The BDCP Blog and the $11 Billion Question
Posted October 5, 2012
Last week, the Bay Delta Conservation Plan unveiled a new blog. The first post highlights an important message that BDCP decision-makers have repeatedly emphasized for the past six months – “No one can say exactly how much water would be diverted under any of the nine BDCP alternative projects now being studied.“ To me, it’s quite clear that EPA, the State of the Estuary Report, the State Water Board and many other analyses have clearly shown that restoring the Bay-Delta and its fisheries, including California’s salmon jobs, will require more water to flow through the Delta. Nevertheless, this statement from BDCP is important.
For years, water exporters have hoped that BDCP would deliver a 50 year guarantee regarding the amount of water that they will be able to pump from the Delta. That’s always been more of a dream than a realistic expectation. After all, the Bay-Delta is an extraordinarily complex and dynamic system, subject to sea level rise, climate change-driven changes in runoff, earthquake risk, invasive species, water quality problems and more. In addition, scientists are still learning more about the flow needs of the largest estuary on the West Coast. It’s difficult to imagine how regulatory agencies could accurately determine the flow needs of the Bay-Delta for the coming half century. Even so, ESA “assurances” have been one of many contentious issues in the BDCP.
The first BDCP blog post is significant because it clearly states that this effort will not provide ESA assurances or export guarantees. This is not the first time BDCP agencies have made this point. For example, on July 26, Deputy Interior Secretary David Hayes was quoted in the New York Times stating that “water contractors had been insisting that there be a guarantee of a specific” amount of water deliveries. “The regulatory agencies said: ‘We can’t guarantee that.’ And they” — the contractors — “stepped back and agreed to that.”
Here’s where it gets interesting. At the June BDCP public meeting, a consultant presented a brief powerpoint that summarizes potential economic benefits from BDCP. (This is one of very few BDCP documents discussing the economics of the project.) To be clear, this was only a brief, initial analysis, and the BDCP project is still evolving. But it’s noteworthy that this analysis assigns an $11.6 billion benefit to “regulatory certainty.” The problem, of course, is that BDCP has now admitted that it cannot provide any such formal certainty – suggesting that the $11 billion potential benefit included in the June presentation is an illusion.
The June analysis finds $3-$7.8 billion in additional economic benefits from increased water supply for urban and agricultural water users. Again, the BDCP blog clearly indicates that these anticipated increases in water supplies are also an open question. (As discussed above, it’s far more likely that future Delta diversions will be lower than today.) Again, these billions in potential benefits appear to be based on unrealistic assumptions.
The take home message is simple but critical. BDCP would cost water users many billions of dollars. Understandably, those water agencies and their customers want to know what they would get from this multi-billion dollar investment. Therefore, given the aggressive BDCP schedule, including the release of a draft environmental document and plan this fall, it is critical that BDCP make progress immediately to define scientifically-based likely (but not guaranteed) future export levels and to complete a cost-benefit analysis based on assumptions that are more realistic than those in the powerpoint released in June.
This information is central to determining if the current BDCP plan can be permitted as well as whether it can be financed. A decade ago, the CALFED Bay-Delta Program floundered as a result of its failure to address economics and financing. The stakes in the Delta are too high for this to happen again. After all, the key to success for BDCP lies in developing a plan that is both biologically and economically sound. BDCP has struggled to generate credible biological analysis, but it is barely out of the starting gate on issues related to economics and financing.
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