The SFPUC’s Socioeconomics Study Is Flawed

The Bay Delta Water Quality Control Plan aims to achieve the co-equal goals of protecting fish and wildlife and ensuring a reliable water supply. Phase 1 of the Plan proposes to require 40% of unimpaired flow (what would naturally occur in the absence of dams and diversions) to be released into the Stanislaus, Tuolumne and Merced Rivers, down into the lower San Joaquin River and out to the San Francisco Bay-Delta between February and June. Adaptive management would allow flows to be increased or decreased by up to 10% depending on whether biological goals and objectives are met.

In an OpEd published in the San Francisco Chronicle on October 9, 2016, the General Managers of the San Francisco Public Utilities Commission (SFPUC) and the Bay Area Water Supply and Conservation Agency (BAWSCA) stated, “Our initial economic analysis of the first iteration of this plan forecast up to 51 percent rationing, resulting in 140,000 to 188,000 jobs lost in the Bay Area. These same forecasts also show between $37 billion and $49 billion in decreased sales transactions.”

The Socioeconomics Study referenced in the above quote was seriously flawed. Had it been accurate, we should have expected to see a loss of $7 billion and 24,510 jobs during the last fiscal year when water use in the SFPUC service territory was 32% below the SFPUC’s average year water supply. Obviously, that did not happen.

Background

On March 13, 2014, the SFPUC released its draft Socioeconomics Study, and on April 9, 2014 a coalition of environmental groups submitted comments that pointed out a number of flaws in the Study. To date, the SFPUC has yet to respond, but continues to cite the Study.

We found the following flaws:

  • The Study confused water demand with supply. Instead of calculating reduction percentages based on supply, it worked off of demand. This failed to credit the role conservation plays in allowing demand to be met when supply is reduced. Reductions would come from supply, not demand.
  • The Study assumed reductions in water supply would be imposed on the SFPUC’s entire Regional Water System, and not just the Tuolumne portion of supply. In an average year, 15% of the SFPUC’s water supply comes from Bay Area sources. The Bay Delta Plan will not affect this portion.
  • The Study failed to sufficiently analyze the important role storage carryover and replenishment play in the SFPUC’s water supply. For example, after five years of drought, with the Tuolumne watershed receiving normal precipitation last year, total SFPUC storage is currently at 80% of capacity. We have enough water in storage to last four-and-a-half years at pre-drought levels of use.

Furthermore, after the Socioeconomics Study was released, BAWSCA (which accounts for two-thirds of system demand) revised its 2040 demand projections downward by 20%. Therefore, future demand projections cited in the Study are no longer accurate.

Water Use Was 32% Below Supply in FY 2015/16

During the 2015/16 fiscal year, water demand in the SFPUC service territory was 180 million gallons per day (mgd) – 32% below the average year supply of 265 mgd. The following charts from the SFPUC’s Socioeconomics Study suggest that a 30% reduction in supply would have resulted in $6.5 billion in sales losses, $570 million in welfare losses, and 24,510 lost jobs. This did not happen. In fact, our economy was stronger than ever.

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Even before the drought kicked in, water demand was down around 225 mgd. The graph below shows that water use in FY2015/16 was lower (180 mgd) than during the 1997/98 drought, despite a large increase in population and jobs in the SFPUC service territory.

avg-delivery

Source: SFPUC

Future Demand Projections Have Decreased

The top chart below from the Socioeconomics Study suggests water demand from the SFPUC’s wholesale customers in San Mateo, Santa Clara and Alameda Counties (represented by BAWSCA) would be 212 mgd in 2035/36. The bottom graph shows BAWSCA’s revised demand projections reduced by 20%. They now expect to need only 168 mgd from the SFPUC by 2040. The Socioeconomics Study is obviously stale, and should no longer be referenced.

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Source: SFPUC Socioeconomics Study

projected-demands

Source: BAWSCA

Water Supply Carryover and Replenishment

The SFPUC owns several reservoirs in addition to Hetch Hetchy and has a water bank at Don Pedro Reservoir that allows them to capture and store water when there’s excess in the system and then borrow off of it in dry years. Total storage equals 1.458 million acre-feet (an acre-foot is 326,000 gallons). After five years of drought, with last year being a normal precipitation year, the system held 1.144 million acre-feet of water on October 2, 2016, and the rainy season had just begun.

Before the drought kicked in, the SFPUC service area used about 250,000 acre-feet of water per year. At 80% capacity, there’s currently enough water in storage to last 4.5 years.

reservoir-storages

Source: SFPUC

According to the Substitute Environmental Document (SED) prepared by the State Water Board for the Bay Delta Plan: “The 1922-2003 average calculated volume of water potentially available to CCSF under the Raker Act was about 750 TAF/y [thousand acre-feet per year]…According to a SFPUC planning document, an average of 244 TAF/y is diverted from the Tuolumne River…based on data from 1989-2005…” The SFPUC is not short on water.

The SFPUC’s Obligation Under the Bay Delta Plan

At this point it is unclear what portion of increased flow the SFPUC will be responsible for. A contract (known as the Fourth Agreement) between the SFPUC and the Modesto and Turlock Irrigation Districts (which own and operate Don Pedro Reservoir) obligates the SFPUC to provide 51.7% of any increase in flow required by the Federal Energy Regulatory Commission (FERC). However, the State Water Board is not a party to the Fourth Agreement, and has no authority to enforce it. The Fourth Agreement explicitly addresses flow increases pursuant to a “Federal Power Commission license requirement” and is silent on flow increases that may be required by the State Water Board.

In its Socioeconomic Study, the SFPUC worked off of the assumption it would be responsible for 51.7% of increased flow, making the economic impacts appear much larger than they will likely be. However, in testimony to the State Water Board, the SFPUC stated, “In presenting potential water supply and socioeconomic effects from certain interpretations of the Raker Act and the Fourth Agreement, San Francisco does not thereby waive arguments it may have about how the Raker Act or Fourth Agreement should or will be interpreted in future proceedings.” Obviously, they intend to argue against being responsible for 51.7% of increased flow.

The Bay Delta Plan SED states, “The State Water Board may assign responsibility for meeting the flow objectives through a proceeding amending the agency’s water rights to require compliance with the objectives. In a water right proceeding amending water users’ rights, the State Water Board generally would assign responsibility for meeting the objectives in accordance with the rule of priority and other applicable law. At this time, it cannot be predicted how such responsibility would be allocated in a future proceeding among the water right holders on the Tuolumne River.”

If the SFPUC’s responsibility ends up being proportional to its percentage of diversions from the Tuolumne, it would be obligated to produce 20% of the increase in flow (80% of diversions are carried out by the Irrigation Districts in Stanislaus County). This would amount to about 45 mgd. Subtracted from its average supply from the Tuolumne (225 mgd), and then adding in 40 mgd of Bay Area water supply, the SFPUC would still have access to 220 mgd.

It’s interesting to note that over the past seven years, the SFPUC service area has averaged less than 220 mgd in water demand. And again, for real impact one must consider carryover and replenishment storage.

Prepared by the Tuolumne River Trust on October 20, 2016.