Experts Analyze Costs of Peripheral Tunnels:Cost Estimate has Tripled Already

FOR IMMEDIATE RELEASE, Wednesday, May 29, 2013
Contact: Steve Hopcraft 916/457-5546;; Twitter: @shopcraft
Barbara Barrigan-Parrilla 209/479-2053;
Twitter: @RestoretheDelta

Experts Analyze Costs of Peripheral Tunnels:
Cost Estimate has Tripled Already, Public Will Pay
“Through-Delta” Alternative has Highest Benefits/Cost Ratio

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 responded to the Brown Administration’s latest cost estimate for building Peripheral Tunnels, saying the cost estimate has already tripled and not a shovel has turned. “The first estimate was $4 billion, and is now more than $14 billion,” said Barbara Barrigan-Parrilla, executive director of Restore the Delta. “The cost keeps escalating and the benefits diminishing.” Restore the Delta pointed to findings of the governor’s own analysis released today showing the “through-Delta” alternative has the highest benefit-cost ratio of all the options. The Brown Administration analyzed the benefits to the water-takers, but not to the people of California as a whole.

“The new BDCP economic analysis shows that a through Delta conveyance alternative (Alternative F) would have a higher benefit-cost ratio to the water contractors, provide higher levels of ecosystem restoration, and cost $8.5 billion less than the twin tunnels plan,” said 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. (see Table 9-32, page 9-264)

Three separate prior analyses of the costs, benefits and financial burdens of the proposed Bay-Delta Conservation Plan (BDCP), and its Peripheral Tunnels, all found it costs more than its benefits, and that it will impose a heavy financial burden on California businesses and families. 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 produced 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 project would cost a typical Los Angeles family up to $9,0000, according to a report from ECONorthwest.

“We still see a project with no comprehensive cost-benefit analysis, no analysis of water availability,” said Barbara Barrigan-Parrilla. “This boondoggle will still impose heavy financial burdens on California families and businesses, while mainly benefiting a few mega-farmers in Westlands and Kern water districts. There is a better, cheaper and faster way to address our water challenges.”

Dr. Michael said, “Once again, BDCP has been unable to provide a viable finance plan. The new cost plan not only assumes the 2014 water bond passes, but that the state will pass another subsequent water bond to fund the BDCP. BDCP’s own analysis shows that the majority of the economic benefits accrue to urban users, whereas the majority of water goes to farmers. In the past year, the cost estimate for the tunnels has increased from $12.8 billion to $14.5 billion even though the water delivery capacity of the tunnels was decreased by 40%.”
Dr. Michael’s own cost-benefits analysis has 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, and how much, or that there is a more cost-effective solution.”

“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 its benefits; and, that it would cost $2.50 for every $1 in benefits, which is one of the lowest ratios for any project I have analyzed,” said Dr. Michael.

Bill Jennings, executive director of the California Sportfishing Protection Alliance, said, “The high-outflow scenario that delivers the same amount of water (4.705 MAF) is not even being evaluated in the EIR/EIS (page 9-10, Chapter 9, Alternatives to Take).”

Dr. Michael questioned the estimates of water supplies the tunnels would provide, “The new Economic analysis is inconsistent with the Environmental Impact Report (EIR). In order to show that the benefits to water contractors exceed the cost to the water contractors, the BDCP economic analysis assumes that the tunnels will deliver incremental water supplies that are more than double the levels described in the BDCP Environmental Impact Report (EIR).”

Dr. Michael also 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.”

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 report is available for review here.

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