February 13, 2007 - From the February, 2007 issue

Smart Investment of Water & Levee Bonds Rests on Wisely Upgrading California's Water Infrastructure

The debates over last year's bond measures resulted in at least one near-unanimous conclusion: the levees of the Sacramento Bay-Delta need repair, and the result was the passage of Prop 1E and Prop 84. But that is hardly the extent of the investment that California's water system requires. Population growth is taxing water supplies ever more, and a combination of new infrastructure, conversation, and technology is needed. MIR was pleased to speak with two of the state's foremost water experts-former MWD GM Ron Gastelum and American States Water Company's Executive V.P. Michael George-about how the state can meet these challenges.


Michael George

As we begin 2007, how well will the state bond funds-which the voters recently approved and the governor plans to spend to implement the next phase of his Strategic Growth Plan-be invested?

Ron Gastelum: The voters have approved a great deal of money, and the objective was well stated when the voters considered it. However, there is no coordinated plan on how to actually spend it, and it's possible that it won't be spent for some time, with the exception of some emergency measures to deal with critical levee problems.

Michael George: Ron is correct, just because of the public processes that are required. Once the voters approve bonds the state goes through a process before those bonds are authorized and sold. After the voters have approved the bond, the responsible parties get down to the critical issues of scope, schedule, and budget: What are the projects? What are the priorities? What risk are we trying to address? What opportunity are we trying to address? The voters have given us the authority to expend funds on projects, and we are now required to conceive and design in order to meet their needs and keep their faith.

On what projects should the bond funds be spent? What are the top priorities?

RG: What is going to be on top of the list is what the governor and the Legislature said will be on the top of the list: to address highly vulnerable levees, not only to protect public welfare in vulnerable areas, but also to address the potentially huge state fiscal liability if those levees collapse resulting in loss of life and property. That is the top of the list, and then we'll get to the real water supply and water quality issues, and that is the Delta.

MG: I agree. The levees became the subject of a lot of focus after Hurricane Katrina, the risk that they faced last year in what was a wet winter, and the recognition that a large part of Sacramento is at risk. A systematic review of the integrity of the levees is now underway, as is the risk assessment with respect to those levees. But it is connected to the second priority that Ron mentioned, which is the Delta. The Delta levees are suspect and may not be sustainable for the long term. The challenge for all of us, and the vision for the future, is to provide environmental recovery in that critical estuary while also maintaining water supply for Central and Southern California.

If I could be provocative, I would say that the Delta as we know it is not sustainable. The challenge is to figure out a sustainable vision for the Delta over a long period of time. The governor has convened a group, and a lot of people are studying that. Unfortunately it is fraught with political difficulty, particularly anything that smacks of the old Peripheral Canal. That may make it difficult to carry on an intelligent conversation about what could, might, or ought to be done in the Delta.

The governor's Strategic Growth Plan proposes $7 billion in water-related investments, including $3.7 billion for dams and reservoirs, while $200 million is dedicated to conservation. Is that the right mix of priorities?

RG: I don't know what the credible source point would be to rationalize those expenditures. Certainly if you look at it from a climate change perspective, no studies or conclusions that I am aware of suggest these reservoirs are the right investments to deal with climate change. Certainly additional surface storage, if managed properly, can provide benefits, but we have yet to see if the cost of the facilities would be justified in terms of the benefits. The governor has laid out a broad vision, but there still needs to be a lot more discussion about whether that vision would yield what he is hoping for.

MG: As Ron pointed out, the cost-benefit analysis needs to be done. But another issue is that even if we can agree on the benefit, who pays for those benefits? That will be a difficult discussion as people, communities, and interest groups on one side or the other of a benefit try to figure out how someone else can pay for them. It's a difficult process, and we're going to have a lot of debate, not only over what the benefits are but also who benefits and who should pay.

In terms of the mix between surface storage and conservation-or groundwater storage, which I think ought to be in that mix and is in the governor's vision-the costs differ. It is a lot more expensive to get an acre-foot of new supply out of surface water storage than it is to get it from conservation and groundwater storage. That said, it is not a question of, "We only need a little bit, so let's buy the cheapest." We need a mix that gives us reliability, redundancy, and security.

There is no question, however, that surface water storage is more expensive per acre-foot than some alternatives. There is a school of thought, generally attributed to the environmental community, that we shouldn't generate any new surface storage and that we should simply conserve or underwater-store our way out of problems. Given the challenges in the Delta, the need for more responsive, more manageable storage is going to drive us in the direction of some additional surface water storage, notwithstanding our best efforts on conservation.

RG: The environmental position as stated is as wrong as the pro-storage position. For the reasons that Michael outlined, you need a portfolio of resources. We also need to recognize that we have limited dollars and that we have to spend them efficiently. I would submit that highest on the list for immediate purposes would be conservation. Everyone in the state could and should conserve more, but that won't be enough to solve the problems. Next is Delta conveyance and dealing with the complex issues in the Delta. Then storage and other kinds of options ought to be considered.

But also recognize that to build new surface storage reservoirs, even if we all agreed today-and we're not all going to agree today-would still take 15 years. The Delta could fail tomorrow, and then this state would be in a world of hurt-our economy, our environment, and lots of people. We need to get our priorities straight and be prepared to spend money on priorities that will yield benefits when they are most needed. To do this will take an understanding of the realities, and political courage from the governor and the State Legislature. The public also needs to be told the honest truth about the risks. We can't afford to have the kind of bumper sticker sloganeering that characterized the last time the Delta was the issue in the Peripheral Canal debate of the early 1980s.

Who is making our water decisions? Are their priorities in the public interest?

MG: The lead on this is the Department of Water Resources and its director, Lester Snow, who is a good steward with great experience throughout California. DWR is, and should be, the locus of planning. The plan from the state is very much a regional plan; it's not one-size-fits-all. Therefore, we are going to look to a lot of players to propose projects and ways of dealing with the overall water problem on an interrelated basis. That means a messy process of getting consensus at the regional level and then building a consensus at the state level to carefully invest the limited funds that we have.

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Michael works in the Bay Area; Ron, you are in Los Angeles. What are the priorities of Southern California?

RG: I think that, unfortunately, most of the time how money is spent is a reflection of the way water policy generally works in California, and that is, essentially, every man for himself. That's how we get the purported Mark Twain quip, "Whiskey is for drinking; water is for fighting." The State Water Project, regional collaboratives like the Metropolitan Water District of Southern California, and the recent state water bonds are fortunate exceptions.

The promoters of propositions 50, 84, and 13 were major players in creating the opportunity for the voters to decide how billions of dollars would be spent on water. There are processes, as we described earlier, and the Legislature will have its say, but the broad categories of where the dollars are going to be spent in the near term were defined by the voters in those initiatives.

Notably absent from those initiatives are the controversial issues of surface storage and the Delta. Because of the recently approved state bond measures 84 and 1E, we have some money for levees that largely will not be spent in the Delta. So, now we have some money for levees that largely will not be spent on protecting below-sea-level farmland in the Delta. The need to protect large areas of the population is more pressing in other areas, and I predict that we will spend the money in those areas first. We will then come down to a discussion about what we are going to do about storage and the Delta. There is no consensus on who is going to pay for that or how we are going to arrive at a conclusion.

In Southern California, disappointment persists over the Peripheral Canal debate we had in the early 1980s, which resulted in, essentially, no decision to complete the State Water Project. The Delta is the heart of the State Water Project, but it is unconnected to the rest of the State Water Project, except through meandering waterways that are vulnerable and subject to collapse. Most of these "levees" are actually dirt berms, not constructed to withstand the kinds of hydraulic pressures that exist today, much less what is expected in the future. There is general consensus that they cannot be rebuilt to meet modern engineering standards at a cost that could be justified for the expenditure of public funds.

In this context, we are about to have a new conversation in this state, but Southern California is in a much different place than it was in 1982. Southern California, in contrast to many other areas around the state, has invested billions of dollars in its own local storage and conveyance system. It has a diverse portfolio of water resources that is generally regarded to be more reliable than in many other parts of the state. I don't think Southern California will demand a particular result, only that it be fair, cost effective, and sustainable in the face of the known risks, including climate change.

Southern California has supported emergency preparedness and taking care of the levees protecting Sacramento and other major population centers. Southern California will support the governor's visioning process but without any expectation as to exactly what is going to come out of it, but they, like everyone else in the state, expect action to be the outcome, not more studies. Southern California deserves to be treated with respect and given fair recognition for it's contributions to the state's economy.

State Senator Joe Simitian has once again introduced legislation that would revive an equivalent of the Peripheral Canal. From the Bay Area's perspective, have the parochial politics changed? Will there be a more productive conversation about options other than reliance on the levees?

MG: I think you are right in characterizing Senator Simitian's bill and that discussion as being an alternative to levee maintenance. One of the problems in the Delta is that in the short run-and that may be a decade or longer-we need to shore up those levees while recognizing that it is not sustainable to farm lower and lower below sea level behind those levees. Ultimately, it is not a question of whether there will be a major catastrophe in the Delta, but when and how well prepared to deal with it we will be.

In the long run, I've become convinced that there needs to be a water conveyance that bypasses the Delta but doesn't abandon the Delta, makes sure that fresh water is available to the Delta. It must recognize and respect the Delta as an important ecological habitat, but also make certain that we connect the State Water Project through a sustainable, operable facility. I agree with Ron that that is a high priority for the entire state.

I'm probably out of step with a lot of my counterparts in Northern California in saying that I think for the environment, for the security of the state's economy, as well as for the sanctity of water rights throughout the state, we need reliable conveyance to connect the Northern California rivers with the State Water Project. The sooner we can get to rational planning, design, and financing for that, the better off we will be. It makes little sense to build additional surface storage north of the Delta until we address the problem of the Delta as a conveyance. We made a short-term decision in the 1960s to save money and use the Delta as a collection point for the State Water Project. In retrospect, that was probably an improvident decision. That temporary expediency puts California at risk.

What other water related issues need to be resolved in 2007?

RG: Public awareness of climate change, the catastrophe in New Orleans, and the daily threat of seismic events that could trigger levee collapse in the Delta make this our number-one priority to address in the state of California. Everyone is affected, and the vision that is developed in 2007 must take into account our environment, the local land uses, and all of us throughout the state who depend on the Delta for good water quality and supply. I see 2007 as the opportunity for a fair discussion about the problems and solutions and 2008 as a year of decision, assuming the decision opportunity isn't taken away by a flood or earthquake or other calamity that could very well happen tomorrow-and definitely will happen in the foreseeable future.

MG: I think Ron is dead-on in terms of the timing of the debate and the decision-if we can control the timing of the debate and the decision. But we are at great risk of losing that control. That should focus us on what the governor calls post-partisanship-to recognize that all of California, is at risk and depends not only on the wisdom of a decision but also plan for implementing the decision.

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