Experts Analyze Costs of Peripheral Tunnels: Costs are $7 Billion Higher than Benefits

Experts Analyze Costs of Peripheral Tunnels:

Costs are $7 Billion Higher than Benefits; Could Cost LA Ratepayers $20 to $47 Billion, up to $9,000 per family; Similar Pipeline in Santa Barbara Failed

Sacramento, CA – Restore the Delta today presented findings of three separate analyses of the costs, benefits and financial burdens of the proposed Bay-Delta Conservation Plan (BDCP), and its Peripheral Tunnels. The Brown Administration has repeatedly refused to conduct a comprehensive benefits-cost analysis, ignoring the rules of the very agencies pushing the project. Instead, they have conducted partial and scattered reports that the public will not find useful in determining whether this largest-ever California water project is worth the crushing cost.

The analyses found that the BDCP would cost $2.50 for every $1 in benefits.

“The BDCP contemplates one of the largest public works project in our history,” said Barbara Barrigan-Parrilla, executive director of Restore the Delta. “The State refuses to conduct a comprehensive cost-benefit analysis, in violation of its own policies. We can only conclude that they don’t want the people of California to know whom the Peripheral Tunnels would primarily benefit, what the true costs of the Peripheral Tunnels are, who would pay how much, or that there is a more cost-effective solution.”

Dr. Jeffrey Michael, Director of the Eberhardt School of Business, at the University of the Pacific, and the consultant who conducted the peer-reviewed economic sustainability plan for the Delta Protection Commission has conducted the only benefits-cost analysis of the project, said, “Since the BDCP process started, the cost estimates of Delta conveyance have increased from $4 billion to $14 billion, the water supply and environmental benefits have declined, and seismic levee improvements have been shown to provide a broader range of economic benefits than the tunnels for a fraction of the cost. Our initial benefit-cost analysis finds that BDCP is a bad deal for all Californians, and the repeated refusal of state and federal agencies to follow their own economic analysis guidelines is troubling. Our benefits-cost analysis found the cost of the BDCP is $7 billion higher than benefits; that it would cost $2.50 for every $1 in benefits, which is one of the lowest ratios for any project I have analyzed.”

Dr. Michael said that the Peripheral Tunnels would undercut more cost-effective efforts to improve California water policy. “The only way to finance the colossal debt of the Delta tunnels will be to keep southern California and Silicon Valley dependent on Delta water.  I have heard people say the state should do the BDCP and develop advanced water technologies and alternative supplies, but the two visions are fundamentally in conflict. There is a strong case that a combination of Delta levee upgrades, local water supplies, conservation and recycling will be less expensive, more resilient to droughts (the biggest reliability threat), save lives and protect critical statewide transportation and energy infrastructure, and create jobs across the state, including southern California.”

“In 1991, Santa Barbara County voters approved the Coastal Aqueduct at an estimated cost of $270 million. The aqueduct ended up costing nearly $1.7 billion, and has not been necessary to meet the County’s water needs. California ratepayers and taxpayers should expect the same bad deal with the Peripheral Tunnels. Just like the aqueduct, these tunnels will cost much more than promised, drown local water agencies with massive amounts of debt, and will not secure our water supply,” said Carolee Krieger president and executive director of the California Water Impact Network (C-WIN). “Water deliveries have been only 36% of what was promised for Sta. Barbara’s south coast. Sta. Barbara residents had to pay 6.5 times what they were promised for Delta water in 1991. A typical Sta. Barbara family would have to pay $1,200 to $5,000 per year. Many of our area families cannot afford this burden. The Peripheral Tunnels are a white elephant wrapped in pork.”

Food & Water Watch commissioned ECONorthwest to analyze the impacts that the costs of building and operating the tunnels would have on LADWP ratepayers. It outlines a low-cost scenario of $20.6 billion, and a high-cost scenario of $47.2 billion. For each, they evaluate the costs if the state and federal water projects evenly split the costs of the tunnel and related activities, and if the state project paid 100 percent.

“The BDCP is environmentally unsustainable and fiscally irresponsible. It would place California deeper in debt, force massive rate hikes and enrich corporate interests,” said Adam Scow, California campaigns director for the consumer advocacy group Food & Water Watch. “Los Angeles Department of Water and Power (LADWP) customers could be on the line to pay $2,003 to $9,182 per customer to pay for the 37-mile Peripheral Tunnels project. Most of the cost burden will fall on taxpayers and urban water ratepayers, although large agribusinesses will receive the majority of the water from the tunnels through the Kern County Water Agency and Westlands Water Districts.”

The report is available for review here:

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