Brown Administration Releases Incomplete Delta Tunnels Cost-benefit Analysis

By Dan Bacher | February 14, 2018 |

The Brown administration yesterday released the long-awaited cost-benefit analysis for the Delta Tunnels, claiming that the plan could "bring billions of dollars in benefits."

Delta Tunnels opponents countered that the analysis is "incomplete,” as it only examines the initial phased-in tunnel and states that analysis for the second tunnel would need to be completed in the future.

The Department of Water Resources (DWR) published a Cost-Benefit Analysis for California WaterFix conducted by Dr. David Sunding, a professor of natural resource economics at UC Berkeley. The report claims that the project's first stage, based on one tunnel with a 6,000 cubic feet per second (bfs) capacity, "could bring billions of dollars in benefits to Californians who obtain their water from participating State Water Project (SWP) contractors."

Dr. David Sunding, professor of natural
resource economics at UC Berkeley.
Photo courtesy of UC Berkeley.

“Stage 1 of California WaterFix passes a cost-benefit test for SWP urban and agricultural agencies under all scenarios analyzed,” Dr. Sunding wrote in the report.

In a series of controversial public meetings in fall 2017, local public water agency boards voted to participate in the WaterFix, under heavy political pressure from Governor Jerry Brown and against the will of most local water ratepayers.

"Based on that level of support, DWR is proposing to pursue WaterFix as planned while also considering an option to construct the project in stages. Today’s economic analysis will help participating agencies develop and consider necessary actions for their respective boards this spring," DWR said in a statement.

DWR said the benefits to SWP (State Water Project) water agencies are "substantial." The report found benefits exceeding costs in every scenario analyzed – even up to $1.82 in benefits for every $1 in costs. Urban agencies could see $2 billion – $4 billion in net benefits depending on the scenario analyzed.

"Those benefits would increase with the availability of financing through low-interest federal loans," DWR claimed. "SWP agricultural agencies would see several hundred million dollars in net benefits under several scenarios, and again those benefits would increase with the availability of federal low-interest loans and the ability to trade unwanted project shares with urban contractors. The study also indicates that federal contractors south of the Delta would receive benefits exceeding costs."

“Without WaterFix, State Water Project contractors will see the continued deterioration of their water supply reliability,” Dr. Sunding claimed. “This analysis shows there is substantial benefit for both urban and agricultural water users throughout the state, and that the project will be more affordable for consumers than local alternatives such as desalination and recycling.”

The report compared the benefits and costs of Stage 1 of WaterFix - one tunnel - in relation to what "would likely occur" if WaterFix were not built, including further restrictions designed to minimize harmful reverse flows and protect species.

However, the report didn't compare the benefits and costs of the proposed two stages of the revised project, a huge omission that project opponents were quick to point out. The economic analysis is available here.

Assemblymember Jim Frazier, D-Discovery Bay, criticized the cost-benefit analysis for its newly revised twin Delta Tunnels proposal for being "incomplete and pretty much useless."

“The Department of Water Resources for years failed to complete a cost-benefit analysis for any of the previous versions of the proposed tunnels project, for which it was heavily criticized in a recent report by the State Auditor. Now, barely a week after completely revising the scope of its proposal, DWR suddenly has a cost-benefit analysis," said Frazier.

"But it’s an analysis for a proposed two-tunnel project that only addresses one tunnel and doesn’t factor in debt service, making it incomplete and pretty much useless. It’s heavily skewed to make conclusions that support what the administration and the proponents want," he stated.

"Simply put, this is a position paper that relies on cherry-picked numbers and contains very little actual economic analysis. It does not answer the question I’ve been asking the whole time: ‘How much is the project is going to cost over the long term after factoring in debt service?’ It also fails to assess potential risk and cost overruns that inevitably occur with large-scale infrastructure projects. These factors need to be addressed," Frazier said.

In their initial response to the report, Restore the Delta said two areas of concern can be found from a "simple perusal," noting that the group will issue additional responses to the document in the days ahead.the release of Sunding's report.

The group said "numerous questions about the validity of the CalSimsII modeling used to determine needed flows through the Delta, storage of water behind dams, and water exports through the tunnels have been raised by protestants at the State Water Resources Control Board, yet it is the modeling system used for this cost-benefit analysis. Independent modeling experts question the validity of the assumptions used by the modeling system, including reservoir operations that lead to deadpool conditions and inadequate Delta flows."

Deirdre Des Jardins of California Water Research, who has studied CA WaterFix modeling extensively through the permit hearings for WaterFix at the State Water Resources Control Board, stated, “The modeling used for the project contains assumptions about future regulatory requirements."

"These assumptions are currently being determined by the State Water Resources Control Board. DWR also needs to revisit their assumption that it is not necessary to analyze the project yield under drier climate change scenarios, especially as drought conditions have returned once again to California," she said.

Barbara Barrigan-Parrilla, Executive Director of Restore the Delta, said, "We have known for some time that deep problems exist within the modeling which create a fictional scenario of how much water is available for the Delta tunnels."

"Moreover, DWR wants it both ways. "They want a water right for building two tunnels, but they don’t want to tell the public how much that will cost, or what the real water quality impacts will be for the San Francisco Bay-Delta Estuary. If Secretary Laird, the Department of Water Resources, and the Metropolitan Water District continue touting Delta tunnels fiction as fact, California water management, and consequently California water quality and supply is headed toward a bad end," she explained.

"This just another chapter of the California Natural Resources Agency and the California Department of Water Resources presenting incomplete facts to push this ill-conceived project onto Californians," she concluded.

The Delta Tunnels project, whether a one tunnel or two tunnels proposal, is based on the premise that diverting more water out of the Sacramento River will somehow "restore" the San Francisco Bay-Delta Estuary. However, not one California WaterFix proponent has  been able to show me a single project, in U.S. or world history, where a massive diversion of water out of a river or estuary has resulted in the restoration of that river or estuary.

Project opponents point out the tunnel project would hasten the extinction of Sacramento River spring-run and winter run Chinook salmon, Central Valley steelhead, Delta and longfin smelt, green sturgeon and other species, as well as imperil the salmon and steelhead populations on the Trinity and Klamath rivers.

The project would destroy the "sacred system of life that swims in the Delta," as Pennie Opal Plant of Idle No More SF Bay pointed out on February 8, when she urged the State Water Resources Control Board to reject the petition for the change in the point of diversions required to build the California WaterFix at the board meeting in Sacramento.

“I am a signatory to the Indigenous Women of the Americas – Defenders of Mother Earth Treaty Compact 2015. We can’t live without water and neither can our non-human relatives. The WaterFix is a water theft. You cannot approve the WaterFix,” urged Plant.

”From my heart to yours, especially to the women, our babies swim in the seas of our wombs. Please protect this water and the life that lives inside of our bellies. Please protect this sacred system of life that swims in the Delta. If we don’t protect the Delta now, it’s going to be damaged beyond the capability to maintain human and non-human life. It’s up to us,” she stated.