Report: Delta tunnels fail financially

In case you missed it… 

Link to full report, "Benefit-Cost Analysis of The California WaterFix," by the Center for Business and Policy Research, University of the Pacific,  August 2016. 

Check out page 21 for a table on "Present Value of Benefits and Costs of Delta Tunnels Through the Year 2131." Dr. Jeffrey Michael finds that, "Although the study includes assumptions favorable to the WaterFix, the results clearly show that the WaterFix is not economically justified under both the base and optimistic scenarios. The base scenario finds a net present value of -$10.2 billion, and a benefit-cost ratio of 0.23. That means the WaterFix is estimated to provide only 23 cents of benefits for each dollar of cost. In the optimistic scenario, the net present value is -$7.8 billion and the benefit-cost ratio is 0.39."

The Record
Report: Delta tunnels fail financially
Costs exceed benefits, Pacific economist says
By Alex Brietler
August 24, 2016
Original link

The costs of Gov. Jerry Brown’s proposed Delta tunnels vastly outweigh the benefits of building them, according to an analysis released Wednesday by University of the Pacific economist Jeff Michael.

“I don’t think there’s a project that’s economically feasible here. And it’s not close,” said Michael, director of the university’s Center for Business and Policy Research.

Michael has long been critical of the $15 billion tunnels. His latest review finds 23 cents of benefits for every dollar that would be spent — or, under a more optimistic scenario, 39 cents of benefits per dollar spent.

The Delta Counties Coalition, which opposes the tunnels, contributed to the study with a $10,000 grant.

State officials had not seen Michael’s full report on Tuesday and could not comment in detail, but Erin Mellon, a spokeswoman for the California Natural Resources Agency, defended the merits of the tunnels project.

“More than 50 years of experience tells us that California needs to modernize its water delivery system in the Delta or face increasingly severe supply disruptions and ecosystem damage,” she said. “We’re confident that upgraded infrastructure will more than prove its worth to future generations."

Michael said he used conservative assumptions to calculate the costs and benefits, and relied on figures found in the state’s own reports.

Among his arguments:

• The tunnels no longer include 50-year guaranteed deliveries for water users, and won’t provide enough water to justify the cost of building them.

• The environmental benefits of creating more natural river flows in the south Delta will be offset by the construction of new intakes on the Sacramento River.

• While the tunnels will safeguard a portion of the state’s water supply from a potential earthquake that could topple Delta levees, Michael says that might not may not provide any overall economic benefit. California has experienced severe water shortages in recent years, he said, yet the state’s economy has grown “robustly.”

“The notion that civilization is going to collapse from a shortage that is a fraction of the severity of the drought, I would hope our current experience has put that to rest,” Michael said.

He said he did the study because the state is moving forward to seek approval of the tunnels without having released its own assessment of the costs and benefits.

Mellon said such a study will be coming once discussions about how to spread the costs of the project among different water users have been completed. “That’s an important piece of the puzzle," Mellon said, "and will ensure our study is comprehensive and accurate.”

— Contact reporter Alex Breitler at (209) 546-8295 or [email protected] Follow him at recordnet.com/breitlerblog and on Twitter @alexbreitler.

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Should State Agencies Be Lobbying for the Delta Tunnels?

A recent email forwarded from one of our supporters seemed innocuous enough. The subject line read: “Op-Ed: WaterFix provides solution to California’s water woes.” These kind of emails are shared every day by people who follow California water policy.

What was strange about this email was the sender, a government agency.
From: CALIFORNIA NATURAL RESOURCES AGENCY

The email was a heads up regarding an op-ed from Mike Mielke with the Silicon Valley Leadership Group arguing in favor of the Delta Tunnels (CA WaterFix). Pretty standard stuff.

What seemed odd is when the email clearly wanders into grassroots advocacy:

“Share Mike’s op-ed and these stats to make sure people know how crucial WaterFix is to securing clean water for 25 million Californians.”

Is this legal? Who knows?

But the questions raised by the email are many:

• Do ratepayers of the Santa Clara Valley Water District know their state tax dollars are funding the California Natural Resources Agency’s lucrative contracts to lobby their own ratepayers to pay more?

• Do ratepayers of the Santa Clara Valley understand that their pockets are being picked to pay to build the Delta Tunnels that will mostly benefit a few rich industrial irrigators in the southwest San Joaquin Valley?

• Do ratepayers of the Santa Clara Valley Water District know that when they paid their water bills over the last 24 months that they actually funded Santa Clara Valley Water District employees to help Stewart Resnick’s Paramount Farms to create Californians for Water Security? Californians for Water Security works hand-in-hand with Silicon Valley Leadership, and now California Natural Resources Agency to lobby Santa Clara Valley Water District board members to support the tunnels project?

• How should ratepayers and property taxpayers in the Santa Clara valley respond to agency lobbying? Should they demand a full accounting of the PR campaigns paid for with their money?

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Weekly Updates: Environmental Analysis Needed for Tunnels Plan, Critics Ask Questions

Weekly Summary: August 18, 2016

Groups Request New Environmental Review of the Delta Tunnels Proposal  Yesterday, a coalition of conservation, fishing, and public interest organizations sent a letter to state and federal agencies requesting a new (and complete) environmental analysis of Governor Brown’s Delta Tunnels (CA WaterFix) proposal.

"The U.S. Environmental Protection Agency gave the most recent environmental review documents for the project a failing grade in October 2015.

The EPA expected that the essential, but missing, environmental analyses would be supplied by other agencies during their review processes. That did not happen." Details.

Our op-ed in KCET: State Auditors Look Into 'Potentially Improper' Delta Tunnel Transactions  Commentary: Last week, Northern and Southern California state legislators had a rare breakthrough over one of the state’s most divisive issues — water. The Joint Legislative Audit Committee voted to instruct the State Auditor to launch an audit of Governor Jerry Brown’s proposed Delta Tunnels. Recent revelations show the project has murky funding and even supporters know the tunnels cannot be built on a financial house of cards. Read at KCET

Associated Press: Critics ask where water-tunnel funding is coming from  Excerpt: “It’s a shell game,” said David Wolfe, the Howard Jarvis Taxpayers Association’s legislative director. “I think it comes back to the audit (request) yesterday: There are way more questions here than there are answers.” Read the article.

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Groups Request New Environmental Review of the Delta Tunnels Proposal

For Immediate Release: August 18, 2016
 
Contact:
Robert Wright, Senior Counsel, Friends of the River at (916) 442-3155 ext. 207 or [email protected].
 

Groups Request New Environmental Review of
the Delta Tunnels Proposal

Key data missing on water quality, fish, agriculture and public health impacts

 
Sacramento – Today, a coalition of conservation, fishing, and public interest organizations sent a letter to state and federal agencies requesting a new (and complete) environmental analysis of Governor Brown’s Delta Tunnels (CA WaterFix) proposal.
 
The groups claim the proposal, as currently submitted, violates the National Environmental Policy Act and the California Environmental Quality Act.
 
Among the claims made by the coalition:

  • The U.S. Environmental Protection Agency gave the most recent environmental review documents for the project a failing grade in October 2015.
     
  • The EPA expected that the essential, but missing, environmental analyses would be supplied by other agencies during their review processes. That did not happen.
     
  • The US Bureau of Reclamation has now issued a biological assessment admitting the project is “likely to adversely affect” endangered and threatened fish species and their designated critical habitats. That contradicts Reclamation’s denials of adverse effects in the earlier Draft Environmental Impact Statement.
     
  • A new White House guidance requires consideration of the effects of climate change on federally-permitted projects.  

“The National Environmental Protection Act is often called the ‘take a hard look at the environmental impacts’ law. Until the U.S. Bureau of Reclamation and California Department of Water Resources can prove the Delta Tunnels will not kill off fish species or destroy water quality for people in the Delta, the project remains un-permittable,” said Robert Wright, Senior Counsel for Friends of the River and author of the coalition letter.  He added: “The dog ate my homework defense doesn’t work in the federal courts.”

Groups signing the letter include: AquAlliance, California Sportfishing Protection Alliance, California Water Impact Network, Center for Biological Diversity, Environmental Justice Coalition for Water, Environmental Water Caucus, Friends of the River, Planning and Conservation League, Restore the Delta, and Sierra Club California.

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State Auditors Look Into ‘Potentially Improper’ Delta Tunnel Transactions

In case you missed it…

KCET
State Auditors Look Into 'Potentially Improper' Delta Tunnel Transactions
By Barbara Barrigan-Parrilla, Executive director of Restore the Delta 
August 17, 2016
Original link.

This KCET story is viewer supported.

Commentary: Last week, Northern and Southern California state legislators had a rare breakthrough over one of the state’s most divisive issues — water.

The Joint Legislative Audit Committee voted to instruct the State Auditor to launch an audit of Governor Jerry Brown’s proposed Delta Tunnels. Recent revelations show the project has murky funding and even supporters know the tunnels cannot be built on a financial house of cards.

The Delta Tunnels would be 40-foot tall, 35-mile long tunnels dug beneath the San Francisco Bay-Delta estuary. They would deliver fresh Sacramento River water to state and federal projects that send water to agriculture in the San Joaquin Valley and Southern California cities. California voters rejected the Peripheral Canal proposal in 1982.

Now rebranded the “CA WaterFix,” the project would cost $17 billion, with interest and operational costs bringing the total payback amount to over $50 billion. “CA WaterFix” maintains the project will be paid for entirely by those water districts who would get the water, not state or federal taxpayers. To date, $248 million has been spent on the Delta Tunnels planning.

Documents recently released under the Public Records Act reveal potentially improper transactions involving public funds within the California Department of Water Resources, Westlands Water District, San Luis Delta-Mendota Water Authority, Metropolitan Water District of Southern California (MWD), and Santa Clara Valley Water District. Meanwhile, the Deputy Inspector for the U.S. Department of Interior is investigating whether the California Department of Water Resources siphoned off millions of Federal taxpayer dollars meant for improving fish habitat to instead pay for the Delta Tunnels’ environmental impact report.

The Howard Jarvis Taxpayers Association said the project’s funding had become “a shell game.”

Who Will Pay for the Delta Tunnels?

So far, none of the water districts have committed to paying their fair share of the $17 billion project.

MWD has said they won't pay for the project if their ag partners, Westlands Water District and the San Luis Delta-Mendota Water Authority do not participate financially. The agricultural water districts announced they would not pay to complete the current preliminary work on the tunnels unless the project first won regulatory approval. The agricultural parties don’t seem entirely convinced the investment would bring enough water to be worth the expense. Meanwhile, the Fitch Credit rating services has issued a negative credit rating to San Luis and Westlands due to their outstanding debt load and “a little Enron accounting.”

If big agricultural users who will most benefit from the water cannot afford their 40 percent of a $17 billion project, who will subsidize these users?

Most likely state and federal taxpayers, in violation of the original funding agreement for the project. AP has reported that state officials told Metropolitan that “any additional funding needs to complete the planning phase will be provided by state or federal sources.”

No wonder legislators want an audit!

Who Would Benefit?

An estimated 70 percent of the water from the Delta Tunnels will flow to farms in the southern San Joaquin Valley. These farms represent just .3 percent of the state’s GDP.

Mother Jones recently reported Stewart and Lynda Resnick’s firm “The Wonderful Company” has cornered the market in pistachios, pomegranates, and even water sales. They hope to expand their holdings with Delta Tunnels water and are funding PR efforts supporting the Tunnels.

Metropolitan Water District officials (some of the highest paid public officials in California) would also benefit from a project that helps them continue selling imported water as Southern California’s water wholesaler.

Who Would Be Harmed?

The science is clear. Water exports from the San Francisco Bay-Delta are killing off endangered species and causing encroaching saltwater that harms Delta farms that have been producing food for more than a century. Native salmon and smelt are on the edge of extinction and water quality in the Bay-Delta has plummeted. Already 90 percent of the fisheries in the San Francisco Bay-Delta have vanished. Famed chef Alice Waters is the latest to speak up on behalf of the state’s salmon population and what we stand to lose.

The burden of proof that the Tunnels won’t further harm to the estuary, endangered fish, or Bay-Delta communities, now lies in the hands of the California Department of Water Resources and the U.S. Bureau of Reclamation. The EPA has rejected their plan twice already.

Are the Tunnels a Good Investment?

Climate scientists predict less Sierra snowpack and fewer rainstorm events in the future. There may be no reliable water source to fill the Tunnels.

Sea-level rise also presents a huge problem for the proposal. The lead engineer recently testified at State Water Board hearings that the Delta Tunnels have a lifespan of 100 years, while the lead operations officer testified a few days later that they have only planned for 18 inches of sea level rise based on the first year of impact – 2030. Actual sea level rise could give the project a lifespan of only 30 years.

KCET’s Chris Clarke described the Delta Tunnels as “teetering on the edge of obsolescence before the first shovel of earth is dug.”

Is There a Better Way to Spend $17B on Water Infrastructure?

Opponents warn that when interest and operation costs are included, the Tunnels could cost up to $60 billion. Ratepayers and taxpayers would then end up paying as much as $2 billion per year for a thirty-year project and no additional water.

We support major investments in California’s water infrastructure. But the Delta Tunnels are a 20th Century solution that will not “fix” anything and not create one new drop of water.

Let’s instead invest in water conservation, water recycling, groundwater recharge, urban water capture, and replacing lawns with drought-friendly landscapes. Investing in local projects like the ones outlined in the 2015 report by the Environmental Water Caucus, “A Sustainable Water Plan for California.” That's the best way forward for California’s environmental and economic future.

Commentaries are the opinions of their authors, and do not necessarily reflect the views of KCETLink.

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