for agricultural purposes. Navigation—Activities and/or infrastructure related to dredging and the construction, operation, and maintenance of infrastructure (e.g., locks, channels, and dams), primarily for river-based transportation. Wastewater treatment—Activities and/or infrastructure designed to manage and treat storm water and domestic and/or industrial wastewater. Water dispute management—Adjudication, litigation, and negotiation activities to prevent or resolve water-related disputes, including water settlement payments. Water conservation—Activities and/or infrastructure designed to reclaim, recycle, and/or reuse potable or nonpotable water. Watershed protection, restoration, and management (watershed management)—Activities and/or infrastructure related to nonpoint source pollution prevention, wetlands restoration, and land-based activities related to source water protection and coastal zone management. Federal agencies provide financial support for freshwater programs through direct federal spending and grant, loan, and loan guarantee programs. For the purposes of this report, direct federal spending is a general term used to describe, among other things, work performed by federal employees or through contracts with private and nongovernmental entities on the federal government’s behalf. For example, direct federal spending includes the financial support spent by federal agencies for, among other things, the construction of reservoirs for flood control and irrigation. Grants, loans, and loan guarantees are different types of financial assistance programs provided by federal agencies to help communities with projects, such as construction of water and wastewater treatment facilities. In addition to providing financial support on the direct costs of freshwater programs, such as capital construction and operations and maintenance costs, agencies also provide funds for technical assistance and research and development efforts. Agencies rely on several sources of funding—including annual appropriations from the general fund and from dedicated funding sources, such as trust funds—to provide financial support for these programs. Agencies obligate these funds for multiple purposes as they implement their programs. Obligations represent amounts for orders placed, contracts awarded, services received, and similar transactions during a given period that will require payments during the same or a future period. Obligations differ from expenditures in that an expenditure is the issuance of a check, disbursement of cash, or electronic transfer of funds made to liquidate an obligation. In addition, in some circumstances expenditures fulfilling an obligation may occur during subsequent years. Consequently, obligations provide the best estimate of what an agency plans to spend during a fiscal year. The extent to which agencies track their freshwater efforts vary. Agencies tend to track the financial support they provide to large freshwater programs, such as EPA’s Drinking Water State Revolving Fund. Some programs, such as Agriculture’s Conservation Reserve Program, serve multiple purposes and specific program components, such as irrigation activities, are not specifically tracked. Similarly, freshwater projects (e.g., a dam) can serve multiple purposes, providing benefits such as water storage, flood control, and generation of hydroelectric power. The financial support provided for the overall project cost is generally available, but the costs for specific components of the project are not readily available. In addition, definitions of freshwater programs can vary depending on the agency’s role. An agency that is responsible for maintaining portions of the nation’s waterways may include lock infrastructure and waterway operations and maintenance activities in its navigation program; however, other agencies, which are responsible for research and development of freshwater resources, may include stream flow and sedimentation research within their navigation programs. Because of these differences, agencies may not be tracking their freshwater expenditures consistently across agencies. As such, financial information reported by the agencies on the federal government’s financial support of freshwater programs in the United States and abroad is an estimate of the minimum amount of funds provided for these efforts. Of the 27 agencies that provided about $49 billion in federal financial support specifically for freshwater programs in the United States during fiscal years 2000 through 2004, 3 agencies accounted for over 70 percent of the total. EPA provided about 31 percent of the total support, the Corps accounted for about 26 percent of the total, and Agriculture’s Rural Utilities Service accounted for about 16 percent of the total. See table 1 for more information on the federal financial support provided for domestic freshwater programs. Each of the agency’s financial support of freshwater programs generally reflects the nature of its mission. EPA—as the agency responsible for protecting the nation’s waters through enforcing clean water and safe drinking water laws, providing support for municipal wastewater treatment plants, and protecting watersheds and sources of drinking water—provides substantial financial support for freshwater programs. On the other hand, the Department of Health and Human Services’ (Health) Administration of Children and Families—an agency responsible for federal programs that seek to promote economic and social well-being—administers a grant program dedicated to helping rural, low-income communities with their water and wastewater systems and provides a relatively small amount of financial support. In addition, agencies, such as Agriculture’s Rural Utilities Service, the Department of Commerce’s (Commerce) Economic Development Administration, Health’s Indian Health Service, the Department of Housing and Urban Development’s (Housing) Office of Community Planning and Development, and EPA, that assist communities with the development of drinking water supply and wastewater treatment facilities provide far more financial support than agencies, such as Agriculture’s Cooperative State Research, Education, and Extension Service and Defense’s Army Material Command and Office of Naval Research, that primarily support research and development efforts. Agencies generally receive annual appropriations from the general fund to support their domestic freshwater programs. In addition to annual appropriations, 4 agencies—Agriculture’s Rural Utilities Service, the Corps, Defense’s Office of Naval Research, and the Appalachian Regional Commission—received funds from supplemental appropriations. The Department of Transportation’s (Transportation) Federal Highway Administration and Saint Lawrence Seaway Development Corporation received the majority of their annual budgets from dedicated funding sources available subject to appropriations (the Highway Trust Fund and the Harbor Maintenance Trust Fund, respectively). In addition, 4 other agencies—Agriculture’s Farm Service Agency and Natural Resources Conservation Service, the Corps, and Interior’s Reclamation—supplemented their annual budgets with dedicated funding sources available subject to appropriation. The Agriculture agencies received funds from the Commodity Credit Corporation, while the Corps and Interior’s Reclamation received funding from trust funds. Finally, certain agencies, including Interior’s Reclamation and Fish and Wildlife Service and Agriculture’s Rural Utilities Service, received funds from dedicated funding sources available without further appropriation. For example, Interior’s Reclamation received funds from the Lower Colorado River Basin Development Fund to finance the operation and maintenance of freshwater infrastructure in the Colorado River Basin for, among other things, drinking water supply, flood control, and irrigation efforts. Domestic drinking water supply and wastewater treatment programs were supported by 18 and 16 agencies, respectively. Agriculture’s Rural Utilities Service, Commerce’s Economic Development Administration, Health’s Indian Health Service, Housing’s Office of Community Planning and Development, and EPA primarily supported activities related to the development of drinking water supply and wastewater treatment infrastructure, and some of the other agencies mostly provided technical assistance and/or research and development assistance, such as water quality and water availability research. Sixteen agencies supported a variety of watershed management programs. While 7 agencies provided financial support for navigation programs, the Corps and Transportation’s Saint Lawrence Seaway Development Corporation provided the majority of the support for, among other things, operations and maintenance of the nation’s waterways. See table 2 for more information on the domestic freshwater programs these agencies supported. Agencies used several different funding mechanisms to provide financial support for domestic freshwater programs. Twenty of the 27 agencies reported that they used direct federal spending to provide financial support for freshwater programs. For the purposes of our review, we define direct federal spending to include (1) work carried out by federal employees, contractors, and private and nongovernmental organization sectors for the federal government; (2) the federal government’s portion of federal cost-share programs; and (3) funds provided from one agency to another agency to conduct work. Thirteen agencies used grant programs, and 2 agencies each used loan and loan guarantee programs. Many agencies used a combination of funding mechanisms to provide financial support for freshwater programs. See table 3 for more information on funding mechanisms used by agencies to provide financial support for freshwater programs in the United States. Grant programs and direct federal spending provided over $22 billion and about $22 billion, respectively, for domestic freshwater programs. Loan programs provided over $4 billion, and loan guarantee programs provided over $90 million in initial obligations. Initial obligations are the amount agencies obligated for the subsidy cost when a loan guarantee was made. They do not include subsequent reestimates. See figure 1 for the financial support provided by each funding mechanism. Direct federal spending ($21.8 billion) Grant programs ($22.5 billion) The $49 billion for domestic freshwater programs includes funding provided from one agency to another to conduct freshwater activities in the United States. For example, the Corps received financial support from EPA to conduct watershed management activities.