The Bay Delta Conservation Plan is a voluntary search for common ground in one of the nation’s highest-stakes natural resource disputes.
As a balancing act, the plan was not designed by economists. Yet it appears on track to becoming a sound investment for dozens of public water agencies and the California public at large.
The package of ecosystem restoration and water conveyance improvements advanced by the plan reflects the broad goals set by the Legislature in 2009: Protect and enhance the Sacramento-San Joaquin Delta ecosystem and provide a reliable water supply for the California economy.
All of the groups engaged in the plan must do their own balancing act. Federal and state governments must protect endangered species such as chinook salmon. They also operate the water projects upon which public water agencies depend to serve people from Silicon Valley to San Diego.
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Those public water agencies, in turn, must protect their ratepayers from deteriorating water supplies by making the right investments.
Any given stakeholder – or economist – undoubtedly has his or her own preference on the elements of the plan. Through 400-plus public meetings and thousands of pages of draft documents, the Bay Delta Conservation Plan illustrates how state and federal governments have approached the challenge, along with public water agencies, in light of their different missions.
Beginning in 2011, I led a team of independent economists to evaluate the Bay Delta Conservation Plan, along with a number of potential alternatives. Our research shows that the plan, soon to be released for public review, reflects a balancing of the two fundamental goals the plan must meet: more reliable water supplies and a healthier Delta ecosystem.
•Water supplies vs. fishery protection:
Building five new intakes on the Sacramento River capable of filling the existing aqueduct system of the State Water Project and Central Valley Project would be the preferable approach from the narrow standpoint of improving water supply for the 25 million Californians and 3 million acres of farmland that use Delta water.
Our cost-benefit analysis scores this proposal highest. However, from the ecosystem standpoint, federal and state wildlife agencies have expressed concern about the potential harm to native fish of five new intakes in relatively close proximity to one another in the northern Delta.
So the balancing act that is the Bay Delta Conservation Plan has landed upon the proposal of three intakes.
A smaller system to convey water from the north Delta, such as a single intake and a smaller tunnel, would be less expensive. But not that much less expensive. The best estimates available suggest that shrinking the tunnel system by two-thirds would reduce costs by less than one-third. That’s because tunnel construction has fixed costs related to such needs as land acquisition and forebay construction. It sounds reasonable to argue for a smaller conveyance system to free up money to invest in water supply development outside the Delta, but our work shows that it doesn’t pencil out.
Nor does abandoning efforts to build a new conveyance system. To date, the existing system of moving water supplies through the Delta in unnatural directions, velocities and times of year has failed to meet either environmental or water supply goals. Years of regulatory and legal struggles over the existing system are what led to the Bay Delta Conservation Plan in the first place.
Continued inaction could lead to much higher long-term costs to meet environmental and water supply goals. Anyone can examine the recent regulatory experience in the Delta and reasonably assume that if native fish populations continue to decline, wildlife agencies will further restrict pumping and require higher outflows.
If no new Delta water conveyance system is built and certain seasonal Delta flows and pumping restrictions weighed by wildlife agencies were imposed to protect fish, the result could be the loss of more than 1 million acre-feet of water supply a year. That supply loss would trigger severe cutbacks to farms and cities, and widespread economic pain.
Avoiding further water supply cutbacks from the Delta is valuable, even if the $25 billion investment in the Bay Delta Conservation Plan produces no additional supplies.
Our economic analysis suggests that the water supply reliability offered by the plan is worth $15 billion over 50 years to the water districts that depend upon the Delta. In all, once water quality and seismic security benefits also are considered, the Bay Delta Conservation Plan offers these water districts – whose customers would pay more than two-thirds of the plan’s costs – net benefits worth $5 billion.
The plan represents the proverbial choice of paying less now or a lot more later. Its stabilizing effect on water supply also would help build California’s economic muscle. By my calculation, the plan would increase economic activity statewide by $84 billion over its 50-year life, even after the costs of the project are taken into account.
As a voluntary partnership, the Bay Delta Conservation Plan must make biological sense for the wildlife agencies and financial sense for the paying public, all while achieving broader state goals for the environment and the economy. The plan itself is a balancing act, but its statewide costs and benefits are not. In terms of California’s economic future, this plan would pay off in a big way.