Secret state report shows ongoing taxpayer costs for Delta tunnels

September 14, 2016 12:39pm

•  Tunnels’ success may be predicated on draining the California Delta

•  “Clearly, this huge subsidy is in stark contrast to ten years of public statements”

Taxpayers will be tapped for at least $6.5 billion to help pay for the Delta twin water tunnels touted by the governor, according to a hitherto undisclosed draft economic analysis paid for by the state.

The taxes would be used for expenses for Central Valley Project water users, and additional subsidies would have to be paid for by California taxpayers.

But hitherto undisclosed state documents point to a need to drain the vast California Delta to get enough water to justify the tunnels project.

The draft economic analysis of Gov. Edmund Gerald Brown Jr.’s Delta tunnels project was authored by David Sunding of the Brattle Group and was discovered by the anti-tunnels group Restore the Delta through a Public Records Act request of the California Department of Water Resources.

“Clearly, this huge subsidy is in stark contrast to ten years of public statements that all construction and mitigation costs would be paid by water users,” writes Jeffrey Michael, director of the Center for Business and Policy Research at the University of the Pacific in a memo reviewing the Brattle Group's analysis of the governor’s tunnels.

Mr. Michael's review finds that the tunnels scheme “passes a cost-benefit test in aggregate,” but when the results are disaggregated by urban and agricultural uses, the report finds “benefits fall short of allocated costs for most agricultural water users.”

“Because costs exceed benefits for agricultural users, the report actually finds that the tunnels are not economically feasible as this requires benefits to exceed allocated costs for all users,” he writes. “Thus, much of the rest of the report attempts to rationalize public subsidies to lower the costs for agricultural contractors.”

The Brattle Group’s draft economic analysis also assumes that water yields (the difference in export water delivery from the Delta with and without the tunnels) are four times higher than in official documents including its revised draft environmental impact report and statement and its petition to the State Water Resources Control Board.

“As we have suspected, the economic planning for the tunnels is forecasting a water yield far higher than what proponents are telling the State Water Resources Control Board at hearings on permits for the project,” says Barbara Barrigan-Parrilla, executive director of Restore the Delta. “Because drought is the new normal, the only way for [the tunnels] to deliver four times more water within the calculated difference is to deplete the Bay-Delta estuary and the upstream watersheds.”

Additional emails in the Public Records Act request show that the next version of the economic analysis will contain only aggregated economic results, meaning the public version of the report will notshow all the negative results about the project not penciling out for agricultural users, even with a subsidy, says Restore the Delta.

“In addition to providing no evaluation of the economic harm that will be inflicted on Delta communities, it is clear … planners have no qualms about Californians paying for the project through higher water rates, property taxes, and state and federal income taxes -- all for the benefit of big agricultural growers on the west side of the San Joaquin Valley, and special interest water districts, like Metropolitan Water District of Southern California,” says Ms. Barrigan-Parrilla. “Southern Californians and Silicon Valley water ratepayers should be very concerned as they will end up subsidizing big agriculture four different ways.”

If built, the tunnels would be a sort of underground version of Mr. Brown’s ill-fated Peripheral Canal, rejected by voters in 1982. The tunnels, each 40-feet in diameter, would drain fresh water out of the Sacramento River near Clarksburg, before the water could flow fully into the Deltas. The water siphoned off would travel underground for about 35 miles and empty into the State Water Project and the federal Central Valley Project.

Because the plan is to finance the project with revenue bonds, there would be no public vote on it, unlike Mr. Brown’s earlier effort. Water agencies would pay off the bonds by selling the water, raising rates if they had to.

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