Economist: State Ignores It's Own Studies about Delta

Economist: State Ignores It's Own Studies about Delta Article by Gene Beley, CVBT Delta Correspondent, STOCKTON, October 13, 2013


“I’ve come to the conclusion that being an advocate is a good thing”, Dr. Jeffrey Michaels

Dr. Jeffrey Michaels Delivers Keynote Address 

In touting twin tunnels to siphon off part of the Sacramento River, the California Department of Water Resources is ignoring years of advice from its own experts, says University of the Pacific economist Michael Jeffrey.

He says this research bolsters his own, in three detailed cost analysis over four years, that show that shoring up the levees in the Sacramento-San Joaquin Delta is the most economical way to ensure water supplies for the San Joaquin Valley and Southern California. What doesn’t work, he says is the Bay Delta Conservation Plan’s call to build massive twin tunnels beneath the Delta.

If built, as advocated by Gov. Jerry Brown and his allies, the 35-mile-long tunnels, each wide enough to let a small plane fly through them, would have the potential capacity to drain enough water out of the Sacramento River and into the state and federal irrigation systems south of the Delta to fill the Rose Bowl to its brim every 30 minutes. However, proponents say the tunnels would not operate at maximum capacity.

The cost of the project has been estimated as high as $54 billion, when interest on the project’s debt is included.

But the university economist says his research shows a better, cheaper, way to go – something that’s been sitting in the storage rooms of the state government for years.

“I found a whole stack of reports in the Department of Water Resources that came to the same conclusion as mine — that the first rational step in this process is to invest in the levee system,” says Mr. Michael, who is director of the Business Forecasting Center and associate professor in the Eberhardt School of Business at the University of the Pacific.

He says this research is being covered up by the long-running campaign in favor of the tunnels.

“It was clear to me that there was a lot of misinformation going on there. And there hadn’t been any real attempt at economic costs analysis, which is what governments do when they are pondering billion dollar infrastructure investments,” Mr. Michael told a meeting last week of the Delta advocacy group Restore the Delta.

The flood of misinformation was not accidental, his remarks suggest.

“We had Congressional representatives in 2009 running around the Valley blaming everything on a two-inch fish called the Delta smelt. This upset me as an economist because we were in the third year of a severe drought, but less than 5 percent of irrigated agriculture in the state had been fallow,” he said.

“But the owners of that 5 percent have polluted the media, flying in reporters from New York, who drove right past the real economic problems in the Valley and took a photo of one of those fallowed fields and blamed everything on the two-inch fish,” he said.

His first published report on water and the Valley economy was titled “Unemployment in the San Joaquin Valley — Fish or Foreclosures?” Mr. Michael says the title was inspired by a program produced by Sean Hannity, a commentator for the Fox cable network, which blamed the endangered fish for the farmers’ woes.

Mr. Michael says the true cause of unemployment in the Valley was the mortgage meltdown and collapse of the housing industry – not lack of water for irrigated crops.

He said that after four years and doing three significant economics studies on the subject, he’s reached the conclusion that the Bay Delta Conservation Plan (BDCP) with its twin tunnels scheme at its heart is bad for the state. “There are less costly and better solutions,” he said.

“The BDCP brought in a panel of national experts to review this crazy thing that we had researched. What was interesting to me was that they said our levee recommendations were too weak for the safety needs of the Delta. We said the state needs to do more. Their expert said the earthquake risk to the water exporters did not justify a multi-billion investment in a tunnel or canal.”

“Cost analysis were coming from everywhere -- state legislature, academics, editorial pages of newspapers,” Mr. Michael continued.

“By the summer of 2012 I drafted my own benefit cost report showing $2.50 in cost for every $1 of benefit to the state. Very bad investment,” he noted. “The farmers simply can’t afford the tunnels.”

Under the BDCP plan, those getting water from the tunnels, from San Joaquin Valley farmers to customers of the Metropolitan Water District, which serves much of Southern Califirna, would pay to build them. Taxpayers would pick up the multi-billion dollar tab to restore the Delta’s ecology.

But those buying the water don’t have to use a drop of it themselves – they’d be free to resell it to whoever wrote them the biggest checks. Vast amount of fresh water, such as that to be shipped through the tunnels, is needed for fracking – the method of fracturing underground rock formations to free up oil and natural gas.

The oil industry is eyeing the Central Valley’s Monterey shale formation, a vast 1,750 square mile, 1,900-foot-thick, rock formation about 9,000-11,000 feet beneath the Valley, stretching from Modesto south to Bakersfield. If estimates are correct it could contain one of the world's largest land-based reserves of shale oil, estimated by the federal government to be as much as 15.4 billion barrels of oil.

Argonne National Laboratory's Robert Horner, a policy analyst, energy/environmental systems specialist in its Washington, D.C., office, says fracking of a shale formation for oil or natural gas can take between 2.5 million and 5.5 million gallons of clean water. Andrew Bunger, assistant professor in the Department of Chemical and Petroleum Engineering and the Department of Civil and Environmental Engineering at the University of Pittsburgh, offers a more specific number: “Approximately 4 million gallons for one typical horizontal well (similar to growing 40 acres of irrigated crops for one year),” he told CVBT in July.

Both experts say that the current state of the art in fracking requires fresh, clean water that is then mixed with proprietary formulas of grit and chemicals.

Mr. Michael was the keynote speaker at the Restore the Delta fundraiser, at which he received an award from the group.

“I’ve come to the conclusion that being an advocate is a good thing,” he said. “A Delta advocate cares about this special place. They want future generations to enjoy a Delta that is fishable, farmable, swimable and all those nice things. But being a Delta advocate is being more than that. To me, it means facts over fear, being an advocate for good government and demanding that government agencies follow their own rules and be responsible for taxpayer dollars. It means standing up for enduring value, and having an environmental sustainability, fairness, democracy, and the rule of law.”

Restore the Delta’s rally and fundraiser in the South Delta’s River Mill winery Oct. 10 resulted in donations of more than $500,000. Barbara Barrigan-Perrilla, the group’s executive director, said there would be an announcement soon, after the accounting is completed, that may push the figure even higher.

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