Economic Analysis Shows Value of Investing in WaterFix: California Water Users Will See Benefits Far Exceeding Costs

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The Delta at sunset.

SACRAMENTO – Today, the Department of Water Resources (DWR) released a Benefit-Cost Analysis for California WaterFix by Dr. David Sunding, a professor of natural resource economics at UC Berkeley, that finds WaterFix could bring billions of dollars in benefits to Californians who obtain their water from participating State Water Project (SWP) contractors. These benefits include improved water quality, more reliable water supplies, enhanced disaster preparedness, and climate change resilience.

 

“The analysis described in this report demonstrates that investment in the California WaterFix results in positive net benefits for the SWP urban and agricultural contractors,” Sunding wrote in the report prepared for DWR.

 

The economic analysis summarized in the report goes beyond what is legally required for WaterFix and is consistent with methods described in the department’s “Economic Analysis Guidebook.”

 

The analysis concludes that the WaterFix benefits to SWP water agencies are substantial. SWP urban agencies could see about $3.1 billion in net benefits. SWP agricultural agencies could see about $400 million in net benefits.

 

“Without WaterFix, State Water Project contractors will see the continued deterioration of their water supply reliability,” Sunding said. “This analysis shows there is substantial benefit for both urban and agricultural water users throughout the state, and that the project will be more affordable for consumers than local alternatives such as desalination and recycling."  He added that the analysis also indicates that “CVP south of Delta contractors would realize positive net benefits were they to utilize and pay for access to the new north Delta conveyance facilities.”

 

The report compared the benefits and costs of WaterFix in relation to what would likely occur if WaterFix were not built, including further restrictions on existing SWP and CVP operations designed to minimize harmful reverse flows and protect species.

 

A notable feature of the report is that it monetizes the cost of climate change impacts and the benefits of offsetting those impacts.  “WaterFix helps mitigate the impacts of climate change on the state’s water supply system,” Sunding said.  “This feature of the WaterFix alone is worth several billion dollars and is an important rationale for implementing the project.”

 

The economic analysis is available here. More on California WaterFix is available here.

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Contact:
Erin Mellon, Assistant Director, Public Affairs, Department of Water Resources

(916) 651-2440 | erin.mellon@water.ca.gov

 

 

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