Wednesday, September 18, 2013

Listen to the Hydrowonk

Is the Hydrowonk (Dr. Rodney Smith) legit?  In a word, yes.  I highly recommend his series of posts on BDCP finance and economics.

He has been posting detailed commentary on BDCP costs and benefits on his blog faster than I can respond.  His perspective is strictly evaluating the prospective investment from the point of view of a water agency.  Unlike me, he isn't worrying about fish, in-Delta or statewide impacts in his analysis. 

The only serious critical comment I have had about Dr. Smith's commentary until now is that he takes the exaggerated water yield estimates in the BDCP economics reports at face value.

I delivered that comment to him in San Diego last week in person, and he immediately responded with his most recent post and its very handy list of costs under different water yield assumptions.  Now, my only criticism is that his table assumes all the water yields are positive!  The EIR tables show a negative water yield under one scenario, and the biological opinions are still being litigated.

The cost per acre foot is really important.  It is why I rudely butted in for the last word at the legislative hearing last month.  I couldn't let the last word be Dr. Sunding saying the cost of water from the tunnels would only be $300 af. 

Anyway, I have been telling people for some time that my best guess for the cost of the water is around $1,700 af based on the EIR yields which looks reasonably accurate according to Dr. Smith's table.  And as the Hydrowonk notes, you shouldn't compare BDCP water to desal. (Desal is super expensive, but it is treated, drought-proof water, delivered someplace much closer to you than Clifton Court forebay, uses proven and improving technology, and doesn't require you to become business partners with dozens of other water agencies who may not be as trustworthy or financially strong as your local agency.) 

After making some calls for knowledgeable opinions about BDCP water yields, the Hydrowonk concludes that the yield is lower than Dr. Sunding's assumption but potentially more than my EIR-based assumption.  [Thus, my first question for Dr. Smith's ingenious idea for a water policy prediction market:  What are the combined SWP/CVP in 2025 if there is no BDCP and the tunnels are not built?]

His conclusion/advertisement is priceless:
For Hydrowonk, I’m concluding (as of today) that the cost of BDCP water will cost in excess of $1,000/AF (inflation adjusted).  Since this is a non-firm supply of untreated water in the Delta, I urge all parties wishing to acquire non-firm supplies at these prices to contact me immediately.  I’m sure that my firm can help meet your water needs well in advance of 2025.

2 comments:

  1. Just a note on desal. The squeaky clean water generated by desal has high value for blending with more salty water (like water from the Colorado River). The economics of desal in Southern California are entirely different from those in Australia where desal is just a source of water of last resort in droughts and the plants do not need to run in normal or wet years.
    In Southern California they will run 24/7 because that squeaky clean water is in high demand. The same goes for high level treated wastewater.

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