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August 08, 2013
Report Authored by Brattle Consultant Analyzes the Costs and Benefits of a Proposal to Divert Water in California

Brattle principal David Sunding recently authored a report on the benefits and costs of reconfiguring the way California exports water from the Sacramento-San Joaquin delta. The report was commissioned by the Bay Delta Conservation Plan (BDCP). Specifically, Dr. Sunding undertook an economics analysis of a proposal to build a major new diversion point and tunnel system in the delta; a source of water for roughly two out of every three Californians.

In his analysis, Dr. Sunding calculated the economic effects of the project’s intended long-term costs and benefits. Specifically, he looked at four categories of benefits: urban water supply reliability, agricultural water supply reliability, water quality impacts (primarily reductions in salinity), and reductions in seismic risk, versus the costs in 2012 dollars.

His analysis finds that the benefits would substantially outweigh the costs, to the tune of more than $5 billion. In addition, most of the costs from the nearly $25 billion project would fall on urban and agricultural ratepayers who get supplies from the south delta, while state and federal taxpayers would pick up a smaller share to pay for an extensive program of delta habitat restoration. The report also concludes that the tunnel project would generate $83.5 billion in statewide business activity over its 50-year life by averting further water delivery cuts and creating construction and maintenance jobs.

Dr. Sunding presented his findings at the July 23rd meeting of BDCP Committee Members.