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Economics and Inter-Disciplinary Research: California’s Delta Problems. Richard Howitt AERO Conference, UC Davis October 11 2007. Information Needs for Inter-Disciplinary studies. Agricultural &Resource Economics research is driven by public policy questions

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economics and inter disciplinary research california s delta problems

Economics and Inter-Disciplinary Research: California’s Delta Problems

Richard Howitt

AERO Conference, UC Davis

October 11 2007

information needs for inter disciplinary studies
Information Needs for Inter-Disciplinary studies
  • Agricultural &Resource Economics research is driven by public policy questions
  • Many agricultural public policy problems have environmental motivation
  • Linkage between data sets from different disciplines is neccessary
  • Visualization of time and space relationships between environmental and economic processes
  • GIS as an integration mechanism
the delta as critical water supply infrastructure
The Delta as Critical Water Supply Infrastructure
  • Water supply to 23 million
  • 50% annual runoff of California, 40% surface area
  • 7.5 MAF export/year
  • 1800 in-Delta diversions
  • 250 ag discharge sites
  • 1100 miles of levees
the problem
The Problem:
  • The Delta is a dynamic landscape undergoing significant change at multiple scales
  • There is a high probability that abrupt change will take place in the next 50 years, disrupting ecosystem services
  • All current planning efforts predicated on the flawed assumption that the Delta is, or can be made to be, a fixed hydrologic, ecologic and physical landscape
impacts of levee failures
Impacts of Levee Failures
  • Draws salt water into the Delta: Big Gulp
  • Changes tidal prism, leading to further intrusion of salt water into Delta
  • Shuts down the CVP, SWP and Contra Costa Canal
  • Potential to disrupt all environmental services

June 29

impacts of levee failures1
Impacts of Levee Failures
  • Draws salt water into the Delta: Big Gulp
  • Changes tidal prism, leading to further intrusion of salt water into Delta
  • Shuts down the CVP, SWP and Contra Costa Canal
  • Potential to disrupt all environmental services

Day 2

impacts of levee failures2
Impacts of Levee Failures
  • Draws salt water into the Delta: Big Gulp
  • Changes tidal prism, leading to further intrusion of salt water into Delta
  • Shuts down the CVP, SWP and Contra Costa Canal
  • Potential to disrupt all environmental services

Day 14

impacts of levee failures3
Impacts of Levee Failures
  • Draws salt water into the Delta: Big Gulp
  • Changes tidal prism, leading to further intrusion of salt water into Delta
  • Shuts down the CVP, SWP and Contra Costa Canal
  • Potential to disrupt all environmental services

Day 31

impacts of levee failures4
Impacts of Levee Failures
  • Draws salt water into the Delta: Big Gulp
  • Changes tidal prism, leading to further intrusion of salt water into Delta
  • Shuts down the CVP, SWP and Contra Costa Canal
  • Potential to disrupt all environmental services

Day 45

impacts of levee failures5
Impacts of Levee Failures
  • Draws salt water into the Delta: Big Gulp
  • Changes tidal prism, leading to further intrusion of salt water into Delta
  • Shuts down the CVP, SWP and Contra Costa Canal
  • Potential to disrupt all environmental services

Day 62

C. Schmutte

a system undergoing constant rapid change
A System Undergoing Constant, Rapid Change
  • Subsidence
  • Sea Level
  • Seismicity
  • Sedimentation
  • Climate Change
  • Hydrology
  • Land Use
  • Invasive Species
slide14

The DWR Disaster Scenario: 6.5 magnitude quake on the Hayward-Calaveras Fault

L. Snow

  • 16 Islands fill
  • Shut down of all water projects
  • Loss of 2 major highways, railroad, gas and oil pipelines, 2 ports
  • 85,000 acres farmland lost, 3000+ homes
  • Permanent loss of some islands
  • Increased dependence on low-quality San Joaquin Water
  • 5-year costs exceed $40B (low)
abrupt change in 50 years remote or real
Abrupt Change in 50 Years: Remote or Real?
  • P = 1-[1-1/T]n
  • 100-year earthquake = .40
  • 100-year flood event = .40
  • 100-year earthquake AND flood = .16
  • 100-year earthquake OR flood = .64

It is a 2-in-3 probability that abrupt change will occur in the Delta in the next 50 years

ag production model
Ag Production Model

Revenue

Cost

pjg: Selling price of crop j in region g

aijg, gijg: Cost function parameters

j: Crop index

g: Region index

i: Input index

yield reduction by salinity
Yield Reduction by Salinity

(Salinity indirectly measured as Electrical Conductivity, EC)

changes in current delta planning
Changes in Current Delta Planning
  • Need a dynamic approach since we are faced with dynamic exogenous drivers.
  • Need trade-offs rather than consensus.
  • Mitigation based on opportunity cost & environmental costs.
  • The “Beneficiary pays” principle can be implemented through user financing.
  • Project sizing and financing must be decided simultaneously
  • One cost allocation method is Ramsey pricing.
jones tract economics
Jones Tract Economics
  • June 3rd 2004 flooding event during spring tide
  • 11,000 acre island, subsided to 10-12 ft. below MSL
  • Single breach, but near loss of other levees
  • $44 million for levee repair and pump-out
  • Total land purchase value $28 million
  • Shut-down of water supply infrastructure
some delta management alternatives
Some Delta Management Alternatives
  • Fluctuating Salinity & Year Round Exports
    • New Peripheral Canal
    • Island Aqueduct
  • Reduced Exports
    • Opportunistic exports
    • Gradually Abandon the Delta levees
triangulating a delta solution
Triangulating a Delta Solution

Abandoned Delta

  • Subsidence
  • Sea Level Rise
  • Seismicity
  • Runoff Change
  • Invasive Species
  • Urbanization/Population
  • Water Supply
  • Farming
  • Native Biodiversity
  • Transportation
  • Recreation
  • Runoff Disposal

Solution Area

Restored Delta

Fortress Delta

slide30
Book:

“Envisioning Futures for the Sacramento-San Joaquin Delta”

Public Policy Research Institute, San Francisco

http://www.ppic.org/main/publication.asp?i=671

a spatial econometric approach to estimation of salinity effects
A Spatial Econometric Approach to Estimation of Salinity Effects
  • Three cross section field level GIS overlays of crop, soil class, salinity depth and concentration- About 45,000 fields
  • Estimate the extensive margin adjustment to salinity
  • Fit a multivariate logit model to estimate the probability of observing a given crop on a field
  • Calculate the marginal probability as a function of salinity
  • Use cost and return data to calculate the marginal salinity cost
conclusions
Conclusions
  • Agricultural policy research will increasingly include environmental goals
  • Models and data needs will shift toward more integrated physical data
  • Online data sets with spatial and temporal referencing will be required
  • Primary economic data is getting more costly, and scarcer?
  • Geo-referenced physical data is getting much more available and cheaper
  • Specialized agricultural and resource libraries will adapt- possibly as regionally focused nodes in an integrated information network.
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