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Report: Twin tunnels project for Delta will cost more money than it will bring in

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Posted: Tuesday, July 17, 2012 12:00 am | Updated: 8:32 am, Tue Jul 17, 2012.

The contested Bay Delta Conservation Plan is not economically justified, according to an independent cost-benefit analysis of the proposed project by the Business Forecasting Center at the University of the Pacific in Stockton.

The centerpiece of the plan is to build twin tunnels running underneath the Sacramento-San Joaquin River Delta to pull water from the Sacramento River and send it to residents and farmers in Southern California.

Jeffrey Michael, director of the Business Forecasting Center and author of the report released Friday, found that the cost of the tunnels is about $7 billion higher than the potential benefits. That comes out to about $2.50 in costs for every dollar of benefit, or a benefit-cost ratio of 0.4.

In comparison, the revised benefit cost analysis for California's high-speed rail project has a ratio of about two.

The total cost of the water conveyance tunnel proposal is about $13 billion.

The economic benefits of the tunnels include water supply, water quality, and earthquake risk reduction for areas that receive water exported from the Delta by the State Water Project and the Central Valley Project.

The economic costs include project capital costs, operating and maintenance costs for the completed tunnels, and the costs to areas in the Delta and surrounding area that might be hurt by the project.

"Benefit-cost analysis is an essential and normal part of assessment and planning of large infrastructure projects such as the $13 billion water conveyance tunnel proposal, but has not been part of the BDCP," said Michael in a press release.

Estimates of benefit and cost were drawn from recent information from the BDCP and other state agencies.

Advocates for the project say it's too soon to say whether the project is economically justified.

The plan is part of an ongoing study, and a cost-benefit analysis cannot be understood until a draft BDCP and environmental review documents are ready, said Clark Blanchard of the California Natural Resources Agency.

"BDCP is working to define sustainable water supply yields in a scientifically uncertain ecosystem and to define the economic value of those supplies — both efforts are unprecedented in their scale and sophistication in framing co-equal goals for the Delta," Clark said.

Contact reporter Sara Jane Pohlman at sarap@lodinews.com.

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4 comments:

  • Ron Werner posted at 5:23 pm on Tue, Jul 17, 2012.

    Ron Werner Posts: 73

    Mike: The solution to the storage problem you mention is called a reservoir. I think it means reserve. If used in a sentence it would go something like this. Lets build more reserviors to hold water in reserve during wet years to use during dry years. Lets try it your way - Lets build more tunnels to hold water during wet years to use during dry years - IT JUST DOESN"T MAKE SENSE!

     
  • Mike Wade posted at 10:27 am on Tue, Jul 17, 2012.

    farmwater Posts: 5

    What happens if nothing is done to secure a reliable supply of water through the Delta and an improved ecosystem for the estuary? A portion of the water that flows through the Delta reaches 25 million Californians to support their homes and businesses. Farmers use water that flows through the Delta to grow a safe and affordable supply of food, reducing our reliance on food imported from other countries.

    California only has a half-year of water storage available and that supply quickly becomes stretched during years of drought. This year is a good example. Not much rain and snow has fallen to replenish our supplies. As a result, much of the carryover supply from last year has already been allocated and farmers are only receiving 40 and 65 percent of their water supply from State and federal sources.

    California's future water supply will continue to be unreliable if current efforts by the BDCP and the Delta Stewardship Council do not move forward. Those efforts support the 2009 legislative mandate of co-equal goals for both a reliable water supply and an improved ecosystem in the Delta.

    Mike Wade
    California Farm Water Coalition

     
  • Bruce Rubly posted at 8:53 am on Tue, Jul 17, 2012.

    brucerubly Posts: 3

    They forgot some important things...the fish. There is no report of how much money saving the fish will bring in to the Delta , or what about the ocean fisheries, decimated by the lack of water. Tourism in the Delta is a multimillion dollar business,
    How come that wasn't included.
    .

     
  • Kim Parigoris posted at 3:58 am on Tue, Jul 17, 2012.

    Kim Parigoris Posts: 469

    Not to mention the fact that allegedly it has the strong potential to turn the Delta in to a salt marsh...

     

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