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Economic Projects & Programs

DWR economists are involved in a wide range of projects and programs, including water supply, water quality, water use efficiency, flood management, and ecosystem restoration. The majority of these projects and programs can be categorized into the following activities:

State Water Project Facilities' Feasibility Analysis:
DWR is continuously engaged in evaluating water supply augmentation facilities and programs for the State Water Project (SWP). Economic analysis is used to determine the economic justification for these proposals, taking into account local and regional water demand reduction and supply augmentation alternatives. To assist with this analysis, DWR economists use several models, including Least Cost Planning Simulation (LCPSIM) model, and the Statewide Agricultural Production (SWAP) model. SWP Facilities studies include those associated with the North of Delta Offstream Storage Investigation and the In-Delta Storage Investigation.

Non-SWP Facilities' Feasibility Analysis:
DWR often partners with the federal government such as the US Bureau of Reclamation (USBR) and the US Army Corps of Engineers (USACE) to conduct feasibility studies for projects not necessarily related to the SWP but which are critical for statewide water management. DWR economists assist with the economic analyses required for these feasibility studies. As part of DWR's coordination and cooperation with federal agencies, DWR economists participate in the development of common analytical procedures and tools. DWR economists also helped develop the DWR and USBR Common Assumptions Common Modeling Package as part of the effort to use common metrics to facilitate the comparison of proposed DWR and USBR projects.

Non-SWP Facilities studies include USBR projects such as the Shasta Lake Water Resources Investigation, the Upper San Joaquin River Basin Storage Investigation and the Los Vaqueros Expansion Investigation.Also, DWR has partnered with the USBR to undertake a Corrective Action Study to investigate and determine a course of action to mitigate seismic risk at the B F Sisk dam a joint (state and federal) facility at the San Luis Reservoir This study involved an EAS economic analysis of mitigation alternatives.

Statewide Planning (California Water Plan Update):
In addition to operating the SWP, another key mission of DWR is statewide planning, specifically, the preparation of the California Water Plan Update (CWP) every five years, A critical element of the Water Plan Update is the forecasting of regional urban and agricultural water demands, which can be accomplished using the economics modeling tools mentioned above. In addition to demand estimation, economic analysis can also contribute to policy discussions within the water plan update, including water-pricing issues. DWR economists are currently involved in developing sustainability metrices and indicators and conducting research and economic analysis for the Sustainability Outlook and Funding Plan chapters of the CWP update 2018.

SWRCB Bay-Delta Hearings:
DWR economists are responsible for advising DWR legal staff and helping in the preparation of testimony to be presented to the State Water Resources Control Board as well as for the preparation of cross-examination questions and rebuttal testimony regarding economic issues. Programs needing EAS participation include proposed Delta Conveyance Facilities and SWRCB Bay-Delta Water Quality Control Planning.

Agricultural Drought Impact Studies:
To forecast agricultural drought impacts, DWR economists work closely with SWP and Central Valley Project (CVP) operators and DWR Regional Groundwater Geologists to develop reasonable assumptions about the supplies from surface and groundwater sources available for crop irrigation. The SWAP model is used with this information to develop shifts in cropping patterns economically consistent with the available supplies and the short-term options available to farm operators (assuming those operators are profit maximizers). The IMPLAN model is used to determine the direct and indirect effects of agricultural economic output and employment. Also, farm operating costs are forecasted based on increases in groundwater pumping expected by the Groundwater Geologists.

Flood Management:
Under the FloodSAFE initiative, the Central Valley Flood Management Planning Program (CVFPP) and the Statewide Flood Management Program (SFMP) are components of a multi-faceted effort to improve public safety through integrated flood management. DWR economists are involved in the review and development of economic project justification criteria established for these programs.

Environmental/Socioeconomic Impact Analysis:
Federal and state legislation, e.g. National Environmental Policy Act (NEPA) and California Environmental Quality Act (CEQA) require the preparation of environmental impact statements/reports that may require the estimation of socioeconomic impacts of proposed projects and programs. Economic models such as Input-Output (IO) models (e.g. IMPLAN and REMI) can be used to estimate socioeconomic impacts of proposed SWP facilities and programs upon local communities as well as the service areas that will be receiving additional water supplies. These impacts include changes in population, employment, income levels, tax revenues, and public service requirements like public assistance, fire protection and schools.

Local Assistance Loan and Grant Programs:
DWR administers numerous programs that provide either low-interest loans or grants to local water agencies and communities for the capital costs of water conservation, groundwater storage and recharge, local water supply rehabilitation and development, or flood management purposes. DWR economists are involved in the development of economic criteria for eligibility for these programs as well as the review of the economic portions of applications submitted by local entities for the purpose of ranking the proposed projects for funding. DWR economists also participate in the development of economic eligibility criteria for loan and grant programs managed by other State agencies and organizations such as the State Water Resources Control Board (SWRCB) and the California Water Commission (CWC). DWR economists also participate in training classes for prospective grant and loan applicants.

Water Transfers:
DWR economists review water transfer proposals that would require the use of State Water Project conveyance facilities for unreasonable regional income and employment effects that may be caused by the short-term or long-term transfer of water supplies to another region. DWR economists also conduct reserach and prepare reports (e.g. Economics of Rice) in support of water treansfer proposals.

Review of Other Agencies' Reports and Analyses:
DWR economists review and comment upon economic analyses prepared by other agencies, including the review of urban and agricultural water management plans that incorporate economic analysis of proposed projects and programs.

DWR Internal Management Decisions:
Because of the extensive system of SWP facilities (dams and reservoirs; pumping plants; aqueducts, canals and pipelines; radial gates, maintenance facilities, etc.) throughout most of the state, DWR management is constantly faced with operational decisions that would require the use of resources. Therefore, these decisions could potentially benefit from economic analysis, although the type of analysis would vary upon individual circumstances. For example, in situations where a decision has been made to achieve a specified physical objective or proceed with a project or program, then a cost-effectiveness analysis may be appropriate to help ensure the best use of resources to achieve that objective.