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 →

Will There Be Buyers of Bay Delta Conservation Plan Water?

Beats me!  Let’s see.

California’s Department of Water Resources (“DWR”) argues that BDCP water is a bargain.  I do not find the pitch compelling.  The cost of water is understated.  The BDCP water supply is “non-firm” and not at all comparable to alternatives discussed.  What should be done?  Use a subscription process and find out if federal and state water contractors are willing to enter into contracts to purchase BDCP water.  Continue reading →

State Legislator Calls for Texan Interstate Comity and A New Policy Direction

State Representative Lyle Larson (R-San Antonio) recently called for a new bold plan to solve the Lone Star state’s outsized water challenges in a guest column in the Waco Tribune Herald.  He proposed “an open dialogue with our neighboring states and investing in new technology to bolster our state’s water supply, rather than relying on the same approaches that have failed to provide us a water supply for future generations.”  He finds Texas’s future can be found outside courtrooms and in conjunctive groundwater-surface water projects based on interstate cooperation. Continue reading →