Economist blasts cost-benefit analysis plans for Delta tunnels

STOCKTON
January 29, 2013 9:00pm

Like the proverbial butcher with his thumb on the scale, the state’s plans to do a cost-benefits analysis of Gov. Jerry Brown’s scheme to suck water out of the Sacramento River would seem to be rigged.

That’s a conclusion that could be drawn from reading a criticism of the plans by economist Jeffrey Michael of the plans of the governor’s Department of Water Resources.

“I am left with the impression that they are not responsive to feedback, and that the analysis is not really directed by the economists or established benefit-cost principles,” writes Mr. Michael, who is director of the Business Forecasting Center at the University of the Pacific. “It is directed by Jerry Meral, the Governor's chief advisor on the BDCP [Bay Delta Conservation Plan], who is not fair and impartial, let alone qualified to direct benefit-cost analysis. He has a clear mission to implement the Governor's vision for the twin tunnels, and he is keeping the consultants on a short leash.”

Mr. Brown is pushing for construction of two massive 35-0mile long tunnels beneath the Sacramento-San Joaquin Delta to suck water out of the Sacramento River before it can enter the Delta and send it to state and federal irrigation systems to ship it to the San Joaquin Valley, Southern California and Silicon Valley.

While the state has put construction costs at $14 billion, When interest on borrowed money and other expenses are added in, the cost could exceed $50 billion.

Mr. Michael says the Department of Water Resources seems to be ignoring its own rules in setting up the cost-benefit analysis.

“Each of the major components of the BDCP must independently satisfy the benefit-cost test. Since the big controversy surrounding the BDCP are the proposed tunnels, B-C guidelines clearly indicate that conveyance (i.e. the tunnels) should be analyzed separately,” Mr. Michael writes.

“Mr. Meral has made it very clear that they would only be looking at one alternative, the Governor's plan, and comparing it to a no action alternative. This is a clear source of bias, and is [a] well-known way to game benefit-cost analysis,” he says.