Delta water tunnel project fails cost test
- Published on 07/12/2012 - 4:36 pm
- Written by Business Journal Staff
A proposal to build water conveyance tunnels under the Sacramento Delta has been found to be non-economically or financially justified by the Business Forecasting Center at the University of the Pacific.
Forecasting center analysts conducted a benefit-cost analysis of the proposed $13 billion tunnel project. They determined that the cost of the project is about $7 billion or about 2.5 times higher than its benefits.
The benefits of the tunnels include improved water supply, water quality and earthquake risk reduction to areas served by export water agencies. The University of the Pacific report is part of the center’s mission of independent research and analysis of economic issues and trends in the state and region.
The research results were informational and no funding was solicited or received to fund the analysis.
The water conveyance tunnels are proposed as the centerpiece of the Bay Delta Conservation Plan. The economic benefits of the tunnels include water supply, water quality and earthquake risk reduction for areas that receive water exported from the delta by the Sate Water Project and Central Valley Project.
The economic costs include capital costs, operating and maintenance costs and the costs to in-Delta and upstream areas that would be negatively affected. The quantitative estimates of benefits and costs were compiled from recent information from the Bay Delta Conservation Plan and other state agencies involved in Delta planning.
Benefit-cost analysis is an essential and normal part of assessment and planning of large infrastructure projects such as the water conveyance tunnel proposal, but has not been part of the Bay Delta Conservation Plan.
As a comparison, the revised benefit-cost analysis for California’s High-Speed Rail project estimated a benefit-cost ration of approximately two, which is five times the benefit-cost ratio of 0.4 for the Delta tunnels. The report fills an important information gap for policy makers, taxpayers and water ratepayers who will ultimately bear the multi-billion dollar costs of the Bay Delta Conservation Plan.