You are hereCost of governor’s twin tunnels plan disputed

Cost of governor’s twin tunnels plan disputed

May 29, 2013 9:00pm


•  Independent economist questions Brown’s numbers

•  “The tunnels would fail a financial feasibility analysis and benefit-cost analysis”

Gov. Jerry Brown’s Bay Delta Conservation plan costs are being questioned. The costs were released Wednesday.

Mr. Brown says the total cost of BDCP is $24.5 billion during its 50-year implementation period.

That would not include the cost of interest that would have to be paid on bonds or loans, a spokeswoman for the Natural Resources Agency tells CVBT.

The biggest part of the cost would be Mr. Brown’s plan to build massive twin tunnels 150 feet beneath the Sacramento San Joaquin Delta. The tunnels would siphon off much of the fresh water from the Sacramento River before it could flow naturally into the Delta, the largest estuary on the West Coast of the Americas.

Instead, the water, which could be taken at a rate large enough to fill the Rose Bowl in minutes, would be put into the State Water Project and the federal Central Valley Project irrigation systems to be sent to farmers on the west side of the San Joaquin Valley, to Los Angeles and to Silicon Valley.

But Mr. Brown’s cost figures are being questioned by independent economist Jeffrey Michael, director of the University of the Pacific’s Business Forecasting Center in Stockton.

Mr. Michael points to flaws in the governor’s plan:

• “The new cost plan not only assumes the 2014 water bond passes, but that the state will pass another subsequent water bond to fund the BDCP,” he writes.

• “BDCP’s own analysis shows that the majority of the economic benefits accrue to urban users, whereas the majority of water goes to farmers.

• “BDCP does not show that the benefits to agricultural contractors exceed the proportional costs allocated to agricultural contractors. Financial feasibility requires benefits to exceed costs for all contractors.

• “In the past year, the cost estimate for the tunnels has increased from $12.8 billion to $14.5 billion even though the water delivery capacity of the tunnels was decreased by 40 percent.

• “The new BDCP economic analysis demonstrates that the Governor and other BDCP proponents have exaggerated the economic risk of a Delta earthquake on water supplies.

• “BDCP shows that the cumulative economic benefits of seismic risk reduction from the tunnels only sum to $400 million over 50 years which is only 2 percent of the economic benefits of the tunnels to the water contractors,” he says.

Another critic of the governor’s plan is Burt Wilson, a writer on California water issues and an opponent of Mr. Brown’s earlier plan, in the 1980s, to circumvent the Delta with the Peripheral Canal, an idea rejected by voters in 1983.

“Under the Delta Stewardship Council's ‘beneficiaries pay’ agreement, we, the people will bear the final costs -- without being able to vote on it,” Mr. Wilson says in an email to CVBT. “This is a form of ‘taxation without representation’ and I look forward to a ton of lawsuits if this is going to go through.”

While the governor’s plan has critics, it also has supporters, mainly those who will benefit from the twin tunnels and the fresh water they will bring.

Questions regarding cost estimates, funding sources and effectiveness of a new water delivery system for California were answered with the final chapters released that make up the Bay Delta Conservation Plan, says Mike Wade, executive director of the California Farm Water Coalition.

"The Bay Delta Conservation Plan is the best opportunity to provide a secure water future for all of California," says Mr. Wade. "The completion of BDCP answers the legislative mandate to create a reliable water supply and to restore the Delta ecosystem. Other efforts such as increased water storage and conservation that are outside of the scope of BDCP should continue."

Mr. Michael says one of those tunnel alternatives deserves closer inspection.

“The new BDCP economic analysis shows that a through Delta conveyance alternative (Alternative F) would have a higher benefit-cost ratio to the water contractors, provide higher levels of ecosystem restoration, and cost $8.5 billion less than the twin tunnels plan,” Mr. Michael says.

He says that from the water exporters perspective, through Delta conveyance is estimated to have a Benefit-Cost ratio of 1.9 ($9.3 billion in benefits to $4.9 billion in costs.

From the water exporters perspective, the twin tunnels have a benefit-cost ratio of 1.4 ($18.4 billion in benefits to $13.3 billion in costs, he says

“From a statewide perspective which considers the harmful effects of the tunnels on the Delta, it is clear that through Delta conveyance is economically superior,” Mr. Michael says. “Why would the water contractors push a divisive plan that harms the Delta when it does not provide higher economic benefits to their customers than through Delta alternatives?”

Mr. Michael’s analysis also notes that the governor’s economic analysis is inconsistent with the Environmental Impact Report. “In order to show that the benefits to water contractors exceed the cost to the water contractors, the BDCP economic analysis assumes that the tunnels will deliver incremental water supplies that are more than double the levels described in the BDCP Environmental Impact Report,” he says.

“If the BDCP Economic Analysis used water supply assumptions consistent with the EIR, the tunnels would fail a financial feasibility analysis and benefit-cost analysis,” he says.


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