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.

Is BDCP a Doable Deal Redux—Part 2

After reading the California Debt and Investment Advisory Commission’s study (“CDAIC Study”) on Bay Delta Conservation Plan (“BDCP”) financing considerations and risk, State Water Project (“SWP”) contractors and (especially) Central Valley Project (“CVP”) contractors should take a fresh look at the financial realities of relying on the BDCP. Unlike the study’s discussion of BDCP affordability,  which was marred by economic flaws, the study offers a useful discussion of financing and risk that water agency board members should consider as part of their fiduciary duty in making BDCP decisions.

The study makes a good first step in scratching the surface of risk assessment of the BDCP. Prudence requires more risk assessment. Continue reading →

Is The BDCP Doable—Redux, Part 1

Call me skeptical. After reading the California Debt and Investment Advisory Commission’s The Bay Delta Conveyance Facility: Affordability and Financing Considerations, my skepticism metastasized.

  • The affordability analysis buries the cost of BDCP water—although it creates the opportunity for teachable moments in economics. (Part 1)
  • three card monteIn contrast, the discussion of risk and financing considerations must be studied by anyone who has invested or intends to invest a nickel in the BDCP. (Part 2)

WARNING: you may regret your actions.

Continue reading →

CA Water Bond on Election Eve: Did Political Leadership Push Prop 1 Over the Finish Line?

Sitting before my computer at sundown November 3rd, thinking about whether California voters will pass the 2014 water bond?  Hydrowonk believes the outcome depends on the balance among three factors: will the drought and political leadership exerted by Governor Brown overcome the drag of increasing debt burdens on voter support for water bonds? According to the wisdom of the Stratecon Water Policy Marketplace, the answer is yes. This market now predicts that the chance of the water bond passing is 57%.  Given the trend in voter support of water bonds and California debt loads, the passage of the water bond would be a remarkable achievement. Continue reading →

Climate Change: A New Energy-Water Nexus for Emission Trading

California Senate President Pro Tempore Kevin de Leon added a new twist (climate change) to the increasingly popular topic of the “energy-water nexus.” Speaking at the 30th Annual Meeting and Dinner of the Southern California Water Committee, “as we live through the current severe and extreme drought, which is now approaching a 4th straight year of drought conditions, the realities of limited water supplies are hitting home.”  Introducing climate change into the policy discussion, Senator de Leon will move water agencies into a new era of carbon emission control.  Will participation in California’s cap-and-trade emission market become a new tool for water managers? Continue reading →