By Dan Bacher

The California Department of Water Resources claims that the embattled Delta Conveyance Project, better known as “the Tunnel,” would cost $20.1 billion, yet expert testimony before the State Water Board last week reveals that the cost would actually amount to $60 to $100 billion.

An updated cost estimate was prepared by the Delta Conveyance Design and Construction Authority (DCA) on May 14, 2025, according to DWR. 

“The cost of the project is estimated to be $20.1B in real 2023 (undiscounted) dollars: A preliminary cost assessment conducted in 2020, early in the design process, showed the project would cost about $16B,” DWR concluded in their cost-benefit analysis for the project. “Accounting for inflation to 2023 dollars shows that the two estimates are similar in cost. Even as details are added and refinements made to the program, costs are holding steady.”

However, last Wednesday, a partner at a leading environmental economics firm concluded “sobering testimony” at a State Water Board hearing on the Newsom administration’s longtime proposal, observing it will “burden ratepayers already facing affordability challenges, crowd out critical investments in local water supply projects, and provide no water security to most Southern California  communities,” according to a statement from the California Water Impact Network, or C-WIN.

SN&R readers can view the written testimony submitted on July 11, 2025 here.

Mark Buckley, the senior economist for the research firm ECOnorthwest, testified to the board on behalf of C-WIN. Buckley emphasized that the project – a massive project that would transfer water from the beleaguered Delta to Southern California via a huge subterranean tunnel at a time when salmon and other fish populations are in collapse – would cost between $60 to $100 billion, or up to five times the $20 billion figure cited by DWR.

“DWR’s estimate suffers from optimism bias and strategic misrepresentation—well- documented phenomena in public investment analysis—raising serious concerns about allocative efficiency, equity, and the fiscal sustainability of the project,” noted Buckley. “While $20 billion may be a sufficient placeholder for costs in a planning exercise, it is not an adequate estimate for decision makers to transparently evaluate downside risk and potential opportunity costs of the DCP, especially compared to other strategies available to address water supply reliability. It is entirely insufficient for understanding cost liabilities for ratepayers, including equity and distributional issues for communities in Southern California already facing unaffordable costs for utilities.”

Along with its enormous cost, Buckley testified that other downsides to the project, including lost ppportunities for sustainable policies around water in the state.

“The DCP’s (tunnel’s) crippling price tag would restrict funding for local and sustainable water projects that would also create net environmental gains, including conservation, recycling, stormwater capture, groundwater cleanup, and impaired agricultural land retirement,” the senior economist observed.

Buckley also commented on what he characterized as the project’s inaccurate municipal water demand estimates.

“Urban water use is declining as California households adjust to climate change-associated drought and rising rates,” he pointed out. “Population growth is also slowing due to the state’s high cost of living. The Newsom administration’s analysis of future water needs – which assumes skyrocketing demand for urban water – is thus misleading and erroneous.”

Finally, Buckley broached the topic of potential fishery and ecosystem devastation from the tunnel: The project would accelerate and increase freshwater transport from the Delta, potentially pointing to the ultimate collapse of its already stressed ecosystems. Buckley estimated economic losses from salmon fishery impacts would range from $1.1 to $2.6 billion over the lifetime of the tunnel.

“The DCP (tunnel) record fails to incorporate potential adverse impacts to critically endangered salmon runs in the Sacramento River and other potential adverse impacts to ecosystems,” Buckley wrote. ‘DWR’s economic evaluation of the DCP understates the costs of the project due to an inadequate treatment of ecological and environmental externalities—particularly the potential catastrophic impacts on Sacramento River Chinook salmon populations.”

He added, “The assumption of ‘no significant effect’ on these populations, despite their precarious status, reflects a deterministic approach that ignores well-established principles of risk and uncertainty in ecological economics.”

The economist concluded, “A probabilistic framework incorporating the social cost of species extirpation would yield a more accurate representation of expected losses. These additional losses could amount to $1.1 to $2.6 billion (discounted 2024 dollars). Additionally, DWR’s economic analysis fails to monetize other critical non-market values such as cultural, recreational, and aesthetic losses: The reliance on $1.6 billion in mitigation and community benefit programs, without explicit valuation or outcome guarantees, represents a policy gamble rather than a defensible economic strategy.”

Carolee Krieger, C-WIN Executive Director, summed up the significance of Buckley’s testimony.

“This is a massive and destructive project that just doesn’t pencil out,” Krieger said. “The ECOnorthwest analysis makes clear that it is time to move on from mega-projects designed to suck more water out of the Delta.”