For every $2.50 spent building the Delta conveyance tunnel proposed by the BDCP, we can expect to see $1.00 of economic benefits. That’s the conclusion of a new report by Dr. Jeffrey Michael, Director of the Business Forecasting Center at the University of the Pacific. The report notes that other economic analyses have tended to focus on benefits and ignore negative impacts on third parties such as in-Delta and upstream interests. Its too bad the legislature wouldn’t support Assemblymember Bill Berryhill’s bill to do this kind of comprehensive cost-benefit analysis.
The report notes that the proposed conveyance is primarily an agricultural water supply project. Farms use twice as much Delta water as cities do. Says the report, “If costs are allocated on a per capita basis, Metropolitan Water District ratepayers would be responsible for 75% of the project costs (they are 18 million of the 25 million people who receive some Delta water), not the 25% that is proportional to the water they use. The use of financial feasibility analysis that allocates the full cost of the project on a per capita basis implies that urban ratepayers will be asked to pay large subsidies for agricultural water supplies in their bills.”