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Peripheral Canal Would Cost $23 to $53.8 Billion!

by Dan Bacher

August 30, 2009 -- A draft economic report by Steven Kasower of the Strategic Economic Applications Company, released to the California Legislature Tuesday, reveals that the costs for the construction of a peripheral canal around the California Delta or a tunnel under the estuary would be much higher than previously estimated, ranging from $23 billion to $53.8 billion depending upon the conveyance facility. 
 
The $23 billion estimate includes $4.2 billion for "isolated conveyance" - a peripheral canal- through the eastern Delta, $9.8 billion for through Delta conveyance, $4 billion for mitigation, $4 billion for restoration and $5 billion for off-stream storage. The $53.8 billion estimate is based on a combination of $33 billion for a conveyance tunnel and $9.8 billion for through Delta conveyance, in addition to $2 billion for mitigation, $4 billion for restoration, and $5 billion for off-stream storage. 
 
Governor Arnold Schwarzenegger's Delta Vision and Bay Delta Conservation Plan processes have advocated building "dual conveyance" facilities, a combination of "isolated conveyance" - the peripheral canal - and through Delta conveyance where the water would flow through shored up levees in existing river channels. More recently, the California Department of Water Resources has suggested building a massive 35 mile tunnel, rather than a canal, through the Delta. 
 
The peripheral canal, designed to export more northern California water to Central Valley corporate agribusiness and southern California, would be a monumental project approximating the Panama Canal in width and length. The canal, designed to carry 15,000 cfs of Sacramento River water, would be 500 to 700 feet wide and 48 to 49 miles long, based on an engineering report completed in August 2006 by Washington Group International for the State Water Contractors. By comparison, the Panama Canal is 500 to 1000 feet wide and 50 miles long. 
 
To develop the costs for the tunnel under the Delta, Kasower substituted as "reasonably equivalent" the costs for a comparable construction project, the London-Paris Channel or "Chunnel." The Chunnel is 31 miles long and cost $21 billion in 1994. By adjusting the $21 billion into 2009 dollars, Kasower came up with the $33 billion figure. 
 
Regardless of whether the canal or tunnel alternative is proposed as the solution to meeting the "co-equal goals" of water supply and ecosystem restoration, the California debt servicing would be enormous. Kosower estimates it would range from $1.5 to $3.4 billion annually - and only $6.5 billion would be financed through General Obligation Bonds. 
 
"The financing would incur a $416 million annual debt service while Delta water users would shoulder the rest," said Kasower. "For citizens unlucky to live in the Delta service area, they would pay for both the beneficiary financing as well as the general obligations encumbered for restoration and their share of the off-stream storage reservoirs." 
 
Kasower noted that almost no information is available on mitigation and restoration costs do not exist at all for the controversial project. "The project economics have not been accomplished to date. There is little information on what benefits in terms of long-term yield or project implementation timelines," he stated. 
 
He concluded, "There is not enough substantive engineering, economic and thus financial information at this point to consider any Delta solution policy other than serious investment in answers. A rush to solution will result in no progress and no solution." 
 
Kasower posed a series of questions and recommendations to policy makers, including investigating the possibility of developing "Delta-free self reliance" for water supplies in southern California, studying whether or not the San Joaquin Valley can survive with no Delta diversions, and exploring what restoration and mitigation the Delta would require if no Delta diversions occurred. Other recommendations include investigating whether Bay Area diverters could survive on local projects and programs and studying the new role that stormwater reuse and aggressive recycling could play in a sustainable California economy. 
 
In spite of the intensive campaign for the construction of the canal by Governor Arnold Schwarzenegger and his allies, canal opponents emphasize that the proposed government pork barrel boondoggle wouldn't create any new water - it would only take water from senior water rights holders to be delivered to junior water rights holders on the San Joaquin Valley's west side. And in spite of the claims of its proponents that the canal will result in “ecosystem restoration," Delta advocates say the canal will only exacerbate the unprecedented collapse of Central Valley salmon, delta smelt, longfin smelt, green sturgeon, Sacramento splittail, American shad, striped bass and other California Delta fish populations by removing more water from the imperiled estuary. 

“Friends of the River stands with sport anglers and Delta residents to oppose the controversial, outrageously expensive, environmentally destructive and unneeded Peripheral Canal,” said Steve Evans. “The canal will be used to suck every last drop of water from this beleaguered estuary for delivery to large corporate farms in the southern Central Valley and southern California developers.” 
 
“To Our Governor and many in southern California, the Delta is merely an obstacle in the way of more water being shipped south,” said Bill Jennings. “But to us, the Delta is our home.” 
 
SB 1, the bill sponsored by Senator Joe Simitian (D-Palo Alto), will set up a Delta Stewardship Council consisting of seven members - four appointed by the Governor and one each by the Senate and the Assembly, with the seventh being the chairperson of the Delta Protection Commission. Jennings slammed the proposal. 
 
“In an astonishing abdication of oversight and due diligence, the legislature proposes to allow the Governor to appoint the majority of a council that has authority to fund and construct a water conveyance system before they even know what will be proposed,” said Jennings. 
 
The bill package was developed with no public input and Delta advocates fear that the bills will be rushed through during the last three weeks of the legislative session. 
 
“The Legislature is having hearings on these bills and they have had virtually no input from the public, including those most impacted by the project - Delta residents,” said Barbara Barrigan-Parrilla. “We are all here today to show the Legislature that we should have a voice in the process and we will be heard.” 
 
As the bill proceeds through the Legislature, the Department of Water Resources is planning to begin drilling at 16 locations on the Sacramento, Mokelumne and San Joaquin rivers for possible intakes for the canal. 
 
To save the Delta and stop the peripheral canal, sign this petition and send letters to your Legislators through this on-line action alert: http://www.calsport.org/8-22-09.htm.