Even a single water tunnel burrowed under the California’s Delta would be worth it for urban ratepayers and farmers who would to pay to build and maintain the project, according to an analysis released Tuesday by Gov. Jerry Brown’s administration.
The Department of Water Resources commissioned David Sunding, a professor of natural resource economics at UC Berkeley, to conduct a cost-benefit analysis of Brown’s Delta tunnels project. His report concludes that benefits outweigh the costs to ratepayers in every scenario he analyzed under a one-tunnel approach.
After key San Joaquin Valley agricultural districts announced last year they couldn’t afford the project, Brown’s administration announced last week that officials were moving forward on a phased-in approach to the tunnels, starting with building a single pipe under the Sacramento-San Joaquin Delta in the coming years. The tunneling project is officially known as California WaterFix.
A single tunnel would cost $11.09 billion to study, design and build, but the project would bring a $2 to $4 billion return on that investment in the form of a more reliable water-supply, cleaner drinking and irrigation water and shielding the state’s massive water-delivery network from a catastrophic earthquake, Sunding said.
Put another way, every dollar spent on the project would bring $1.82 in benefits under the most favorable projections, Sunding said.
Even under less favorable projections, Sunding said the one-tunnel project still “pencils out” for farms and cities who rely on water pumped from the Delta. Urban water districts benefit the most because they can spread the costs out over millions of ratepayers, Sunding said.
There are fewer benefits for agricultural districts in the San Joaquin Valley where few hundred farmers would face a much more pronounced water-cost hike, but Sunding said San Joaquin Valley agriculture wouldn’t lose money on the investment.
“For ag it is a bit more of a close call,” Sunding said. “But under all the different combinations of assumptions that I analyzed, the benefits are greater than the costs for agriculture.”
Tunnels opponents say the Brown administration has long overstated the benefits of the tunnels and relied on overly rosy projections.
Doug Obegi, an attorney with the Natural Resources Defense Council, said the report makes a number of faulty assumptions, including relying on “historically low” interest rates, and it assumes that state water users would get more water than their federal counterparts. The report, Obegi said, also stretches out the benefit projections over a 100-year period instead of the 50 years Sunding used two years ago in another tunnels costs study.
“It certainly looks like there are some cooking of the books going on,” Obegi said.
Critics, such as Obegi, say diverting river water through one tunnel or two would worsen the Delta’s fragile ecosystem, further contribute to the demise of several imperiled fish species and harm water quality for Delta farms and cities.