David Sunding prepared yet another flawed analysis of the economics of California water earlier this week. Reading his report, one would never know that water exports from the Delta increased dramatically over the decades until the late 2000s, nor that today under the biological opinions, average water exports from the Delta are the same as the average from the 1980-2000 period (4.9 million acre feet per year). Nor would the reader know of the record farm revenues and profits in recent years, or the continued growth of California's urban economy.
As the State Water Resources Control Board has explained, the amount of water flowing through the Bay-Delta into San Francisco Bay has declined over the decades, and increased flows are needed to restore the health of the estuary and its native fish and wildlife. And this doesn’t just harm fish and wildlife; unsustainable water management threatens thousands of fishing jobs that depend on healthy salmon runs and threatens water quality for farmers and cities in the Delta.
Sadly, Sunding’s work for these anti-environmental voices is similar to his other preposterous claims that have been debunked. After all, this is the same economist who predicted in 2013 that the State Water Resources Control Board’s proposal to increase flows in the Tuolumne River would cause massive economic impacts; he claimed that a 20% shortage would result in more than 6,500 lost jobs and more than $3.1 billion in economic impacts. Yet during the recent drought, the San Francisco Bay Area cut water use by nearly 30% without adversely affecting the economy, debunking his wildly overinflated claims.
Despite Sunding’s doom and gloom, the reality is that water agencies—and the public—have demonstrated during the recent drought that investments in local, sustainable water supply solutions like improved water use efficiency, water recycling, and groundwater cleanup can sustain the economy and our natural environment. Since 2009, California law required water agencies to reduce reliance on the Bay-Delta and invest in the Untapped Potential of these sustainable water supply tools to continue to help us prepare for a future with climate change. Investments in these kinds of regional water supply tools are a big reason why urban agencies weathered the recent drought without major economic impacts, and why California will continue to thrive into the future.
Finally, its important to keep in mind that the economic impacts Sunding identified in this recent report are substantially smaller than the economic benefits that he estimated in 2012 for restoring the health of the estuary (which he valued at $13 billion to $55 billion). Based on his own numbers, reducing diversions from the Delta and investing in local water supply projects (which he estimates cost $1,400 per acre foot, about the same or less than the cost of water from the California WaterFix project), in order to restore the health of the estuary, results in a positive cost:benefit ratio.
Unfortunately, Sunding’s conclusions seem to depend on who’s paying him. His work is a sad reminder why the study of economics is sometimes called the “dismal science.”