≡ Categories

Restore the Delta Calls for Cost-Benefit Analysis of BDCP

Restore the Delta Calls for Cost-Benefit Analysis of BDCP,

Peripheral Tunnels:

Cost Estimate has Tripled, Public Will Pay

“Through-Delta” Alternative has Highest Benefits/Cost Ratio

State is Refusing to Follow its own Cost-Benefit Guidelines

Sacramento, CA – Restore the Delta (RTD), opponents of Gov. Brown’s rush to build Peripheral Tunnels that would drain the Delta and doom salmon and other Pacific fisheries, today told Bay Delta Conservation Plan (BDCP) staff at a public meeting that the Brown Administration is refusing to follow its own guidelines for determining whether a project’s benefits outweigh its costs. RTD also noted the latest cost estimate for building Peripheral Tunnels has tripled from initial estimates, and not a shovel has yet been turned. “The first estimate was $4 billion, and is now more than $14 billion,” said Jane Wagner-Tyack, RTD policy analyst. “The cost keeps escalating and the benefits diminishing.” Restore the Delta pointed to findings of the administration’s own analysis showing the “through-Delta” alternative has the highest benefit-cost ratio of all the options. The Brown Administration has analyzed the benefits to the water-takers, but not to the people of California as a whole, and has failed to disclose that California families will pay thousands of dollars, yet receive no new water.

Three separate 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.

Jane Wagner-Tyack, Restore the Delta policy analyst, said, “The State has refused to conduct a comprehensive cost-benefit analysis, in violation of its own policies. This leads to the conclusion that the governor doesn’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.”

BDCP hasn’t met the criteria for financial feasibility set forth in DWR’s own “Economic Analysis Guidebook”: “The test of financial feasibility is passed if (a) beneficiaries are willing and able to pay their allocated costs for project outputs over the life of the project” (page 46).  BDCP can’t evaluate financial feasibility without a cost allocation, and they don’t have a final cost allocation.  So far, they haven’t shown benefits/costs for agricultural beneficiaries under proportional cost allocation.

Westlands Water District and other Central Valley Project (CVP) contractors pay the Bureau of Reclamation only for the water they receive, so in years when water deliveries are less than projected, revenues don’t recover the federal investment in the project.  But in years when actual water deliveries exceed projected deliveries, excess revenues are refunded to the contractors instead of being used to reduce unpaid capital costs and Operations and Maintenance deficits.

“We still see a project with no comprehensive cost-benefit analysis, no analysis of water availability,” said Wagner-Tyack. “This boondoggle will 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.”

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: http://documents.foodandwaterwatch.org/doc/BayDeltaConveyanceLAEconAnalysis.pdf

Leave a Comment

{ 2 comments… add one }