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$20 Billion: The Delta Tunnel’s New Price Tag
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By CalMatters
Published 1 month ago on
May 17, 2024

California's Delta tunnel project, a controversial plan to increase water supply to the south, now carries a hefty $20 billion price tag, sparking renewed debate over its environmental and economic impact. (CalMatters/Miguel Gutierrez Jr.)

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California’s contentious and long-debated plan to replumb the Sacramento-San Joaquin Delta and pump more water south finally has a price tag: about $20 billion.

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Rachel Becker

CalMatters

The Rising Cost of the Delta Tunnel Project

The new estimate for the Delta tunnel project — which would transform the massive water system that sends Northern California water south to farms and cities — is $4 billion higher than a 2020 estimate, largely because of inflation.

Included is almost $1.2 billion to offset local harms and environmental damage, such as impacts on salmon and rare fish that state officials have called “potentially significant.”

The goal of the project is to collect and deliver more water to two-thirds of California’s population and 750,000 acres of farmland during wet periods, shore up supplies against the threats of climate change and protect the system from earthquakes.

The Controversy Surrounding the Tunnel

But environmental groups and many Delta residents have long warned that the tunnel could put the imperiled Delta ecosystem at even greater risk, sapping freshwater flows needed for fish, farms and communities in the region.

The tunnel has been the focus of intense debate in California for more than 60 years. It’s the epicenter of water wars that have pitted Delta locals, environmentalists, tribes and the fishing industry against state officials and water agencies that supply cities and farms, mostly in Southern California.

The new report from the state Department of Water Resources comes as state water regulators weigh competing rescue plans for a region they have described as “in crisis” and in the midst of an “ecosystem collapse.”

Gov. Gavin Newsom backs the proposed project, calling it his “number one climate resilience program” and saying he hopes to get it permitted before he leaves office. The 45-mile tunnel would transport water from the Sacramento River around the Delta to a reservoir near Livermore, the first stop on the 444-mile California Aqueduct.

The Financial Equation and Timeline of the Project

The new estimate and report will help water suppliers in Southern California, the Central Coast and the Bay Area weigh whether it’s cost effective for them to buy the tunnel’s water. The state would issue revenue bonds to fund the project, then suppliers would have to pay back the costs.

Water agencies, such as the giant Metropolitan Water District of Southern California, are expected to have all of the information they need to decide by the end of 2026, said Karla Nemeth, director of the Department of Water Resources, which operates the state’s massive water system.

“The questions are how can this project be implemented, what kind of assurances can we have in the resilience it provides to the Delta and our water supply future, and at what price?” Adel Hagekhalil, general manager of the Metropolitan Water District, said in a statement. He said the cost estimate “brings us closer to understanding that equation.”

The Potential Benefits and Risks of the Tunnel

Building the tunnel could take until at least 2044, with construction expected to start around 2029 and last roughly 15 years.

Had the tunnel been in place this year, it could have funneled 909,000 additional acre-feet of water south from intakes in the north Delta, according to state water officials. That’s nearly enough water to fill Folsom Lake, and could supply more than 9.5 million people for a year.

The total benefits of the project — calculated at around $38 billion — far outweigh the costs, according to the report, with every dollar spent expected to reap $2.20 in benefits. “In other words, doing nothing is more expensive,” said David Sunding, a UC Berkeley emeritus professor of environmental economics who led the cost-benefit analysis.

Sunding said water deliveries from the tunnel would cost about $1,325 per acre-foot — less than the average cost for water generated by desalination, recycling and stormwater capture.

Peter Gleick, co-founder of the Pacific Institute, a global water think-tank, said he has serious concerns about the analysis and whether it accounts for the real costs of construction and water treatment and distribution. He called for “far more and better” economic and environmental assessments.

“This project gets more expensive every single time a new version is proposed, and this type of project has never been brought to completion under budget,” he said. “Water conservation and efficiency improvements are far cheaper than the Delta project.”

One major benefit to a tunnel, Sunding said, is earthquake preparedness for the state’s water delivery system, which is crossed by the major Hayward and San Andreas faults. A catastrophic earthquake that crumbles levees could interrupt water deliveries for nearly seven months and degrade water quality for almost another year. Sunding said the tunnel would, ideally, allow water deliveries to continue in some form after quakes, or at least protect water quality.

The tunnel could also increase water exports from the Sacramento River when pumping from the south Delta is limited to protect threatened and endangered species, Nemeth said. Thousands of threatened steelhead trout and endangered winter-run Chinook salmon have died this year from the pumping, according to state and federal estimates.

But conservationists warn that a tunnel wouldn’t reduce the risk to fish: The existing pumps would still be operational — posing a continued threat to protected species. Environmental groups and fishing organizations have sued over the project, saying adding the tunnel would further reduce freshwater flows — increasing salt levels and harmful algal blooms, and harming native fish.

Tribes and environmental justice organizations also oppose the state’s application for a change in water rights to build and operate the tunnel. “The injurious impacts of mismanagement in the Bay-Delta can no longer be endured by Tribes and Delta communities,” Malissa Tayaba, vice chair of the Shingle Springs Band of Miwok Indians, said in a statement.

Jon Rosenfield, science director of San Francisco Baykeeper, called it “just the latest version of a plain old water grab.”

The state’s own environmental analysis warned two years ago that the tunnel could harm endangered and threatened fish, including the Delta smelt, winter-run chinook salmon and steelhead trout. Changes to flows at the intakes or downstream, for instance, could reduce migration, damage habitat and expose salmon and other native fish to more predators.

The analysis calls for thousands of acres of wetland restoration to offset the “potentially significant impacts” — projects that critics say have historically been slow and inefficient in California.

The Delta watershed supports about 80% of the state’s commercial salmon fishery, which was cancelled this year for the second time in a row because of plummeting populations.

“What better way to address declining salmon populations than by draining their homes?” Scott Artis, executive director of the Golden State Salmon Association, said in a recent statement. “Bravo, Governor, for turning healthy rivers and estuaries into a punchline that harms tens of thousands of families, businesses and employees across California and Oregon.”

About the Author

Rachel Becker is a journalist reporting on California’s complex water challenges and water policy issues for CalMatters. She’s covered drought, water standoffs, groundwater depletion, water quality and the world’s biggest dam removal. Rachel has a background in biology, with master’s degrees in both immunology and science journalism. She previously reported on climate change and air pollution for CalMatters, and contributed to early coverage of the COVID-19 pandemic, as well. 

About CalMatters

CalMatters is a nonprofit, nonpartisan newsroom committed to explaining California policy and politics.

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