CA Tries to Spin Numbers for New Dam Project But it Will Be an Economic and Environmental Disaster

A couple of weeks ago, the U.S. Bureau of Reclamation released its Upper San Joaquin River Basin Storage Investigation "Plan Formulation Report." Despite its long name, and the very odd fact that it is dated October 2008 but was released just recently, this massive report is simply a feasibility study for the proposed Temperance Flat dam on the San Joaquin River -- one of the two surface storage dams being intensively pushed by a few special interests as a critical solution to our water woes. This report, which I just managed to read, is remarkable. Its purpose is to show that Temperance Flat is feasible and makes sense. But in fact, this report actually shows that Temperance Flat is a bad idea, will create far fewer benefits than costs, and will be an ecological, recreational and economic failure. And the "new" water it will create will be minimal and hugely expensive.

The study looked at a wide range of dam projects but quickly rejected most of them as infeasible. They settled on four possible alternatives -- a bigger and a smaller reservoir, with and without a new canal to move water across the valley (not the so-called "peripheral canal," but a new local canal). Yet of these four alternatives, even the Bureau of Reclamation (BoR) couldn't make the ones with the smaller reservoir create more benefits than costs. This left the big reservoir, with and without the canal. They then dumped the canal option, because it didn't add any new net benefits. Thus, they could only make one possible configuration make sense. And here is the problem, even that configuration doesn't make sense.

Water Number: 1.06

The best that the Bureau of Reclamation could do to make Temperance Flat look feasible was to come up with a benefit/cost ratio of between 1.00 and 1.06. 1.06? This means that even after rigging the numbers in favor of the project, they could barely make it appear that the benefits exceed the costs. And yes, the numbers are rigged. Certain "benefits" are exaggerated. Certain major costs are excluded. And even worse, other alternatives that can provide the same benefits at lower costs are simply ignored.

Here are a couple of examples just to give readers here a flavor. [The entire report would benefit from a smart independent economist reviewing all the assumptions and redoing all the benefit/cost assessment with more realistic numbers, but the BoR excludes most of the equations and actual numbers from this study]:

  • The new reservoir will destroy riverine spawning habitat for American shad and striped bass, it will destroy nearly half of the trout habitat in the study area, and it may completely extirpate the shad population (among other ecological impacts they acknowledge but don't quantify). What value does the BoR assign in their benefit/cost to these ecosystem losses? Zero.
  • The new reservoir will destroy one of the few remaining free-flowing stretches of the San Joaquin with many long class 2, 3 and 4 rapids separated by long scenic pools used by rafters and kayakers. What value do they assign in their benefit/cost ratio to this loss? Zero.
  • There are dozens of sacred Native American village, gathering, and religious sites in the area to be flooded. Even the BoR acknowledges over 150 archeological and historical sites in the area, without having conducted a comprehensive survey, and local Native American community representatives have strongly objected to the reservoir on these grounds. What cost does the BoR assign to this cultural destruction in their benefit/cost ratio? $6 million in construction costs for "mitigation" but zero for the destruction of these sites.

Most egregious is that around 80% of the project benefits supposedly result from improved water supply for municipal, industrial, and agricultural users. The problem is that they estimated the value of this benefit at "the estimated cost of the most likely alternative water supply" if the dam was not built. If 80% of the benefits of $169 million a year are attributed to water supply, and the project yields (at best) 180,000 acre-feet of water in an average year, the BoR is assigning a value of nearly $850 per acre-foot to these benefits. Yet the BoR explicitly excludes conservation and efficiency improvements, arguing they don't exist in the region -- a blatant falsehood. Because conservation and efficiency improvements are actually far cheaper than new supply, if they had used the "estimated cost" of improved efficiency, the value of the "benefits" of the water supply would drop substantially, and the "benefit/cost" ratio would plummet.

Finally, does anyone really believe that the construction cost -- estimated in this report at over $3.35 billion -- will not rise substantially? Has any major reservoir been built even close to the cost first estimated by the Bureau of Reclamation? Fix any one of these errors in the feasibility study and the benefit/cost ratio drops below 1. Fix them all and the project is an economic disaster.

Given the stark reality of these numbers, how can anyone still support Temperance Flat? Easy. The people receiving the benefits are not the people bearing the costs, many of which are public, environment, and cultural. Unless we have politicians willing to stand up for the public good, bad projects will continue to impoverish California's environment, cultural history, and pocketbook, without fixing our water problems. This "feasibility" study puts a price on everything except the things with true value.


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