When economist David Sunding reported to the BDCP recently, his analysis showed that the tunnel project would provide a net benefit to beneficiaries (water contractors). That isn’t because tunnels would provide more water, better quality water, or reduced seismic risk. It was because tunnels built as part of the BDCP would provide “regulatory assurance” against any further water supply reductions under the Endangered Species Act if fish are not recovering.
Notes economist Jeff Michael of UOP in a July 5 post on his Valley Economy blog, “In the BDCP most, if not all, of the environmental gains that could result in regulatory assurances for the overall projects are due to the habitat investments, not the tunnels which have uncertain environmental effects. The BDCP envisions $4 billion in habitat investments paid for by federal and state taxpayers.”
Regulated entities are paying for water supply infrastructure. The public is paying for the habitat. Habitat investment is what will provide regulatory assurance.
So the beneficiaries are NOT paying for this benefit. Taxpayers are.
Michael suggests that the regulatory assurance could be achieved with no conveyance, simply with an investment of $2-4 billion in habitat.
