Thursday, 15 July 2010

Department of Water Resources Says Economic Impact Study Costs $450,000

Is this a joke?  From a Hanford Sentinel article on Juan Arambula’s (now co-sponsored by Fran Pavley) bill regarding the sale of agricultural surface water to cities outside the San Joaquin Valley.

Assemblyman Danny Gilmore, R-Hanford, was one who didn’t jump on the bandwagon. Gilmore said he sympathized with Arambula. But Gilmore didn’t support the cost of putting the bill into action during a state budget crisis. The state Department of Water Resources estimated it would cost $2.3 million a year to oversee the groundwater monitoring and another $450,000 annually to do the economic impact studies.
I can’t comment on the groundwater monitoring, but I would bid about $15,000 for our Center to do the economic impact work, and I know consultants who would do it for $3,000 to $5,000.  Heck, I’ll do it for free just because I would like to see this bill pass.  Clearly, Arambula’s bill reveals true motives even more than I initially realized. 

I am truly stunned by this $450,000 annual cost for economic impact studies of a very small number of proposed transfers.  If this kind of work really paid that well, I would have a house in Aspen.  Seriously.   

The irony is that the water exporters would actually like to use my assessments of water supply economic impacts in this case.  My estimates of water shortage economic impacts have tended to be lower than their estimates and therefore would be more supportive of water transfers.

I suspect the truth is that DWR doesn’t want the bill to pass and doesn’t want to do te analysis, so they made up some crazy cost figures to give legislators an excuse to oppose it.  Of course, DWR has been incurring the cost to assess the economic impact of the drought, and update it every month for their drought updates.  If they can’t bear the cost of assessing Vidovich’s “man made drought”, then they should immediately stop assessing the impacts of the current drought since it is too costly.  [As a side note, I find it interesting that DWR is now doing the economic impact estimates themselves now rather than quoting the UC-Davis estimates or citing joint modeling projects with UC-Davis as in their previous updates.]

Update: 7/18

The Fresno Bee ran a story on this bill today as well.  It appears that the sellers are required to pay for the economic assessment, not DWR.  Still, their cost assessment is odd.
Assembly Bill 2776 requires water users wishing to make long-term transfers of surface water to pay for an evaluation detailing the economic, social and environmental effects of the sale. Also, users would not be allowed to replace the water with ground water unless the underground basin is strictly monitored.

About the Author

Ethan Jacob

Author & Editor

I am Ethan Jacob Executive Director of the Center for Business and Policy Research at the University of the Pacific, where I have a joint faculty appointment in the Eberhardt School of Business and the Public Policy Program in the McGeorge School of Law..

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