Sunday, August 16, 2009

Temperance Flat Dam Cost-Benefit Analysis

When, I saw a news report that the preliminary cost-benefit analysis on Temperance Flat Dam found a benefit-cost ratio of 1 to 1, my inner church lady thought "Isn't that convenient?"

When an agency full of engineers who really, really want to build dams finds a 1 to 1 benefit-cost ratio in their own analysis, it is natural to be suspicious that they might have stretched things to get the benefits up to the magic 1:1 line.

So, my 20 minute skim of the over 200 page report revealed the following:

It looks like they assume that value of water is over $600 af. I didn't see the value listed anywhere (might be hidden), I calculated it myself from charts. That is mighty expensive water, especially for ag.

Some other little gems were tucked into the other benefit categories, such as recreation benefit values being increased by 25% to "account for uncertainty." Water quality benefits increased by 50% "based on willingness to pay."

There was a large number of emergency supply benefits included to account for the chance of a Delta island collapse that cuts Delta deliveries. A peripheral canal is supposed to protect us from this risk, so I guess these benefits disapear if we build the PC. Put another way, I guess the need for a PC is lower if Reclamation goes ahead and builds Temperance Flat dam.

Bottom line is that this is an important analysis that needs a serious review. No doubt, I am missing a lot in my quick skim. Let's hope it is getting an independent review and revision.

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