State Documents Show Delta Tunnels Are Not Cost-Effective

As the Associated Press has reported today, documents disclosed by the State of California conclude that the California WaterFix project (the proposal to construct and operate two massive tunnels under the Delta) is not cost-effective.  Even assuming $3.9 billion in federal taxpayer subsidies, the draft report for the State prepared by David Sunding demonstrates that the project is not cost effective for many users.  These documents were disclosed by the state of California in response to a Public Records Act request by Restore the Delta.

For years, project proponents have claimed that the tunnels would not require public subsidies, and that urban water users would not have to subsidize agricultural users.  Even today, the WaterFix website prominently asserts that the project’s estimated $15 billion price tag “will be paid for by public water agencies that rely on the supplies.” Indeed, the 2009 Delta Reform Act requires that the water users pay all the costs of the tunnels (see Cal. Water Code § 85089).  This report by David Sunding, which the State had long promised but had never publicly released, calls into question those promises by the project proponents.   

Several key points jumped out on my initial review of the Sunding report:

  • The report assumes $3.9 billion in federal taxpayer subsidies, and even then, concludes that the project is not cost-effective for agricultural water users who would obtain water from the new tunnels. (page 2, pages 28-29).
  • The analysis is significantly biased by using a false baseline for the cost benefit analysis. Instead of comparing water supply under WaterFix to the status quo, it compares the water supply projected under WaterFix to the water supply that would occur in a hypothetical future where WaterFix operating rules are in place, but there is no new intake facility. (page 2)  Tellingly, this is an entirely different future from the one DWR uses in its environmental analysis of the project.  If DWR were to apply the same false baseline to its environmental analysis of WaterFix, baseline environmental conditions would likely be far better in the future, yielding much more harmful impacts from the tunnels, and demonstrating that this is not an ‘apples to apples’ comparison.  In addition, Sunding assumes that water supply from the tunnels is the same for the next 50 years, even though WaterFix includes no permit guarantees or regulatory assurances that water supply won’t be reduced in the future (unlike BDCP).
  • Not only is the project not cost-effective for Central Valley Project water users, but the analysis shows that the Santa Clara Valley Water District, Westlands Water District, and other members of the San Luis & Delta Mendota Water Authority would actually get less water on average with WaterFix in place than they do today.  (page 7)
  • For urban water agencies, the report concludes that investments in regional water supplies are cost-competitive with the tunnels – and may be cheaper than the tunnels –and that these local and regional water supply projects, like water recycling and water use efficiency, would provide more reliable water supplies than the tunnels. (page 13)  They would also create more jobs in urban areas in Southern California as compared to WaterFix. (page 35)
  • The report admits that WaterFix provides minimal economic benefits for urban agencies from reducing seismic risks, even assuming a 7.5 or 15 month water supply outage.  Yet it admits that “many experts believe that Delta water supplies can be recovered within a period as brief as 6 months. In consideration of this fact, DWR has asked urban water agencies to assume a 6-month Delta outage when preparing water supply reliability analyses as part of their Urban Water Management Plans.”  (page 26-27)

Stepping back, this report helps demonstrate that WaterFix is neither economically nor environmentally feasible. David Sunding’s draft report indicates that the project is not cost effective for agricultural water users even with massive taxpayer subsidies, and that urban water users have cost effective alternative water supplies that are more reliable than WaterFix and that will create jobs in their communities.  And with respect to environmental impacts, our review of the WaterFix biological assessment demonstrates that the project will cause significant environmental harm and threatens salmon and other endangered fish in the Bay-Delta.

If WaterFix is likely to cause dramatic environmental harm and is not cost effective, why are we spending so much time debating the tunnels?  Instead of the distraction of the tunnels, we should be focused on investments in local and regional water supplies (like improved efficiency, water recycling, and better groundwater storage and management) that are far more likely to help the environment and water users.

About the Authors

Doug Obegi

Senior Attorney, Water program

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