Thursday, 16 June 2011

First Administrative Draft of the Economic Sustainability Plan for the Delta

[Update Note: This is a description of preliminary results from a first, incomplete draft.  For up to date information on the most recent complete drafts of the plan, visit the Delta Protection Commission website.  I also deleted a paragraph that listed key contributors, because several of the sub-contractors have been bothered by people associated with the BDCP for their names appearing on this blog that makes critical comments about the BDCP.  In hindsight, I shouldn’t have deleted the paragraph, but I can’t recover it now.]

As some ValleyEcon readers know, I am the PI on the Delta Protection Commission’s Economic Sustainability Plan (phase 2).  The first administrative draft of the ESP report was posted this afternoon in preparation for a DPC workshop at the Port of Stockton on June 23.  This contract was only awarded in March, and a stellar research team has been working hard to get us to this point in under 3 months.  It is work in progress, and some portions are incomplete.


The initial list of key findings is below:

·         Delta agriculture supports 13,700 jobs, $1.1 billion in value-added, and nearly $2.8 billion in economic output in the five Delta counties.  In addition, Delta agriculture supports nearly 23,000 jobs, over $1.9 billion in value-added, and over $4.6 billion in economic output in the state of California. (chapter 7)

·         Delta recreation and tourism supports 2,700 jobs, $152 million in value-added, and nearly $284 million in economic output in the five Delta counties.  In addition, Delta recreation and tourism generates over 4,900 jobs, $324 million in value-added, and $600 million in economic output in the state of California.  (chapter 8) 

·         Delta agriculture supports 5 times more jobs, and 7 times more value-added (income) than Delta recreation and tourism.  While recreation is an important supporting economic sector and adds to the Delta’s unique quality of life, it is unrealistic to expect that recreation and tourism could replace agriculture as the Delta’s economic driver.  (chapters 7 and 8)

·         All available indicators for Delta recreation suggest Delta tourism has been flat for one to two decades before the onset of the recession.  Regional population growth is an opportunity, but does not by itself guarantee growth in Delta recreation and tourism.  Delta boating and fishing increased rapidly in the 1980s and previous decades, but has slowed since.  Improved water quality and new investment in recreation facilities and hospitality enterprises are frequently cited as being essential to growing recreation and tourism in the Delta. (chapter 8)

·         Improving the visibility and recognition of the Delta as a place will benefit Delta tourism and agriculture.  The Delta Protection Commission should complete its feasibility assessment of National Heritage Area designation. (chapter 8)

·         Delta levees are critical to economic sustainability.  The Delta levee system protects critical water, energy, and transportation infrastructure for the state and regional economy, and supports all aspects of the Delta economy.   (chapter 4)

·         Delta levees are in better condition than often portrayed, but still need investment.  As opposed to frequent reports that cite over a thousand miles of “fragile” levees in need of billions in repairs, there are actually about 370 miles of Delta levees that need roughly $500 million in investment to reach appropriate standards.  This goal could be reached with strategic use of existing bond funds. (chapter 4)
  
·         Population trends in the primary zone are relatively flat, but uneven across regions.  North Delta population increased over the past decade, whereas South and East areas of the primary zone declined in population.  In contrast, the secondary zone population increased 25% between 2000 and 2010.  (chapter 2)

·         The current capacity of Delta tourism infrastructure and enterprises is insufficient to capture significant income from increased visitation.  If the goal of the Delta Plan is to increase Delta tourism, there needs to be greater incentives for investment in tourism businesses, not increased regulation of “covered actions” in the Delta that discourage these investments. (chapter 8)

·         Implementing the November/December 2010 draft of the Bay Delta Conservation Plan would be devastating to the Delta economy.  It would cause a 30-50% decline in Delta agriculture, and could decrease Delta recreation and tourism.  (chapters 7 and 8)

·         Large, isolated conveyance would decrease Delta agricultural production by nearly $200 million, and negatively impact Delta tourism.  Increased South Delta salinity would cause large decreases in the production of high-value truck crops, and also negatively impact high-value vineyards.  Increased salinity would also negatively impact boating, and the large scale industrialization of the Sacramento River with five large new pumping plants and intakes near historic Legacy Communities would have negative impacts on tourism development and the rural quality of life.  (chapters 7 and 8)

·         The BDCP proposal to create 65,000 acres of tidal marsh habitat would reduce annual agricultural production by a minimum of $84 million, and generate little if any compensating tourist spending.  The $84 million annual loss in agricultural production assumes targeted land acquisition to minimize impacts, and annual losses could exceed $100 million if agricultural encroachment is not minimized.  (chapter 7)

·         Several influential studies of Delta issues have significant errors in economic analysis.  The most notable problems are various PPIC reports that have misled decision makers about the Delta economy and inaccurately portray the economics of the peripheral canal and investment decisions in Delta levees.  (chapter 5)

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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