On October 11, the Santa Clara Valley Water District held a workshop on the Bay Delta Conservation Plan, which featured a panel that included Mark Cowin, the Director of the Department of Water Resources; Sandra Schubert, the Undersecretary of the California Department of Food and Agriculture; and Dr. David Sunding, professor of economics at UC Berkeley, principal with the Brattle Group and consultant to the Natural Resources Agency.
The addition of Undersecretary Schubert added an agricultural dimension to the discussion, and during the workshop, Mark Cowin answered questions about agriculture’s ability to pay for their portion of the BDCP, Dr. Sunding discusses the NRDC’s portfolio alternative, and a SCVWD director questions the state’s cost estimates for water conservation and recycling.
The Santa Clara Valley Water District depends on imported water for over half of its water supplies in average years, with 15% of imported water delivered through the Hetch Hetchy system and the remaining 40% conveyed through the Delta from both the state and federal water projects. Even though the District’s most recent Water Master Plan incorporates a plan to expand water use efficiency and water recycling efforts, the Water Master Plan affirms that the County will still need imported water supplies to satisfy about 45% of its water demand.
With imported water such a key part of their water supply, the Santa Clara Valley Water District recently began a series of four workshops focused on evaluating the Bay Delta Conservation Plan. This workshop will provide a statewide focus of the Plan, including an overview and state agency perspectives. Two workshops scheduled for November will focus on the Delta, including the perspective of in-Delta and environmental stakeholders, planned habitat restoration, and overview of the BDCP benefits and impacts to the region as well as the condition and stability of the levees. The final workshop in December will focus on local costs and benefits.
CEO Beau Goldie began by saying that this was the first of four workshops that would be held regarding the Bay Delta Conservation Plan. “California’s Sacramento-San Joaquin Delta is continuing to degrade both as a vital ecosystem and as an important component of the state’s water supply system. California has an aging infrastructure that supports our state’s population and economy,” he said. “Developing and implementing a Delta solution is critical, not only to Santa Clara County and the Silicon Valley, but to the entire state. It’s important to have a healthy ecosystem, it’s important to have a healthy economy, and it’s important to future generations.”
“The BDCP is a habitat conservation plan that is aimed at helping to achieve the coequal goals of restoring a healthy ecosystem in the Delta and providing a reliable supply of water. The plan is similar to the recently adopted Valley Habitat Plan for Santa Clara County but significantly larger in geographic scale and scope and covered species,” Mr. Goldie continued. “But the BDCP is not the only solution – no silver bullet for fully achieving the state’s coequal goals. We’ll also hear today about the Governor’s water action plan, a comprehensive plan to address water issues outside of BDCP’s coverage area.”
Cindy Kao, Manager of our Imported Water Program, then gave a brief overview of the District’s water supplies and the role that imported water plays in the County’s water supply reliability. She began by saying that the District is the principle water wholesaler, flood protection agency, and watershed steward for Santa Clara County. “We serve 2 million people, 15 cities, 12 retailers, 4700 direct well owners and hundreds of farms and ranches,” she said. “Early in the 1900s, demand for water in the County had already exceeded the available local supply, and groundwater levels were drawn down. Land subsidence occurred; between 1915 and 1970, the land subsided about 13 feet in San Jose.”
The District built reservoirs, developed a conjunctive use program, and began receiving Hetch Hetchy supplies in the 1950s but groundwater levels continued to decline, she said. “The District then developed contracts with the state and federal governments to receive state water projects supplies in the 1960s, and CVP water supplies in the 1980s which are conveyed through the Delta. This helped replenish our groundwater basins and stop subsidence.”
The district has a diverse water supply portfolio with imported water accounting for 55% of the District’s supply, she said.
Currently, the District conserves more than 50,000 acre-feet per year and intends to double that by 2030; they also plan to double their water recycling. “We’re also nearly done constructing the Silicon Valley Advanced Water Purification Center that will produce about 10,000 acre-feet of highly purified recycled water,” she said.
The District’s strategy is to reduce reliance on imported supplies, and although they’ve made great strides, the supplies conveyed through the Delta will continue to provide critical baseline water supply reliability for the County, said Ms. Kao.
The Delta is considered the hub of California’s water system, and it’s challenged by floods and earthquakes, levee instability, a declining ecosystem, sea level rise and climate change, she said. “The state is developing the Bay Delta Conservation Plan to help improve water supply reliability and restore the Delta’s ecosystem and it will do this by improving water conveyance through the Delta, restoring habitat in Delta flow patterns, and reducing vulnerability to the Delta to climate change and seismicity. It will do this through implementation of 22 conservation measures in these three categories: Delta conveyance, habitat development, and reduction of other stressors. … Doing nothing is not an acceptable alternative and will likely result in further reductions in supply, interruptions in delivery and continued ecosystem decline.”
Ms. Kao then presented a picture of the District’s intake at San Luis Reservoir. “Our CVP supplies are drawn in through this intake. It was taken this past August and illustrates how reduced imported supplies can affect deliveries to Santa Clara County. Essentially, if the water levels drop below this intake and the lower intake, then our CVP deliveries could be cut off.”
The panelists then began their presentations.
MARK COWIN, DIRECTOR OF DEPARTMENT OF WATER RESOURCES
Mark Cowin began by saying that they were on the threshold of a very important and much anticipated milestone, the release of the public draft Bay Delta Conservation Plan. “I don’t need to say that the Silicon Valley is world renowned as a hub of innovation and an economic engine,” he said. “At the heart of the BDCP, we’re trying to make sure that we make the water deliveries that sustain that engine more reliable and sustainable. And we have to do that in a way that protects the most important estuary in California, the San Francisco Bay and the Sacramento-San Joaquin Delta, which are essentially in your backyard.”
“Our core strategy is all about doing that in a way that respects and protects that estuary,” Mr. Cowin continued. “Through the framework of a habitat conservation plan, our expectation is that we’re going to address multiple stressors in the Delta in order to reduce those conflicts with water operations and that will ultimately deliver us more sustainable reliable water supplies for California, including the Silicon Valley.”
However, crafting the BDCP has been far from easy, and extremely frustrating for everyone involved at times during the process, Mr. Cowin said. “After years of meeting primarily in courtroom, we’ve essentially had to reforge relationships between water agencies and fish agencies in order to get on a common page regarding the structure of the Bay Delta Conservation Plan, and perhaps more importantly, the science that underpins that plan. But we’ve made steady progress. And as noted earlier, prior to the federal government shutdown, we were on track to publish our draft plan in the federal register on November 15. We believe we’re probably suffering a day by day delay with the federal shutdown right now, but once the federal government is back up and running, we’ll consult with our federal partners and rework our schedule. We’re waiting for federal regulatory agencies to do a final review essentially of the plan that is sitting on their desks waiting for their return, so we’re very anxious to get on with that review and approval and get the plan out for public review.”
The Plan, once published, will reflect revisions made over the past year including those announced last August. “We’ve shrunk the permit footprint of the Delta water conveyance facilities that are part of the BDCP by 50% in order to minimize disruption to those that live and work in the Delta, and also as a result of a tremendous amount of work between a whole lot of people, we’ve addressed the concerns raised by federal fishery agencies over the last couple of years.”
Once the final BDCP is released, there will be a 120-day comment period, as well as at least a dozen workshops to collect public input, he said. “We will then consider that input and decide how we need to make revisions to the plan with our goal being to get to a final decision and a final plan about this time next year.”
“The complexity of the Bay Delta estuary can’t be understated, and when you overlay that with the human and cultural aspects of the Delta and problem solving, it gets very complicated and becomes a tremendous challenge,” he said. “Never before in California have we tried to craft such a comprehensive long-term aquatic habitat conservation plan with such high stakes, and ambitious as that plan is, we recognize that even a wildly successful BDCP isn’t everything we need to do to secure sustainable reliable water supplies for California.”
However, more needs to be done, Mr. Cowin said. “We need to continue to help local and regional water agencies invest in water conservation, recycling, groundwater management and aquifer remediation, and ecosystem restoration that helps secure reliable water supplies and a host of other projects that will make better use of existing supplies.”
But the State hasn’t been waiting to make progress on those fronts, he said. “Thanks to the voters over the last decade, the state has been able to invest roughly $1.43 billion in grants to help local agencies implement local water supply reliability projects,” he said. “That funding has leveraged an additional $3.7 billion of local funding and all told, the projects implemented through this approach have yielded about 2 million acre-feet per year of water supplies, either through demand reduction or local supply augmentation.”
Although that’s a significant step forward, continued investment on that level is needed into the future, he said. “So to sharpen our focus, those of us within Governor Brown’s administration are currently preparing a Statewide Water Action Plan for the Governor’s consideration where we will outline the priority actions that we need to take over the next one to five years to push us forward on all of these fronts,” said Mr. Cowin. “The plan will describe a series of actions we must take to bring reliability, restoration, and resilience to California’s water system, and includes stabilizing the Delta through the BDCP, improving our ability to manage water across seasons and years through better management of groundwater and building new storage facilities, increasing local self reliance, streamlining water transfers, and expanding funding for programs with multiple benefits such as flood control, improved water quality, and ecosystem restoration. All of these efforts complement one another,” noting that they were aiming to have a plan for the Governor’s consideration and endorsement by the end of the year.
On the other hand, doing nothing is not an option, Mr. Cowin said. “If we do nothing to address the declining Delta, we can expect increasing pressure on covered species and more restrictive regulations on how we operate both the State Water Project and the Central Valley Project, and that will correspond to a decrease in Delta export reliability.”
This past year has truly been extraordinary and unprecedented, and serves as a case in point, he said. “In January of 2013, we had a snowpack that was 134% of normal and I, as director of the Department of water Resources, was fairly relaxed about how we were going to be able to perform regarding the State Water Project this year. But then after New Years, the storm systems just simply stopped and we had the driest January through March on record. During that time, the Endangered Species Act restrictions on water project operations resulted in the loss of 800,000 acre-feet of water that could have been moved into storage for future use if the proposed Delta conveyance facility had been in place. We could have moved that water into storage without causing harm to fish and that water would be serving our economy today.”
The fundamental purpose for improving conveyance is very important to understand, Mr. Cowin said. “Fish agencies have been pushing us for decades now to reduce our reliance on south Delta pumping in order to reduce and minimize those harmful effects that are caused from those reverse flows that result in such mortality of fish species,” he said. “But by adding north Delta diversion capability, we can operate the projects more flexibly, we can be more opportunistic when we do have high flows and we can add more protection against reverse flows and still maintain exports. And that is how Delta conveyance provides benefits for both fish and water.”
Mr. Cowin explain that it’s also the reason why a smaller conveyance facility wouldn’t work: “Unless the capacity of that North Delta diversion is large enough to reduce dependence on south Delta pumping, we can’t gain the basic benefit of reducing reverse flows and the benefits to fish that will allow more resilient project operations,” he said. “Moreover, if we do nothing to change how we convey water from the Delta, we risk disruption of water supplies through earthquakes and rising sea levels and potential for us to not be able to operate those south Delta pumps for an extended period of time.”
“Our water diversion system in the Delta is 50 years old and it’s time to upgrade for the next generation,” Mr. Cowin said, “so let me wrap up by saying I believe we are closer to ever to lasting solutions for the Delta. Sustainability in the Delta will in turn help us understand what other types of investments we may need to make across the spectrum in terms of using water more efficiently, recycling more water, protecting our groundwater, etc. We wouldn’t be at this hopeful point after decades of struggle without the leadership of people like you so thank you very much for that and I look forward to further dialog this morning.”
SANDRA SCHUBERT, UNDERSECRETARY FOR THE CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE
Undersecretary for the California Department of Food and Agriculture, Sandra Schubert, then discussed the importance of California agriculture to the state, the nation, and the world. “California’s agricultural farm gate value is $44.7 billion,” she began. “To the farm gate, we employ over 800,000 people, and that’s farm gate employees. That doesn’t include the restaurants we go to, the restaurant workers, the truck drivers, the port workers, or anybody else that touches that agriculture, the food or fiber that you eat or wear. It doesn’t account for any of those other types of activities.”
“In California we have 80,500 farms,” she noted. “Many of those farms are located in the Central Valley in some of our most disadvantaged communities, communities where the economics are dependent upon agriculture to survive. It is a critical part of what we do.”
Ms Schubert pointed out that California produces nearly 450 different commodities, many of which are produced nowhere else in the world. “We’re unique. We have a Mediterranean growing climate here that allows us to do that and to grow crops year round,” she said. “There are only five Mediterranean growing climates in the world. That means there are only 5 places on earth that can produce the type of bounty we do,” she said, noting that of all the fruits and vegetables consumed in the United States, 50% come from California.
California’s innovative farmers have learned over time how to manage crops and how to work through trying situations, she said. “I like to say that ranchers and farmers are jacks of all trades. They are agronomists, they are economists, they are sales people, they are employees and employers and they do amazing jobs. They have increased our farm gate value regularly every year.”
“We’re the number one dairy state in the nation, we’re clearly the number one producer of fruits, vegetables, and nuts, and we export significantly across the county and across the world,” continued Ms. Schubert. “Our ability to grow these crops helps us feed the world and at a time when we talk about expanding population. By 2050, we expect to have 9 billion people on earth; the stats at this point from the United Nations are 220,000 new mouths to feed every single day. I personally think that California, with the bounty we have unique to us, we have a moral obligation to try to help feed the world. We need to help teach people how to feed themselves, but there are parts of the world right now that do not have the ability to produce the food we have. So it’s my feeling that our bounty is something we should be proud of and we should be proud of the way that our farmers grow our food.”
“This administration is united in the need for the BDCP,” she said. “We’re a big state. We have differing interests. We’re a small nation. … So we have a critical need to look at these big problems and find ways to address these challenges, to ensure that we have sufficient habitat and to ensure that we have a sufficient water supply.”
Ms. Schubert pointed out that California’s farmers have made great strides in efficiency in recent decades. From 1967 to 2007, crop production efficiency has increased 38% while during the same time, economic efficiency has increased by 115%, she said. “Our farmers have learned a lot. They’ve learned a lot about how to manage water. There have been technological developments. They schedule their irrigation water differently. Many farmers use metering. They level their fields so they can get a more even application of water which is beneficial. They use drip irrigation as appropriate,” she said, point out that drip irrigation is not only more water efficient, but helps deliver fertilizer to the plants efficiently, thereby increasing crop productivity as well. “As technology increases, we certainly hope that and we anticipate that our water use efficiency will increase also. That doesn’t mean that there isn’t more that can be done and that there isn’t more that should be done.”
The Statewide Water Action Plan is designed to look forward to what we need to do to make water in California sustainable into the future, Ms. Schubert said. “One of the things this Governor has told our agencies to do is to get rid of the silos. Sit down together. These critical issues cross everything. It’s not just DWR; it’s not just Department of Food and Ag; it’s not just Fish & Game. We all need to come together and look at the future and the good of the state of California and figure out how do we solve these problems, how do we maintain the vital economic society that we have, how do we maintain our natural resources and the bounty that we have.”
“We have an obligation as an administration to look at these big picture issues and ask ourselves how can we meet all our goals? What is the best way we can meet them?,” she said. “Will be there some tradeoffs? Yes, there will be. With the BDCP, we will lose some agricultural land in the Delta. I sit on the Delta Protection Commission on behalf of Secretary Ross so I’m part of a lot of those conversations. I must compliment the Department of Water Resources; they have spent a lot of time working with us on ag land stewardship and mitigation.”
“I do hear a lot from many folks about water use and farmers,” she said. “There are good farmers and there are bad farmers, just as there are good attorneys and bad attorneys, good doctors and bad doctors. Like the rest of us, farmers really work hard to do the best they can to grow the crops they can in the best way that they can, but it is complicated because of the diversity of crops and the diversity of regions we have,” she said, pointing out that out of the seven biomes that exist in the world, five are found here in the state of California. “How and when you water depends on a variety of factors. It depends on which side of the Central Valley are you on, are you growing almonds or are you growing citrus, what type of soil do you have – do you have sandy, salty soil or do you have clay soil. It’s a very complicated endeavor to grow crops in our state.”
The California Department of Food and Agriculture is very supportive of the BDCP project, she said. “It’s critical that we have habitat that’s sufficient for our fish species, but it is also critical to create more reliable water supplies. Some estimates say that next year CVP deliveries may be zero to the Central Valley. That can affect our ability to grow food, the type of food we can grow, it can affect food prices, it can affect groundwater pumping and groundwater quality, so the need to make sure that we have a BDCP that’s functional and accomplishes those coequal goals can’t be understated for the state of California or for our agricultural communities.”
Discussion: Can agriculture pay their portion of the BDCP?
Director Brian Schmidt asked the panelists to comment on the rumor that agricultural water districts were unable to fund their portion of the BDCP and would be relying on urban water districts to do so.
“That would indeed be a rumor,” said Director Mark Cowin. “That is not part of the negotiations that I’ve been engaged in, and in fact I don’t have to look further than this board to point out that the urban water agencies are in no position to suggest that they would support the ag district’s portion of the costs of this project. It’s simply not part of the conversation among the participants in the BDCP.”
“I understand all the competing interests,” said Sandra Schubert. “I hear a lot from people who say ‘agriculture doesn’t touch me.’ I just want to remind everybody that we all eat and we all wear clothes, so whether you live in Mountain View or whether you live in Fresno, agriculture touches you deeply. … It would be an interesting study – what would happen to the state of California if we no longer shipped water to the Central Valley? How would that affect our economy? How would that affect all those disadvantaged communities that rely on agriculture to support themselves? I would guess there would be a lot of people who no longer have jobs or homes. So it’s not an ‘us versus them’ situation. It’s all of us together. We all have to address this issue.”
“I hear a lot from farmers in the Delta,” added Ms. Shubert. “They don’t want BDCP, many of them. But it’s critical for the future of California that we address these issues because it’s only going to get worse if we don’t.”
Director Cowin acknowledged there was still much to do to complete the financing plan. “We’ve got more work to do and we will do it,” he said. “These questions of equity and appropriate cost allocation are extremely complex. Within the Central Valley Project alone, the policies within the USBR for how costs and benefits are allocated within service areas with the Central Valley Project make the decision on how to allocate costs just within that set of users extremely complex, so there is more work to do and no clear answers. I think at the end of the day, it’s a negotiation.”
“Rumors are exactly why we are having these work study sessions,” said Mr. Goldie. “I can tell you I would not be bringing forth a recommendation to this board if urban was going to foot the bill on this and not ag. … We are both a state water project contractor and a federal CVP contractor … This county is broken up into districts, which are various geographical areas with their own characteristics and interests. I think it’s important to make sure we look at the County as a whole and what’s good for the entire County.”
Director Schmidt said that he had an opportunity to visit the Westlands Water District, and the conservation that they do there is really very impressive. “They also pointed out how much more conservation they do than the upstream diverters tend to do,” he said. “That seems to me to be a very serious issue as well and something that is really not being addressed in BDCP. Maybe it can’t be addressed in BDCP but it needs to be addressed.”
DR. DAVID SUNDING, PRINCIPAL WITH THE BRATTLE GROUP AND CONSULTANT TO THE NATURAL RESOURCES AGENCY
Dr. David Sunding began by stating that his presentation would focus more on the benefits to the state and federal contractors who will pay for the major elements of the plan.
“The Bay Delta Conservation Plan is a Habitat Conservation Plan,” he said. “As an academic, one of the areas I spend a lot of time on is the Endangered Species Act and habitat conservation planning. I can tell you that there has never been a habitat conservation plan in the history of the ESA that has had the level of rigor or the comprehensiveness in economic analysis that this particular plan has. And that’s fitting. This plan is very complicated, more than most habitat conservation plans. There are also some elements to the BDCP that require a significant capital investment, so I think it is fitting that there has been this comprehensive program of economic analysis.”
Chapter 9 of the draft BDCP was released in April and it focused on the economic benefits of the BDCP to the state and federal contractors, Dr. Sunding said. “It drew on some foundational work that actually we did for ACWA, CUWA, the State Water Contractors and Metropolitan that got at the fundamentals of the economic value of water supply reliability. We had this year’s long research program working with urban water agencies throughout the state, and we’ve taken that learning into the BDCP.”
While a lot of attention has been paid to the draft Statewide Economic Impact Study and that’s important, Dr. Sunding said the information in Chapter 9 and Appendix 9-A is also very important. “What this chapter of the BDCP does is it tells the story from a biological perspective but also from an economic perspective about why the proposed plan looks the way it does. Why is the conveyance facility sized the way it is, why is the amount of habitat and flow criteria, how did it all come together so that it works from these multiple perspectives.”
Chapter 9 looks at the economic benefits through the narrow lens of the state and federal contractors, a narrow perspective, but a very important one, Dr. Sunding said. “This plan has to be economically feasible for your District and for districts like yours, up and down the state, otherwise it’s a non-starter, so it’s a narrow question but it’s extremely important to carry the plan forward.”
The chapter analyzes four categories of economic benefits of the BDCP: Improvements in urban water supply reliability, improved agricultural water supply reliability, water quality impacts in the form of reduced salinity, and reductions in seismic risk, he said. And when doing an economic analysis like this, you also have to consider what happens if you don’t do the investment, noted Dr. Sunding.
With respect to the urban analysis, Dr. Sunding said they worked to reflect the way water is used in the systems. ”Understanding that most agencies have a supply portfolio available, there is storage available, water supplies from the Delta naturally go up and down from year to year; water gets put into storage and taken out of storage, we try to incorporate at a planning level all of these operations in the economic model,” he said. “We actually have conducted the analysis at the level of individual water agencies, thinking that it’s just essential. There’s no one single value of water in the Bay Area or Southern California or any other place,” he said, noting that the urban analysis included all 26 member agencies of Metropolitan as well as ten other water agencies that also receive State Water Project deliveries.
“Essentially what we’re putting economic value on to the state and federal contractors is moving from one water supply regime to another; that’s what I mean by water supply reliability,” said Dr. Sunding. “We’re looking at BDCP under a bookend. However, it’s not exactly certain at present what are going to be the operating criteria that govern water supplies, so to deal with that, we do what analysts normally do when they are confronted with some uncertainty – we looked at a range of outcomes.”
The bookends are the high and low outflow scenarios, and there are two possibilities: a BDCP or no BDCP, so combined with high and low outflow scenarios, there are four possible outcomes, he said. Dr. Sunding then presented a graph showing exceedance curves. “An exceedance curve tells you the percentage of years that you get more than a certain amount of delivery. Getting higher is better – it means more water supplies, and it’s a very standard concept in water resource engineering.” Referencing the graph, he said the black line is what occurs on the State Water Project without the BDCP, and the red line is what occurs after the investment is made. “You can see here the red line is above the black line. Average deliveries on the State Water Project following BDCP in this high outflow case are about 4.7 million acre-feet per year which is at or a little bit below the ten or twenty year average, either one. But the real benefit of BDCP is that you’re not on the black line which is much worse than what has been the case over the last ten or 20 years. That has a yield of about 3.5 MAF.” Dr. Sunding said that it was determined by taking exactly the environmental flow criteria that are the long-run objectives developed by the fish agencies and applying it to the existing infrastructure in the Delta, so it’s very fair to characterize that as being what the future would look like without the BDCP.
“So I think this puts to rest a major misunderstanding or fallacy about what the BDCP is about,” said Dr. Sunding. “It is not a water grab; it is certainly not a water grab by Southern California, it’s about maintaining what exists, plus or minus a couple of hundred thousand acre-feet. There is some room for improvement, but maybe not quite as much as there has been in the past, but it avoids a disaster. We’re talking here not about earthquakes, this is just fish regulation. It avoids about a 30 to 40% deterioration in State Water Project deliveries.”
So as you think about what is it worth to your ratepayers to invest in BDCP, consider it that way, Dr. Sunding said. “What would your ratepayers be willing to pay to avoid losing 1/3rd of their state water project supplies? I think that put things into perspective nicely.”
The argument has been made by some in the environmental community that it makes sense to do a less expensive version of the BDCP and take that money saved and put it towards other water supply investments, Dr. Sunding said. “That’s a perfectly reasonable scenario to investigate and we have investigated it in great detail. And while I can tell you it’s not a bad idea in theory, it doesn’t pencil out. Not even close in this particular instance.”
“The difference in water supplies from BDCP to no BDCP is somewhere in the range of 1.2 to 1.7 million acre-feet, so when figuring in the costs borne by contractors, that amounts to an implicit water supply cost per acre-foot of between $238 and $321 per acre-foot,” said Dr. Sunding. “Well you know the cost of water supply alternatives as well as I do and there is no new water available in California for a cost of $238 to $321 per acre-foot, so the economics of spending less on BDCP conveyance so you can spend more on water supply alternatives, it just doesn’t come close to penciling out.”
When the numbers are considered without subsidies, recycled water can cost from $1000 to $1700 per acre-foot, said Dr. Sunding, and desalination can cost between $2000 and $2300 per acre-foot. “Multiples almost in order of magnitude above the implicit costs of the BDCP,” he pointed out.
Dr. Sunding then discussed water quality impacts. “There are a number of places around California and urban areas especially where salinity is quite an issue,” he said, noting that they used two models to value reductions in salinity. “There are a lot of reasons why salinity reductions have benefits; it extends the useful life of appliances, there are some taste considerations, there are treatment cost reductions, all things of this nature.”
Seismic risk reduction is not the primary motivation for the BDCP, said Dr. Sunding. “It’s really much more about environmental regulations, but it is definitely a benefit of the BDCP. Having this new conveyance facility increases the ability to get water through the Delta, even with a number of Delta islands failing.” He explained that the seismic analysis used a basic assumption of a 2% probability of a 1-year outage occurring each year. “Outage could be larger, could be smaller, but one year seemed to be a reasonable reference case. The marginal values of water that we used is the benefit of having water supply reliability post earthquake; that’s taken from the urban and agricultural models that we used for the water supply reliability analysis so there’s a consistency there.” He noted that the analysis was performed not just for the proposed BDCP action, but for the other sizes of conveyance facilities as well.
Dr. Sunding then presented a chart comparing the present value of the benefits and costs of the different take alternatives. He noted that the numbers are slightly different as they incorporate the recent changes to the project. The first two rows of the chart are the numbers for the BDCP under the high and low outflow scenarios, which project deliveries to be between 4.7 MAF and 5.6 MAF. “Deliveries over the last 10 or 20 years have been somewhere in the range of 5 to 5.2 MAF, so we’re about in the same place, plus or minus a few hundred thousand acre-feet. But it is accurate to say the BDCP basically keeps things in place,” he said.
With the high outflow scenario of 4.7 MAF, the water supply reliability benefits, the seismic risk reduction benefits and the water quality benefits total just over $18 billion with total costs to the state and federal contractors about $13.5 billion, Dr. Sunding said. He explained that the cost figure might look different than what they’ve seen before because it is in present value. “If somebody asks me what is BDCP going to cost the state and federal contractors, the answer I would give would be $13.5 billion, because what this does is two things … First of all, it puts all future expenditures in current dollars, so a million dollars spent in ten years is less than a million dollars now. It puts everything in current dollars discounting at rates that are approved by the federal government. The second thing it does is it separates out elements of BDCP that have to be done in any case, like habitat restoration that is required by the existing biological opinions. So these are incremental costs borne by the state and federal contractors, put in 2013 dollars. For a cost-benefit comparison, this is the proper way to do it.”
“So for the benefits of $18 billion and costs of $13.5 billion, net benefits are $4.5 billion. The BDCP passes an economic feasibility test from the perspective of the state and federal contractors, and that’s true at either bookend – for the high outflow and the low outflow cases, it passes,” said Dr. Sunding. “From a pure dollars and cents point of view, this would be a reasonable investment.”
Dr. Sunding explained that the analysis also considered different configurations of the project, including larger and smaller conveyance facilities, more or less habitat restoration, and tighter operating criteria. “The first major conclusion that comes from this is that in the aggregate, the BDCP makes sense for the state and federal contractors. It passes an economic feasibility test,” he said. “Second, a smaller conveyance facility does not. And in particular, the 3000 cfs facility has actually negative net benefits meaning that its worse than doing nothing.”
The other alternative that is important from a regulatory point of view is the higher spring outflow case. “This is the 9000 cfs facility with exactly the same habitat that is contemplated in the BDCP, but with even tighter operating criteria so it produces less yield,” said Dr. Sunding. “This is one the fish agencies have to see. … this one clearly doesn’t pencil out so that’s very important from a regulatory point of view when we’re looking at these take alternatives.”
“This analysis is only half of chapter 9; the other half of chapter 9 is looking at every one of these take alternatives from a biological or species point of view. By combining those two styles of analysis, take alternative A, the 15,000 cfs facility, looks great from an economic point of view,” said Dr. Sunding, noting that it has net benefits of $12 billion. “The problem with alternative A is that it doesn’t work for the species. It’s worse than the proposed action from the species point of view, so again, to be an acceptable alternative here, things have to work for both of the coequal goals. The project that’s been proposed is the one that’s in the sweet spot; it works economically but then also for species.”
Discussion: The NRDC’s “portfolio alternative”
Director Schmidt asked Sunding about Alternative I, saying that it was his understanding that the operating criteria for Alternative I was closer to the NRDC’s operating criteria. Dr. Sunding replied that Alternative I was a 9000 cfs facility and the NRDC alternative has the conveyance facility in Alternative D.
“They had told me that they have different operational criteria and that it’s not being reflected in the state analyses,” said Mr. Schmidt.
“The yields that were coming out of the CalSim runs for take alternative D were actually higher than what the NRDC had in mind, so if we were to use the NRDC recommended yields, the benefit costs relationship would be much worse than what I’m showing here,” said Dr. Sunding.
“If Alternative I is more applicable to what they are saying than Alternative D, then I assume the situation is even worse,” replied Mr. Schmidt.
“Yes,” agreed Dr. Sunding.
“On the other hand, this doesn’t show the complete picture,” said Mr. Schimdt. “They say spend money on other actions to provide water, and that you need to do that to figure out a real comparison of alternatives.”
“There are ways that this differs than their proposal,” responded Dr. Sunding. “For example, they also add in 1 million acre-feet of new storage south of the Delta. That is not part of this analysis because it’s not part of what’s proposed to get the permit, so we’re trying to be very directly applicable to what’s actually in the proposed action.”
“What the economic model does is if there’s less water coming from the Delta, then the assumption is that there’s more investments in alternatives. So there are two benefits from maintaining state water project deliveries to agencies like this. One is reduce shortages. Two is some avoided investments in water supply alternatives,” Dr. Sunding continued. “But let me also say that even with the BDCP in place, that doesn’t come close to solving all of California’s urban water problems. There’s no new water in there for growth, for example. So if you take out to a year like 2035, what’s coming out of our model is a need to develop about a million and a half acre-feet of new water supplies in urban areas in California, even with the BDCP occurring, so I don’t want anybody to get the idea that the conclusion of our analysis is to do the BDCP and then you don’t have to do this other stuff. We need it all in California, but on the margin, spending a couple of billion less on conveyance and putting that into urban water supplies, or making up the lost Delta deliveries with more investments in urban water supplies, that’s a bad bargain.”
“Every agency has some array of alternative water projects they might implement, and they are probably constantly considering what those are,” added Director Cowin. “Most likely you’re going to implement the most cost effective projects first – the most implementable, cost-effective projects. So the whole notion here is that the more of those very cost-effective projects that have to go to backfill for lost imported water supplies, the more expensive it’s going to be to go beyond that to meet future needs, not only for population growth but for dealing with other risks, like climate change. We want to be clear – we are proposing a portfolio approach. But we want a portfolio approach that has a sustainable foundational imported water supply that allows for reasonable economic investments to get us to where we need to go.”
Discussion: And what about the costs for water conservation and recycling … ?
Director Schmidt then referred to a letter from Secretary Laird on the portfolio alternative that was included in the board member packet. “He has some calculations that I am having trouble accepting, frankly, about water conservation. It says on page 5 that investing $3 billion in the most cost-effective forms of water conservation and wastewater recycling would not come close to replacing the water supply lost as a result of reducing the size of the tunnels. Water recycling costs are in the range of $1000 – $1500 per acre-foot. It says conservation is often less expensive than recycling, but in most urban areas served by the State Water Project has a cost of $1000 per acre foot and above.” He turned to the staff and asked if they would agree with that figure.
“One of the things you have to understand about water conservation, especially in our case, and it will be different for every water district that implements it is the cost of implementing a conservation measure like low-flow toilets – it’s a certain cost and you get certain amount of acre-feet out of it that’s an every year supply,” replied Joan Maher. “The question is, in wetter years, when we have plenty of local water in our local watersheds, and we prioritize the use of local water first, the acre-feet we’re getting from that conservation measure in the wetter years is not as valuable to us as the acre-foot of savings that we’re getting in the drier years. The cost of conservation versus the economic benefits of conservation, those are two different things. You really need to look at what is the avoided costs that we have of implementing that conservation program. So I know you’ve heard numbers, $200, $300 an acre-foot to implement conservation, that’s the out-of-pocket dollars for the local toilet program. It does not equal the economic benefit of that conservation program,” she said, noting that they would be examining the economics in further detail in a later work study session.
“They’re saying it’s $1000,” said Mr. Schmidt. “I’ve never heard anything like that from staff here as a cost.”
“To my knowledge, we’ve never spent $1000 to get an acre-foot of conserved water,” agreed Ms. Maher.
“The highest figure they use [for recycled water] is $1500 per acre-foot for recycling,” said Mr. Schmidt. “Later on, it says ‘it is doubtful that $3 billion invested would produce even 100,000 acre-feet of reliable new water supply.’ They use a figure of $1500 per acre-foot … I get a result of 2 million acre-feet, not 100,000. I also figure out what is 100,000 AF into $3 billion and I get a cost of $30,000 per acre-foot.”
“I think there’s a confusion maybe between an annual cost and present value cost,” said Dr. Sunding. “The $3 billion is a present value number. The recycling figures, what I think that refers to is an every year cost. It is $1500 per year. So you’re $3 billion is a one-time thing, your $1500 is every year, so the present value on $1500 is closer to $40,000 or $50,000.”