Food and Water Watch Releases ECONorthwest White Paper on Rate Impact of Bay-Delta Canal

Posted on August 14, 2012 in Water Resources by Ann Hollingshead

In the recent white paper, ECONorthwest estimates the rate impacts of the proposed Peripheral Canal/Tunnel on Los Angeles ratepayers.

In late July, California Governor Jerry Brown, alongside Interior Secretary Kenneth Salazar, unveiled plans to build the Bay-Delta peripheral canal / tunnel, which would move water from the Sacramento River in northern California to cities and farmland in the south.

In a white paper, recently released by Food and Water Watch, ECONorthwest estimates the future impact of the canal / tunnel on ratepayers in Los Angeles, including the costs of financing the construction and operation and related mitigation costs.

To account for uncertainty surrounding the actual cost of building the tunnel, the ECONorthwest model included two scenarios: a high-cost and a low-cost. ECONorthwest's model predicts that under the lowest cost scenario, Los Angeles water rates will go up on average $86/year in 2021. The high cost scenario would increase rates by $393/year in 2021.

In the white paper, the authors also describe local water supply alternatives and their potential costs, including conservation, water reuse and recycling, stormwater capture, and groundwater desalination.

"Alone, or in combination, these options could provide a cost-effective alternative for Los Angeles' water-supply needs," said Ed MacMullan, senior economist and the report's principal author. "Our white paper provides insight into the cost impacts of the peripheral tunnel versus local water-supply options. The tunnel does not compare favorably."

The white paper is a companion to a similar analysis ECONorthwest conducted for Santa Barbara ratepayers.

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You can read the full white paper here. Find additional coverage of the ECONorthwest white paper in City Watch, The Record, and San Francisco Bay Area Indymedia.

Other contributors to the white paper include: Ann Hollingshead, Research Analyst, who specializes in natural resource policy and economics; and Paul Thoma, Economic Analyst, who specializes statistical and econometric analysis and applied microeconomics.

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