Jerry Brown’s Delta Tunnels would need $6.5 billion taxpayer subsidy

  • Published on September 16th, 2016

By Dan Bacher

Proponents of the giant Delta Tunnels claim that the project’s cost will be covered by the beneficiaries, but new documents reveal donkeyhotey_jerry_brownthat project proponents could put the federal and state taxpayers on the hook for $6.5 billion in subsidies for the controversial water diversion proposal.

Documents unveiled in a recent Public Records Act request from the California Department of Water Resources (DWR), delivered to Restore the Delta (RTD), show that the state’s most recent cost benefit analysis calls for a $4.6 billion federal taxpayer subsidy for the project to cover expenses for Central Valley Project (CVP) water users and additional subsidies, $1.9 billion, to be paid for by California taxpayers.

The document release is likely to further increase opposition to Governor Jerry Brown’s “legacy” project  to build two 40-foot-high  tunnels under the California Delta to export northern California water from the  Sacramento River 35 miles south for export by San Joaquin Valley agribusiness interests and Southern California water agencies.

Restore the Delta said the California WaterFix will require a taxpayer subsidy totaling $6.5, based on a draft economic analysis for the California WaterFix project authored by Dr. David Sunding of the Brattle Group in Fall 2015.

In a memo reviewing the Brattle Group’s analysis of CA WaterFix, Dr. Jeffrey Michael, Director of the Center for Business and Policy Research at the University of the Pacific, said, “Clearly, this huge subsidy is in stark contrast to ten years of public statements that all construction and mitigation costs would be paid by water users.”

The WaterFix, “passes a cost-benefit test in aggregate,” but when the results are disaggregated by urban and agricultural uses, the report finds “benefits fall short of allocated costs for most agricultural water users,” Dr. Michael’s review discovered.

“Because costs exceed benefits for agricultural users, the report actually finds that the tunnels are not economically feasible as this requires benefits to exceed allocated costs for all users. Thus, much of the rest of the report attempts to rationalize public subsidies to lower the costs for agricultural contractors,” noted Dr. Michael.

Even more troubling in the Brattle Group’s draft economic analysis,  “is the assumption that water yields (the difference in export water delivery with and without the tunnels) are four times higher than in official WaterFix documents including its RDEIR/SDEIS and petition to the State Water Resources Control Board, according to RTD.

“As we have suspected, the economic planning for the tunnels is forecasting a water yield far higher than what proponents are telling the State Water Resources Control Board at hearings on permits for the project,” said Barbara Barrigan-Parrilla, executive director of Restore the Delta. “Because drought is the new normal, the only way for CA WaterFix to deliver four times more water within the calculated difference is to deplete the Bay-Delta estuary and the upstream watersheds.”

Barrigan-Parrilla said additional emails in the PRA request show that the next version of the economic analysis “will contain only aggregated economic results, meaning the public version of the report will cover up all the negative results about the project not penciling out for agricultural users, even with a subsidy.”

You can read the PRA documents here.

Nancy VogeI, spokesman for the California Natural Resources Agency, claimed the “draft economic analysis” that DWR released to RTD is “outdated and incomplete.”

“The state has not concluded that WaterFix requires federal funding to be feasible. The project remains based on the premise that its beneficiaries will pay and a full financing plan will be made available when complete,” said Vogel.

Californians for Water Security, the Astroturf lobbying group launched with the support of Stewart and Lynda Resnick’s Paramount Farms, now called The Wonderful Company, echoed Vogel’s contention that the California WaterFix analysis was “outdated and incomplete.” Check out the email traffic on group’s founding, released under the California Public Records Act.

“Once again, Restore the Delta is distorting reality in an attempt to stop one of the most necessary projects in our state’s history,” said Robin Swanson, on behalf of Californians for Water Security. “They released a year old, draft analysis that is incomplete and doesn’t account for the latest thinking on the financing of this project.”

“Even so, the draft report clearly states that ‘the project would provide significant indirect and public benefits to Californians, even those who do not directly consume Delta water supplies.’ “The report also says that ‘WaterFix easily passes a benefit cost comparison in aggregate,’” Swanson claimed.

Swanson concluded, “It should go without saying that any project financing must make financial sense for all who will benefit from and pay for the project.”

Barrigan-Parrilla countered the responses from Vogel and Swanson regarding Dr. Sunding’s analysis, noting that “the bottom line is this is the most complete draft of the cost benefit analysis and the released emails show how the state was  going  to revive this draft to put it in the best public light.”

“Nowhere in the mails released by DWR has anybody raised an objection to the need for the federal funding. What you do find in the emails is how  the tunnels proponents say they are going to hide the big gap between the costs and benefits of agribusiness in aggregated funds,” said Barrigan-Parrilla.

That’s not all. “In addition to providing no evaluation of the economic harm that will be inflicted on Delta communities, it is clear CA WaterFix planners have no qualms about Californians paying for the project through higher water rates, property taxes, and state and federal income taxes — all for the benefit of big agricultural growers on the west side of the San Joaquin Valley, and special interest water districts, like Metropolitan Water District of Southern California.  Southern Californians and Silicon Valley water ratepayers should be very concerned as they will end up subsidizing big agriculture four different ways,” concluded Barrigan-Parrilla.

In addition, Barrigan-Parrilla said the federal Central Valley Project (CVP) water  contractors who are pushing the Delta Tunnels project include the San Luis Delta Mendota Water Authority and their member Westlands Water District. In July, Fitch Ratings upgraded Westlands credit rating from “Negative Watch” to “Negative.”

You can read Restore the Delta’s response to Californians for Water Security at:  www.restorethedelta.org/…

A broad coalition of fishing groups, Tribes, conservation organizations, environmental justice groups, businesses, family farmers, Delta residents and elected officials opposes the construction of the Delta Tunnels because it would be the most environmentally destructive public works project in California history. The construction of the tunnels would hasten the extinction of Central Valley steelhead, Sacramento River winter-run Chinook salmon, Delta and longfin smelt, green sturgeon and other fish species, as well as imperiling the salmon and steelhead populations on the Trinity and Klamath rivers.

As was the case in the equally controversial Marine Life Protection Act (MLPA) Initiative that Governor Brown “completed” in December 2012, the Governor and his backers are apparently at it again trying to “fix the books” and manipulate the data to forge ahead with their neo-liberal “environmental” agenda. For more information about the deep links between the Delta Tunnels Plan and the MLPA Initiative, go to: http://www.dailykos.com/story/2016/7/2/1544573/-Deep-Regulatory-Capture-Exposed-The-Links-Between-Delta-Tunnels-Plan-MLPA-Initiative





About the Author

Dan Bacher is an environmental journalist in Sacramento who focuses on California's water issues, a healthy environment for the salmon fishery of the Northwest, and the attempts by big agriculture and big oil to hog all the water.