COVID-19 has destroyed the water industry’s economic model (see COVID-19 Will Change the Water Industry, a Trilogy: The Industry’s Economic Model Is Dead) and provides a natural experiment of the impact of economic activity on the environment requiring an enhanced role for improved science (see COVID-19 Will Change the Water Industry, a Trilogy: Enhanced Role for Improved Science). What does all this mean for planning and decision-making?
This second post in my BDCP series answers the question that eludes readers of the Department of Water Resources (“DWR”) materials and participants at DWR’s July 17th presentation:
What is the cost of water to state and federal water contractors?
As explained below, the answer depends on interest rates and risk assessments. I conclude that a reasonable range for the cost of water for state and federal contractors is substantial and depends on DWR’s Delta outflow scenario:
- “low Delta outflow” scenario: $550/AF to $700/AF
- “high Delta outflow” scenario: $750/AF to $1,000/AF