Unreleased Economic Analysis Shows Delta Tunnels Will Require $6.5B Subsidy from State and Federal Taxpayers

restore the delta A recent Public Records Act request from the CA Department of Water Resources, delivered to Restore the Delta, uncovered a draft economic analysis for Governor Brown’s Delta tunnels project authored by Dr. David Sunding of the Brattle Group from Fall 2015.

Read the PRA documents here.

The state’s cost benefit analysis calls for a $4.6 billion Federal taxpayer subsidy for the project to cover expenses for Central Valley Project water users, and additional subsidies to be paid for by California taxpayers. In total, CA WaterFix will require a $6.5 billion taxpayer subsidy.

The Central Valley Project water users who are proponents of the Delta tunnels project include the San Luis Delta Mendota Water Authority, and their member Westlands Water District, who in July had its credit rating upgraded by Fitch Ratings from “Negative Watch” to “Negative.”

In a memo reviewing the Brattle Group’s analysis of CA WaterFix, Dr. Jeffrey Michael, Director of the Center for Business and Policy Research at the University of the Pacific, notes, “Clearly, this huge subsidy is in stark contrast to ten years of public statements that all construction and mitigation costs would be paid by water users.”

Dr. Michael’s review finds that WaterFix, “passes a cost-benefit test in aggregate,” but when the results are disaggregated by urban and agricultural uses, the report finds “benefits fall short of allocated costs for most agricultural water users.”

Dr. Michael says, “Because costs exceed benefits for agricultural users, the report actually finds that the tunnels are not economically feasible as this requires benefits to exceed allocated costs for all users. Thus, much of the rest of the report attempts to rationalize public subsidies to lower the costs for agricultural contractors.”

Even more troubling in the Brattle Group’s draft economic analysis is the assumption that water yields (the difference in export water delivery with and without the tunnels) are four times higher than in official WaterFix documents including its RDEIR/SDEIS and petition to the State Water Resources Control Board.

Barbara Barrigan-Parrilla, executive director of Restore the Delta said, “As we have suspected, the economic planning for the tunnels is forecasting a water yield far higher than what proponents are telling the State Water Resources Control Board at hearings on permits for the project. Because drought is the new normal, the only way for CA WaterFix to deliver four times more water within the calculated difference is to deplete the Bay-Delta estuary and the upstream watersheds.”

Additional emails in the PRA request show that the next version of the economic analysis will contain only aggregated economic results, meaning the public version of the report will cover up all the negative results about the project not penciling out for agricultural users, even with a subsidy.

“In addition to providing no evaluation of the economic harm that will be inflicted on Delta communities, it is clear CA WaterFix planners have no qualms about Californians paying for the project through higher water rates, property taxes, and state and federal income taxes — all for the benefit of big agricultural growers on the west side of the San Joaquin Valley, and special interest water districts, like Metropolitan Water District of Southern California. Southern Californians and Silicon Valley water ratepayers should be very concerned as they will end up subsidizing big agriculture four different ways,” added Barrigan-Parrilla.


About Kevin

Mayor - City of Oakley, Data Center Manager of Mainframe Operations and Optimization – USS-POSCO INDUSTRIES, Co-Founder and Board Member - Friends of Oakley A Community Foundation, Advisory Board – Opportunity Junction, Commissioner - Contra Costa Transportation Authority, Board Member - Tri Delta Transit and Transplan
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