Author Archives: Rodney T. Smith

About Rodney T. Smith

Rodney T. Smith, Ph.D., President of Stratecon Inc.—an economics and strategic planning consulting firm—advises public and private sector water users on the acquisition, sale and leasing of water rights and water supplies in the western U.S. He is routinely involved in economic valuation of water rights, water investments, and negotiation of water acquisition and transportation agreements and has served as an expert witness in the economic valuation of groundwater resources, disputes over the economic interpretation of water contracts, economics of water conservation and water use practices, and the socio-economic impacts of land fallowing. For more information, see www.stratwater.com.

What would be California’s Water Supply Situation without the BDCP and What It Means for Tunnels

There is a significant “risk factor” about the Bay Delta Conservation Plan that merits attention:

What would be California’s Water Supply situation without the tunnels?

Over the past couple of weeks, I have heard about alternatives to the no BDCP scenario defined by DWR.  What proves true will have a substantial impact on the cost of BDCP water.  Under alternative “no tunnel” scenarios, the best case for the cost of BDCP water would be well over $1,000/AF for a non-firm water supply.  There are some scenarios where the BDCP investment may yield even a lower water supply.  In those circumstances, the BDCP investment in tunnels would become the “bridge to nowhere” in waterworld.

Whatever one’s views about the BDCP, in the end we are rolling the dice on what is, in fact, the future world with and without the tunnels.

Dice Image Continue reading →

Are the Statewide Economic Impacts of the Bay Delta Conservation Plan Significant?

No.  DWR’s estimates of the statewide impact of the Bay Delta Conservation Plan are roughly equal to about one month of trend growth in state personal income and employment.  Other than perhaps the temporary jobs during construction of the BDCP conveyance facility, it will be difficult to measure the BDCP’s economic impact on the California economy.  Continue reading →

Do the Benefits of the Bay Delta Conservation Plan Exceed Costs?

Call me skeptical.  Ok, I say no.

The heralded conclusion that the BDCP generates net benefits of $5 billion for state and federal water contractors is not convincing.  DWR understates costs.  The benefits are summary statements about the findings of two economic models that are “black boxes”.  Most importantly, the materials are silent on a simple but critical matter—did the calculation of present value of benefits take into account the decade delay between the necessary commitments to finance construction and the start of water deliveries. Continue reading →

A Lesson for Water Quality Regulation: Listen to Prices in Credit Markets

EPA’s Ethanol Regulation provides an informative case study for the water industry about regulation.  Defining tradable rights in regulatory targets provides flexibility in achieving regulatory goals.  Probably equally as important is that the prices established in those markets provide immediate feedback on the economic impact of regulation.  Continue reading →