Delta Economics and Ecosystem Management

Delta Economics and Ecosystem Management

Chris Austin

Cost-Benefit Analysis BDCP, Stakeholder Perceptions, Adaptive Management
See-Session-PowerpointsSOE2013-cover100px2The Delta is many things to many people. This idea helps explain divergent views of how the region’s habitats should be managed, but also fuels arguments over how best to resuscitate Delta ecosystems while slaking California’s thirst for water. A Wednesday afternoon session on how social factors affect Delta management began with a panel discussion on the economics of the controversial Bay Delta Conservation Plan. The panel featured California Deputy Secretary for Natural Resources Jerry Meral and Jeff Michael, director of the University of the Pacific’s Business Forecasting Center.

Michael described the BDCP as the most expensive water infrastructure project in California history. He asserted the costs are simply too high, especially for agricultural contractors who will use most of the water, and challenged the state to do a more rigorous cost-benefit analysis.  According to his own analysis, the costs of the water developed could range from $541 to $9,000 per acre foot (see Powerpoint Gallery). “Everyone has a different baseline for comparison, but no one is using the no-tunnel alternative as a baseline, which might be better for the fish,” he said.

Despite the $15 billion estimated cost of the infrastructure improvement package, Michael said water agencies are arguing that it will be worth it because of the value of the regulatory assurances it could provide—a point Michael considers overstated. “As you increase or strengthen assurances to one of the stakeholders in the Delta, you aren’t necessarily reducing risk as a whole; you’re shifting risk between the parties,” he said.

Yet state analyses of the plan’s economic impacts indicate it will provide extensive benefits, said Meral, especially in the arena of ecological conservation. While the cost of new facilities and mitigation will be high, he said, agricultural water users so far have indicated they are willing to foot the bill. Viewing the project solely through an economic lens is shortsighted, Meral said. “The idea of preserving these species to me is not an economic reason; it’s a moral and an ethical one.” The final specifications of the project have not been settled, Meral pointed out, but its most important feature is whether it will help reverse the Delta’s ecological collapse. “Part of this is a political discussion with people in the Delta, part of this is that the contractors have to pay for it, but the most important part is that the fish agencies have to permit it,” said Meral. “If they see an operation that exports the kind of water that we’d like to see exported but is not producing ecological benefits, we won’t get a permit.”

Most Californians rely on Delta resources, giving the majority of the state’s population a stake in its fate. [Credit: Hanak et al. 2013, Stress Relief: Prescriptions for a Healthier Delta Ecosystem, PPIC
Most Californians rely on Delta resources, giving the majority of the state’s population a stake in its fate. Credit: Hanak et al. 2013, Stress Relief: Prescriptions for a Healthier Delta Ecosystem, PPIC
When seeking to turn a big project like the BDCP into reality, public consensus is critical. To find out whether people agree on the cause of the Delta’s decline, or the most promising means to fix it, the Public Policy Institute of California (PPIC) conducted a survey of scientists and stakeholders as part of the research project Stress Relief: Prescriptions for a Healthy Delta. The PPIC’s Ellen Hanak shared results from the summer 2012 survey. Participants were given a list of five broad types of Delta ecosystem stressors (fish management, flows, invasive species, physical habitat, pollutant discharges) and asked to rate the impact each factor had on the decline of the Delta’s native fishes. Participants agreed that every type of stressor was somewhat important. However, stakeholder responses depended largely upon their economic interests. “On the whole, we thought it was a positive story in the sense that everybody agreed, in a confidential survey when they do not have to grandstand, that every stressor matters,” Hanak said. When asked to rate the potential effectiveness of different actions to improve conditions for the Delta’s native fishes, the scientists agreed that habitat restoration and improvements in flows could aid Delta ecosystem health, but were more divided about the use of conservation hatcheries or predator harvesting, as well as the usefulness of building tunnels to reroute water or using gates to steer fish. Stakeholder views were more varied, but once again fell along economic lines. “Although they were instructed not to think about the economics, but just the fish, it’s much harder to do when you know that the economics are going to affect you directly,” Hanak said. The opinions of state and federal agency stakeholders and environmental advocates aligned most closely with the scientists’ views, while the opinions of water exporters and upstream interests had the least correlation. Hanak considers this state of affairs a recipe for combat science and litigation. “The groups that would bear the cost tend to disagree mostly with the scientists,” Hanak said. The solution? The PPIC recommends that all parties pool their funds to pay for Delta research, and together determine the questions to be answered. Keeping the science transparent and independent, rather than designed for courtroom use, should help all parties come to more workable solutions for the Delta ecosystem, Hanak said.

The future will bring habitat restoration to tens of thousands of acres of the Delta. To ensure this massive and critical experiment will succeed, adaptive management—conducting ongoing evaluations of results and making subsequent decisions based on what has been learned thus far—is considered the key to success. One problem: adaptive management has yet to be practiced on this scale. Jay Lund from UC Davis Watershed Sciences discussed how to make this style of management work for the Delta. Features such as current conditions and land uses dictate what types of habitat restoration are possible. In the Delta, Lund pointed out, elevation is destiny. The Delta tends to be considered a uniform place, but it’s not, said Lund. “We need to tailor the management of the science to the different regions and the different objectives of each region,” he said. Scientists may view adaptive management as driven by science, but it’s mostly about management, said Lund. Each adaptive management decision will start an experiment involving millions of dollars of gains and losses for different stakeholders, he said. For that reason, each choice must be approached carefully. Lund sees more opportunities to apply adaptive management at the project or site scale, but not Delta-wide due to prohibitive costs and regulations. Regulations have the potential to slow any adaptive management process, Lund said, so a new framework is needed to allow adaptive management to occur. But Lund considers the most difficult problem to be obtaining agency cooperation on science and adaptive management.  “If we don’t figure out how to work together, we’re going to end up in a much worse place.”

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Hanak Slide

Californians will bear the tremendous cost of reconciling state water requirements with the need to revive Delta ecosystems. For that reason, it is imperative to communicate future options for the Delta and explain the potential benefits of habitat restoration. Credit: Ellen Hanak



Lund Slides

Lund slide 15Different fishes have different requirements at each stage of their lives. A reconciled Delta will have specialized ecosystem areas and connecting corridors to accommodate these requirements. Maps: Where the Wild Things Aren’t: Making the Delta a Better Place for Native Species (Moyle et al. 2012). Slide credit: Jay Lund



Michael Slides

The tunnels are only economically viable if there is an increase in exports compared to a no-tunnel scenario.  The cost exceeds the value in agricultural use even with a massive 1.7 maf in annual average increase in Delta exports. Slide credit: Jeffrey MichaelBoth reports show that the benefits to seismic risk reduction and water quality are far too low to justify the investment. Slide credit: Jeffrey Michael

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