Could a Peripheral Canal/Tunnel Increase Drought Risk?

If you have been following the Delta Plan and discussions around levees, you have heard the argument that improving levees will actually increase risk by encouraging development.  Improving levees will reduce the probability of a flood, but the argument is that the amount of property at risk of flooding will increase more as a result, thereby potentially increasing total flood risk. 

Last Saturday in Stockton, Jason Peltier said that Westlands farmers planted more orchards despite uncertain water supplies because of the increasing cost of water.  If a peripheral tunnel/canal is built, the cost of water to these farmers will go up a lot, in wet years and dry years.  Thus, his statements suggest they will plant even more of their land in permanent crops to cover these costs, even though a canal won't prevent droughts.  Thus, the consequence of drought will increase, and therefore drought risk increases since risk equals probability x consequences.

Thus, the increasing risk argument is as applicable, if not more applicable to building a peripheral canal as levees.  There are two reasons why it is more applicable to a canal than levees.

First, building is heavily regulated, especially in the Delta, whereas the choice to plant permanent crops is not regulated.  The levees increase risk argument is pretty weak in my opinion, since we can gain the risk reduction benefits of levees and use regulation to prevent any undesirable side effects like urbanization in a flood plain.  The regulations regarding this have been significantly toughened in recent years, and the Delta Plan will tighten it up even more.  There is little prospect of regulations on orchard planting, although some have recommended it.

Second, the canal/tunnel doesn't actually reduce the risk of drought, whereas levees do reduce the risk of flood.  All the analysis I have seen suggests that a canal/tunnel will not increase water supplies in dry years, any increase in water supplies would come in wet years.

In the past, I have blogged about the fact that I don't really believe that almonds were planted on the west side because water got more expensive.  Most of that planting was before the Wanger decision, and I think they were riding the almond wave just like everyone else in the Valley, and if anything got more confident about planting them when they thought their water had gotten more reliable from 2000-2006.  However, I do believe that paying for a tunnel will create a lot of pressure to invest in permanent crops, and the farmers themselves have said this is how they respond to higher prices.  Thus, it seems a canal/tunnel would certainly increase the economic consequences of drought, increasing the risk.

This is not a major argument against building a peripheral canal/tunnel; but I do think it has more merit than the argument that improving levees increases risk.  In both cases, risk is only one aspect of decision making, and is a pretty useless concept if it isn't balanced with a discussion of reward.