Recently, I have heard Mark Cowin and other state and local water agency officials repeatedly state that there will be no urban to agricultural subsidies for water supplies from the twin tunnels. They have dismissed the notion as a "rumor".
How do these rumors get started? Why won't they go away? Look no further than the latest pro-tunnel propaganda from the Bay Delta Conservation Plan blog, "Mature Choices for a Mature State."
In the piece, the tunnels are described as an affordable choice by comparing its per capita cost to the per capita cost of the Hetch Hetchy upgrade that only serves urban customers in the highest income area in the United States.
In contrast, the vast majority of water that would be delivered through the tunnels is for irrigating crops, not urban use. And state and water agency officials continue to vow that the tunnels will be paid for on an equal basis per bucket of water, not on a per capita or per household basis.
If water leaders want to stop those urban-agriculture subsidy rumors, then they need to stop repeating this idiotic argument that compares per-capita costs of the tunnels to the per-capita costs of urban water infrastructure.
The second obvious problem with this blog post is that it assumes that the tunnels are the only solution to the seismic risk of levee failure. In fact, in all the other infrastructure examples in the blog post, the post describes seismic upgrades to the existing infrastructure - not outrageously expensive bypasses to the existing system. The common sense, "mature" approach to addressing this risk is to invest in seismic upgrades of the levees themselves. This is much cheaper and most importantly, it protects many more things from the seismic risk, including public safety which the Resources Agency has described as their top priority. Thus, seismic levee upgrades both cost less and provide more benefits than the tunnels.
Pushing the tunnels as a solution to seismic risk and ignoring seismic upgrades to the Delta levee system is not mature. It is economically and morally wrong.
A discussion of economic, business, and environmental issues of importance in the Central Valley.
Tuesday, November 26, 2013
Thursday, November 14, 2013
BDCP Statewide Economic Impact Results Illustrate Why BDCP Is a Disaster for California Agriculture
According to the BDCP Statewide Economic Impact Report, implementing BDCP would have the following effects on crop revenue in California.
Revenue Gain to SJ Valley Farmers From Improved Water Supply: +$134 million (page 5.1-21)
Loss to Delta Revenue From Agricultural Land Retirement for Habitat: -$89 million (page 5.1-16)
Loss to Delta Farm Revenue From Salinity: -$2 million (page 3.1-13)
Thus, the total net change in farm revenue according to the BDCP statewide economic impact report is $41 million annually.
When interpreting this $41 million, remember this is gross revenue, net revenue or profit is significantly lower. Also, this is the BDCP's estimate based on their optimistic water supply and delta salinity scenarios. I believe the outcome will actually be worse.
How much will the state's agriculture industry pay to receive these miniscule benefits from the tunnel plan?
Although the BDCP has not finalized an ag/urban cost allocation, the heads of the urban agencies have been repeatedly promising their boards that there will be no agricultural subsidy and every water user will pay the same amount per unit of water received. Since BDCP is estimating debt service and operating costs at $1.2 billion annually (their figure, this understates likely financing costs) and agriculture receives at least 2/3 of the water, the farm share of the tunnel bill looks to be at least $800 million per year according to the leaders of the water agencies who pledge to pay for the tunnels.
Thus, the BDCP documents suggest the financing cost of BDCP to the statewide agriculture industry will be roughly 20 times higher than the net gain in statewide agricultural revenue.
With those kind of numbers, I don't think it is an exaggeration to call BDCP an economic disaster for California agriculture.
While there may be a few individual farmers who could benefit in some way, I don't see how anyone who claims to be representing the statewide interests of California agriculture can possibly support BDCP.
Finally, I should note that there are some agriculture impacts missing.
On the negative side, it leaves out the land retirement for tunnel construction and the potential upstream impacts on upstream farmers in the Sacramento Valley and San Joaquin tributaries (I have been told that the reason BDCP predicts low salinity impacts in the Delta is that those farmers will be giving up water).
On the positive side, there are some water quality benefits to SJ valley production that are not reported separately in these reports, and some potential to reduce groundwater pumping costs for some farmers receiving exports in the SJ Valley.
None of these missing impacts would be remotely large enough to change the BDCP disaster for agriculture. No wonder Dr. Rodney Smith is predicting a 90% probability that the agricultural contractors drop out of BDCP by June 30, 2014.
Revenue Gain to SJ Valley Farmers From Improved Water Supply: +$134 million (page 5.1-21)
Loss to Delta Revenue From Agricultural Land Retirement for Habitat: -$89 million (page 5.1-16)
Loss to Delta Farm Revenue From Salinity: -$2 million (page 3.1-13)
Thus, the total net change in farm revenue according to the BDCP statewide economic impact report is $41 million annually.
When interpreting this $41 million, remember this is gross revenue, net revenue or profit is significantly lower. Also, this is the BDCP's estimate based on their optimistic water supply and delta salinity scenarios. I believe the outcome will actually be worse.
How much will the state's agriculture industry pay to receive these miniscule benefits from the tunnel plan?
Although the BDCP has not finalized an ag/urban cost allocation, the heads of the urban agencies have been repeatedly promising their boards that there will be no agricultural subsidy and every water user will pay the same amount per unit of water received. Since BDCP is estimating debt service and operating costs at $1.2 billion annually (their figure, this understates likely financing costs) and agriculture receives at least 2/3 of the water, the farm share of the tunnel bill looks to be at least $800 million per year according to the leaders of the water agencies who pledge to pay for the tunnels.
Thus, the BDCP documents suggest the financing cost of BDCP to the statewide agriculture industry will be roughly 20 times higher than the net gain in statewide agricultural revenue.
With those kind of numbers, I don't think it is an exaggeration to call BDCP an economic disaster for California agriculture.
While there may be a few individual farmers who could benefit in some way, I don't see how anyone who claims to be representing the statewide interests of California agriculture can possibly support BDCP.
Finally, I should note that there are some agriculture impacts missing.
On the negative side, it leaves out the land retirement for tunnel construction and the potential upstream impacts on upstream farmers in the Sacramento Valley and San Joaquin tributaries (I have been told that the reason BDCP predicts low salinity impacts in the Delta is that those farmers will be giving up water).
On the positive side, there are some water quality benefits to SJ valley production that are not reported separately in these reports, and some potential to reduce groundwater pumping costs for some farmers receiving exports in the SJ Valley.
None of these missing impacts would be remotely large enough to change the BDCP disaster for agriculture. No wonder Dr. Rodney Smith is predicting a 90% probability that the agricultural contractors drop out of BDCP by June 30, 2014.