THIS JUST IN … DWR Releases Economic Analysis Showing Value of Investing in WaterFix

California Water Users Will See Benefits Far Exceeding Costs, analysis finds

From the Department of Water Resources:

Today, the Department of Water Resources (DWR) released a Cost-Benefit Analysis for California WaterFix by Dr. David Sunding, a professor of natural resource economics at UC Berkeley, that finds the first stage of the project could bring billions of dollars in benefits to Californians who obtain their water from participating State Water Project (SWP) contractors. These benefits include improved water quality, more reliable water supplies, and enhanced disaster preparedness.

“Stage 1 of California WaterFix passes a cost-benefit test for SWP urban and agricultural agencies under all scenarios analyzed,” Dr. Sunding wrote in the report published today.

In a series of public meetings last fall, local public water agencies took formal action to participate in the WaterFix project. Based on that level of support, DWR is proposing to pursue WaterFix as planned while also considering an option to construct the project in stages. Today’s economic analysis will help participating agencies develop and consider necessary actions for their respective boards this spring.

The benefits to SWP water agencies are substantial, and the report found benefits exceeding costs in every scenario analyzed – even up to $1.82 in benefits for every $1 in costs. Urban agencies could see $2 billion – $4 billion in net benefits depending on the scenario analyzed. Those benefits would increase with the availability of financing through low-interest federal loans. SWP agricultural agencies would see several hundred million dollars in net benefits under several scenarios, and again those benefits would increase with the availability of federal low-interest loans and the ability to trade unwanted project shares with urban contractors. The study also indicates that federal contractors south of the Delta would receive benefits exceeding costs.

“Without WaterFix, State Water Project contractors will see the continued deterioration of their water supply reliability,” Dr. Sunding said. “This analysis shows there is substantial benefit for both urban and agricultural water users throughout the state, and that the project will be more affordable for consumers than local alternatives such as desalination and recycling.”

The report compared the benefits and costs of Stage 1 of WaterFix in relation to what would likely occur if WaterFix were not built, including further restrictions designed to minimize harmful reverse flows and protect species.

The economic analysis is available here. More on California WaterFix is available here.

RELATED NOTE:  Tune in tomorrow when I’ll be posting the Cal Water Fix discussion at Metropolitan’s committee meeting yesterday … very interesting!

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2 comments

  • kenneth Firl

    I did not see a single $ of cost of value allocated to a single wild fish. How can this be considered as valid without including the impact to the delta environment for wild things?

  • Jan

    I may be wrong, but it looks like Sunding is using as a criteria the fact that 2008/2009 biological opinions stated that, at that point, the export levels were too high and needed to be constrained. So his status-quo scenario uses the fact that there is a need to reduce exports and somehow extrapolates that therefore they can take more water from the Sacramento. If that is what he is using, it is totally bogus because as we know it’s an overall reduction in exports and an increase in outflow that is required, not just an issue with the current location. Is there anyone that can verify if that is correct?

    2nd, once again he is over inflating the earthquake probabilities, just like his prior analysis that was torn to shreds by Dr. Jeffry Michael and others.

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