Will taxpayers bail out delta water exporters?

Jeffrey Michael runs the numbers and suggests the marginal cost of water from a new Peripheral Thingie (canal or tunnel beneath/around the Sacramento-San Joaquin Delta) will be prohibitive for agricultural users asked to foot a share of the bill:

According to the draft BDCP, the marginal cost of new water the contractors get out of the tunnel is going to be $1,000 af ($1.2 billion in debt service and new operation cost for an average of 1.2 maf of new water). Environmental deficiencies with the draft BDCP could mean even less new water, driving the marginal cost of new water supplies even higher for the contractors.

My question, posed in a comment on Jeff’s blog, is whether this project will collapse under this economic reality, or whether, as some California water veterans have suggested to me, the project will move ahead anyway in classic Western water tradition, subsidized by state and/or federal taxpayers. I’d love to hear the thoughts of the California water wonks in the audience.


  1. An almost wholly political question, so why limit responses to water wonks?

    It is perhaps significant that Jerry has already decided to try to move high speed rail forward. I’m thinking he’d be pushing his luck adding the peripheral thingie to the mix.

  2. What is happening in California is no different in many ways from what happens in NM. Water wars are driven by allocations. Coastal urban allocations are disproportional in their priority because of the use of geo-political entities. As the Central Valley becomes more urbanized there is an increase in their representation. But as long as diversions are the solution of choice in California, regional planning will never be utilized to integrate urban users with agricultural and rural users in the decision-making process.

    There is a real base of support here in California among ag and rural users for regional planning. http://www.familiesprotectingthevalley.com/topstory.php?ax=v&n=99&id=99&nid=2496
    At this stage, this is primarily to get the State Legislature out of the process. Politically, there remains the Arnold attitude towards water that “We can have it all.” This is simply because of the political control of the State Legislatures by urban users.

    Establishing new geographical and political parameters for diversions would change this impulse. Coastal waters have not been included in the array of supply options in California. But, there remain untapped potential supplies that have been modeled elsewhere. “Desalination systems account for a fifth of the freshwater used in Israel and, according to existing plans, by the end of the decade that amount will be doubled.” http://www.haaretz.com/print-edition/news/is-desalination-the-solution-for-israel-s-water-problems-depends-who-you-ask-1.420278 The freshwater fetishness has provided other options not previously on the table. Wastewater has been tapped by Orange County as a source for municipal water supplies. Pacific Institute concluded in a 2006 study: “Is desalination the ultimate solution to our water problems? No. Is it likely to be a piece of our water management puzzle? Yes. In the end, decisions about desalination developments will revolve around complex evaluations of local circumstances and needs, economics, financing, environmental and social impacts, and available alternatives. We urge that such decisions be transparent, honest, public, and systematic.” http://www.pacinst.org/reports/desalination/desalination_report.pdf

    Point being: that the tax structure has too long defined the water debates for revenues. No discussion of a tiered water severance tax has been broached. No local revenue raising regional bodies are being proposed to provide collaborative adaptive governance for long-term regional planning. Diversions will always prove to be projects with enormous price tags attached. California’s state budget has been the source of its system of aqueducts throughout the state. But that party is over. Part of the outrage of folks in the Central Valley is the inconsistency of decisions for diversion when L.A. remains the Big Gulp in the state.

    We need to get folks in the Delta aligned with folks in the Central Valley to ever make a dent in regards to the political power of coastal metropolitan regions. There is a recent indicator of an effort by Republicans to enlarge their base on water issues in their recent introduction of legislation to restore Hetch-Hetchy. It very well may just be a chip that they are putting on table to provide leverage in the peripheral canal.

    You ask: “whether this project will collapse under this economic reality, or whether, as some California water veterans have suggested to me, the project will move ahead anyway in classic Western water tradition, subsidized by state and/or federal taxpayers.” More fundamental questions to raise are: Will the charge of the project to users impact on local ag and urban water use in the Central Valley? Will this impact the economic situation and food production of the Central Valley? Are there any options that can address the issue of supply of water equitably for the Central Valley? I think I have included several of those options that have not been developed. A public planning process would certainly increase the options explored for their feasibility.

  3. see blog by John Bass for mention of you and California water.
    “I digress, but it’s funny thing about blogging on the subject of the Delta and Cal water in general. Unless a post really upsets one side or another, no one seems compelled to comment. For example, when I write that the future of water in California is not a scientific problem, no one (except John Fleck, who might just agree, or at least understands the argument) weighs in. Why is that?”

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