This document is an appendix to the Public Policy Institute of California report, "Comparing Futures for the Sacramento-San Joaquin Delta", which was released recently. Some active WaterSISWEB members have had contributions to this.

This appendix reports the results of two CALVIN modeling alternatives developed to represent a range of modified Delta operations. The first alternative represents changing (increasing and decreasing) export pumping capacity limits in the southern Delta. The second alternative represents increasing minimum net Delta outflow (MNDO) requirements. The CALVIN economic-engineering optimization model seeks the least-cost statewide water management scheme for water supply; it includes a wide range of resources and water management options. The CALVIN model represents an economically ideal water market (i.e., no transaction costs, risks, or uncertainty). Transfers are only limited by physical infrastructure capacities, environmental flow requirements, and the economic value of water.

As export capacities are reduced, agricultural and urban users south of the Delta increase wastewater recycling and desalination to offset the reduction in surface and groundwater supplies. When minimum net Delta outflows are increased, urban users north and south of the Delta increase wastewater recycling and desalination to offset reductions in surface and groundwater supplies.

The effects of climate change were not explicitly evaluated in this study. However, previous CALVIN studies (Tanaka et al., 2006; Medellin-Azuara et al., 2008) demonstrate that changes in hydrology lead to increased scarcity and costs as users adapt to reduced supplies and a seasonal shift in water availability. It seems likely that if climate warming effects were added to either of the Delta regulatory alternatives examined here, scarcity and scarcity costs would increase and the economic results (marginal costs of environmental flows and infrastructure expansion) would be similar, though larger in absolute value.

Direct economic valuation of environmental services is controversial (Shabman and Stephenson, 2000). Instead of attempting this, we calculate the shadow values on required environmental flows to estimate the opportunity cost to water users of environmental requirements. As exports decrease, the opportunity cost of the environmental flows increases, especially in the Central Valley. The highest opportunity costs are when the flows are used on site and not returned to the water system, as is the case with wildlife refuges.

Additional surface water storage, while having some economic benefit, is not as valuable as expanding key conveyance and recharge facilities. Aqueducts, canals, and interties that allow users to buy and sell water, especially between the agricultural and urban sectors, are the most valuable.

As exports are decreased, Delta outflow increases. The increases are larger in some months, especially in summer and fall. Depending on the management goals, having more (or alternating more and less) water flow through the Delta may be desirable. If a fresh water Delta is the desired outcome, it is more cost-effective to increase Delta outflow requirements directly and still allow exports. If the desired goal is a reduction in fish entrainment, then a direct reduction in pumping capacity is more efficient. Some of the increased scarcity to export users could be reduced if a peripheral canal were constructed to allow the CVP, SWP, and CCWD to export water without using the Delta for conveyance. A combination of Delta alternatives and management options will be needed to reduce entrainment, reduce salt water intrusion as sea level rises, and provide water supplies for agricultural and urban uses.

Overall, management of the Delta requires a balancing of the interests that rely on it; this includes in-Delta users, water export users, upstream diverters, and environmental concerns. Results from large system models, like CALVIN, allow decision makers to better understand consequences of changes in management throughout the system. While imperfect, such results produce reasoned (and reasonable) insights. Overall, California’s water supply system has considerable capacity to adapt to changes in Delta water policies. While such adaptation incurs cost, it need not incur catastrophe if well managed.