June 13, 2011 - The Department of Water Resources has released the Delta Risk Management Strategy Phase 2 Report and Executive Summary. The Delta Risk Management Strategy (DRMS) Phase 2 report builds on the knowledge gained from the DRMS Phase 1 assessment to evaluate scenarios which could reduce the risks to our State economy. The methods include a selection of improvement strategies considered at the time of the study in 2009; however, today, there are more options in play. The information in the report provides insight to methods that may be used by the Department and others to manage risk.Among the obvious signs that the study is from 2009 are that it uses a $4.9 billion cost estimate for a peripheral canal that is dated from 2007. The results, and I have not reviewed to see how reliable the calculations are, show that improved levee strategies and isolated conveyance rank very close, and anyone who would interpret the results as saying isolated conveyance is best should realize that any net benefit advantage from isolated conveyance completely disapears if one uses more current cost estimates.
There are many other curious aspects of the report, such as its combining conveyance scenarios with putting highways on piers and armored infrastructure corridors that confuse the issues. At this point, the phase 2 report will probably have little impact on the debate. However, it is hard to use the DRMS Phase 2 results to justify a peripheral canal over upgrading levees in the way that many spun Phase 1.
The timing and low profile of this release is probably the most interesting aspect of it. Very odd. I would be interested in hearing more about that if anyone knows and is willing to share.
Hi Jeff,
ReplyDeleteI didn't read the entire report, but did read the Executive Summary. I am no economist, but it does seem explicit in concluding (on page 9) that the Isolated Conveyance gets the biggest bang for the buck. Perhaps what you are referring to is just below those conclusions, in Table 1, where there don't seem to be stark differences in cost/benefit vis-a-vis risk exposure. Is that what you are getting at - the difference between the "conclusions" and the supporting numbers?
The problem is that they are packaging the conveyance options with a bunch of other things.
ReplyDeleteFor example, the cost of upgrading levees isn't $10 billion, the vast majority of that cost is because they packaged it with options like elevating 3 state highways on piers that cost many billions. The report explicitly says that these investments aren't worth the cost.
Likewise, while it says the cost of the isolated conveyance package is $15 billion, when you look at the report, the conveyance is estimated at $4.9 billion and the other $10 billion come from these various other measures.
So, it mixes all these things together, and uses old cost estimates for conveyance, in a way that obscures a normal comparison of net benefits.
If you go to one of the final chapters that compares the scenarios, it becomes pretty clear what they are doing with these packages.
I spent 30 minutes reading through it quickly, but it is clear the answers also depend a lot on levee failure probabilities that are almost universally thought to be too high in DRMS, and their levee upgrade costs appear too high too.
In simple terms, I would say that the net benefit difference between the options was less than $10 billion, and they are using a cost of isolated conveyance that is about $10 billion less than current cost estimates.
ReplyDeleteSo based on that alone, it looks almost even. And that is a suprisingly strong result for upgrading levees given the other aspects of how the study is structured.
Impossible to conclude much from it, but a very interesting release without any fanfare at all.
It would be good to get an apples-to-apples comparison into the debate, wouldn't it?
ReplyDeleteSince they go to the heart of the issue, which is dollars, let's hope DWR clarifies the questions you are raising.