Friday, May 11, 2012

California DOF revises 2050 population projection down by 8.5 million. Huge Implications for Water, Transportation, and Budget Planning

California DOF makes the state's official population projections.  The DOF forecasts have been notoriously aggressive in the past.  Until this week, the most recent DOF forecast was issued in 2007 and projected the state population at 59.5 million in 2050.  This week, DOF released new projections that estimate a population of 51 million in 2050

I am pleasantly surprised by the extent of the downward revision, and very pleased to see that the State's official growth projection is now much more realistic and fits well with our own modeling.  My research associate has just returned from a meeting about these projections for San Joaquin Valley counties, and came away really impressed with the improvements the DOF demographers are making to their models.  Kudos to them, it will really help the state improve planning and decision making.

For example, it is critical to things like estimating future water demand, a topic near and dear to many of the readers of this blog.  This 15% cut in future population projection is a big deal.  That's 15% less water demand - regardless of what you assume about efficiency improvements - and 15% fewer ratepayer/taxpayerss to tap for future debt payments - whether those are revenue bonds issued to pay for conveyance or a a general obligation water bond.

Way back in 2008, the very first thing I criticized in the PPIC/Davis analysis of the peripheral canal, was the population forecast used to estimate future urban water demand.  Their model used the absurdly high figure of 65 million, when DOF's own high forecast was 59.5 million, and most private forecasters and extrapolation of U.S. Census 2040 estimates were coming in around 54-55 million in 2008.  That was before the Great Recession, and I think the new DOF estimate of 51 million is pretty realistic now.

To their credit, the PPIC team has made some adjusments and they are thinking more constructively about the implications of slower growth and conservation, and I suspect some modeling of this will be evident in their new book on water economics.  I particularly liked this passage in a recent blog post,

The prospect of a long-term plateau or decline in water use in California is fundamentally positive for the politics of water in California (although it has some negative implications for utility finance). No longer should policymakers fear vast inevitable growth in long-term water use, with apocalyptic zero-sum consequences. California can have growth and prosperity without continued increases in water use. Water conflicts need not become increasingly severe and debilitating. 

[Edited on 5/12 to correct some very poor grammar.  I shouldn read these posts a second time before clicking publish.  My apologies to the English majors who suffer through my blog posts.]

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