Best of 2012: Will taxpayers be taken for a ride on new state irrigation plans?
Editors' note: Each day during the holidays, Crosscut will revisit two top stories from the last year in a specific category. Today's focus is Environment. This article was originally published February 15, 2012.
It's all about getting to one: The federal Bureau of Reclamation can't fund a water project for which the calculated public benefits don't at least equal the calculated costs — in other words, a benefit-cost ratio of at least 1. One can argue that a cost-benefit ratio or 1-to-1 this is a pretty low bar. Spending billions of dollars on a project that may just break even makes limited sense — unless, of course, you are one of the beneficiaries. At best, the system privatizes benefits while it socializes costs. In this society, that hardly makes it unique.
Naturally, project boosters squeeze the numbers any way they can to make the calculation come out one. Naturally, project opponents point to the shakiness of assumptions required to make the numbers work out right. That has been the recent — and not-so-recent — history of efforts to expand the federal Columbia Basin Project, and especially of efforts to expand it into the farmland currently irrigated from wells sunk deep into the Odessa aquifer — where farmers have been pumping their way through a deposit of "fossil" groundwater for the past half century or so. According to the state Department of Ecology, those farmers "have seen the aquifer drop an average of 7 feet per year for decades."
Now, a lobbying group, the Columbia-Snake River Irrigators Association, has used state money to produce an economic "review" that proposes a way of getting Columbia River water to about half the land currently being irrigated from the Odessa aquifer. The group has already asked the House Agriculture and Natural Resources Committee to go along. Some people admire both the irrigators' tenacity and their idea. The Tri-City Herald says the scheme "appears to be a winner."
How did a special-interest group get taxpayer money for a study that served its own interest? It's a long story. During the New Deal, the federal government decided to use power generated by the Grand Coulee Dam to pump water uphill from Lake Roosevelt, which was created by the dam, and channel it south to irrigate more than a million acres of arid land. Congress authorized the project in 1935, and re-authorized it in 1943. Workers completed Grand Coulee in 1941.
The original idea was to do the Columbia Basin Project all at once, but farmers in the Odessa subarea, among others, didn't want to be part of the project, so the feds decided to complete it piecemeal. The water started flowing in 1952. The first half-million-acre phase of the project was finished in the late 1960s. By now, the project has grown incrementally to 671,000 acres. That makes it the largest all-federal project in the country, but if you're still dreaming of the full million acres, it's incomplete.
Originally, just about everyone farming in the Odessa area raised dryland wheat. About half a century ago, some people started irrigating their wheat from deep wells. Over the years, they drilled more wells and had to drill them deeper. After 1973, when wheat prices spiked because of a huge wheat deal with the old Soviet Union, the amount of pumping skyrocketed. The water table kept dropping. The people who were pumping it hoped against hope that federal irrigation water would come flowing over the hill to save them from themselves. It didn't.
Six years ago, in 2006, the state Legislature passed the Columbia River Basin Water Supply Act, which set up an account to "assess, plan, and develop new storage, improve or alter operations of existing storage facilities, implement conservation projects, or any other action designed to provide access to new water supplies within the Columbia River Basin for both in-stream and out-of-stream uses." One-third of the water is supposed to be left in the river for fish. Two-thirds of the money "shall be used to support the development of new storage facilities." (Translation: “new storage facilities” means new dams, albeit not on the mainstem Columbia River.) The 2006 legislation gave special treatment to the Odessa aquifer.
In October 2010, the state and the Bureau of Reclamation issued a draft environmental impact statement for the Odessa subarea. It identified two alternatives: One would provide surface water to all 102,000 acres currently irrigated from the aquifer. The other would provide surface water to 57,000 acres. Neither got to one. The draft EIS came out with a worst-case benefit-cost ratio of just .396. The best case — which critics found implausible — still amounted to only 917. “If you correct their mistakes,” retired Washington State University professor of agricultural economics Norman Whittlesey said last year, “it's probably closer to .1.” (Late last year, the Bureau announced it had come up with a new preferred alternative, which will be the subject of a final EIS due out early this year. It would serve 70,000 acres of farmland both north and south of Interstate 90 in east central Washington.)
Irrigators north of Interstate 90 figured that at best, they'd have a long, long wait for federal water. The feds and state hadn't taken a very close look at what it would take to supply them. As Derek Sandison, who heads the state's Office of Columbia River, explains, Adams County suggested taking a look at the mechanics and the economics of getting water to the northern part of the Odessa subarea. The state gave Adams County the money to do so. The county hired the irrigators group.
After that, said Sandison, "what it morphed into then was a separate proposal." The irrigators have proposed taking water only to the acreage north of I-90, where it could be served by existing canals, and suggested that the state issue $250 million in revenue bonds to pay for it. The irrigators could pay the money back over 20 years. So, now the study has produced the plan that the Tri-City paper likes.
Why should the state bail out people who are currently pumping from an aquifer created perhaps by melting glaciers tens of thousands of years ago? Not everybody thinks it should. On the other hand, you could say that bailing them out is just the right thing to do. You could point to the fact that the potatoes grown there store well; without them, local processors would have to operate more seasonally and might leave. You could say that the area lies within the boundaries of the Columbia Basin Project, and when those people — or their predecessors — started pumping, they reasonably expected the long-delayed federal water that their more distant predecessors had turned down. (In advancing this argument, it may help to skip over the fact that federal water has looked iffy at least since Washington was governed by Republican John Spellman.) You could also say that the state gave them a green light to keep pumping.
Certainly, the state didn't discourage them. Everyone knew from the start that the groundwater wouldn't last. Originally, just about everyone farming in the Odessa area had raised dryland wheat. About half a century ago, some people started irrigating their wheat from deep wells. Over the years, they drilled more wells and had to drill them deeper. After 1973, when wheat prices spiked because of a huge wheat deal with the old Soviet Union, the amount of pumping skyrocketed. By the mid-1970s, the water table was dropping up to 40 feet a year.
In response, the state Department of Ecology got farmers to agree that they'd deplete the water table by only 10 feet a year. That clearly wasn't a long-term solution. Basically, no one expected the water to last even this long. But the state gave the farmers permits to pump. And nobody stopped pumping.
Now, the Columbia-Snake River Irrigators have come up with a way for the state to save at least some of them. But can they get to one? If you listen to the irrigators, of course the answer is "yes."
After the irrigators' study came out, the Sierra Club and the Center for Environmental Law and Policy commissioned a review by Norman Whittlesey. According to Whittlesey, the answer is "no," the project cannot get to a break-even point.
Although the question has varied somewhat over the years, this isn't Whittlesey's first "no." Back in the presidency of Ronald Reagan, with federal money for Phase 2 of the Columbia Basin Project uncertain at best, some people wanted the state to jump-start the process. In 1984, the state Senate voted to issue $100 million worth of bonds. But then, Paul C. Pitzer writes in his 1994 book, Grand Coulee: Harnessing a Dream, Whittlesey "dominated the hearings subsequently held by the House." He "accused local people in the area, sprinkler dealers, bankers, and professionals, of backing construction only because they hoped to benefit financially." The state House rejected the bill.
Federal money was still theoretically an option. The Bureau of Reclamation came up with a favorable cost-benefit analysis for Phase 2, but in the mid-1980s, Whittlesey and other WSU and University of Idaho economists shot it down. In the Bureau's analysis, “the costs were understated and the benefits overstated,” the General Accounting Office (now the Government Accountability Office) concluded at the start of 1986. Among other things, the Bureau of Reclamation had omitted the cost of the energy needed to pump the water out of Lake Roosevelt and the cost of the energy foregone because that water wasn't turning turbines. With the deck stacked, the Bureau had calculated that the U.S. Treasury would contribute nothing at all. The university economists — and other independent reviewers — calculated that the Treasury would pick up 80 percent of the tab. A lot of farmers didn't want the water anyway. Phase 2 didn't get off the ground.
In his analysis of the new Coluimbia-Snake River Irrigators' study, Whittlesey wrote that " the present value analysis should be revised to reduce the stream of irrigation benefits by at least 40% to 45%. These two corrections would reduce the benefit/cost to around 0.3 in the State-Federal alternative and to something less than 0.5 in the State-private alternative."
Whittlesey also found — shades of the old federal calculations for Phase 2 — that "the energy costs of irrigation development" — that is, the actual cost of pumping the water up out of the river, which would not be borne by the irrigators, and the opportunity cost of kilowatts not sold because the water never flows through the turbines — "are significantly understated."
Looking at the irrigators' estimate of jobs and other secondary impacts,Whittlesey found that the "figures and terms used to describe [such] secondary impact analysis are misleading and subject to gross misinterpretation by any of the general public or the state legislature. Such information properly explained and interpreted should never be implied to be sustained over a long time period. All such secondary impacts are transitory and are quickly (two to five years) reduced to zero as capital and labor resources are relocated and reemployed."
Unless the state issues revenue bonds or otherwise shoulders the whole public portion of the load, not much surface water will reach the Odessa area without a big infusion of federal money. The feds don't have a lot of spare cash.
The fact that eastern Washington's own Doc Hastings currently chairs the U.S. House of Representatives' Natural Resources Committee may improve the odds somewhat. But Sandison of the state Columbia River office acknowledges that in the realm of federal funding, "the competition for available dollars is extraordinarily high. However, he says, "My sense is that if we do a good enough job of packaging these projects and . . . do it in a way that's not asking for a staggering amount of money in one fiscal year," getting the money may be plausible. For the Odessa project, he adds, "we're really pushing the private financing. . . . Odessa won't be possible unless there's significant financial participation by the irrigators themselves."
Critics complain that state and federal governments have already started splitting the project up in ways that hide some of the costs. To get new water from the existing canals to the acreage currently being irrigated with groundwater south of Interstate 90, the project needed a second barrel for the Weber Siphon, a little east of Moses Lake. In the normal course of events, building a new Weber Siphon barrel would have required competing for federal approriations and preparing an EIS. But those considerations — and any question about whether or not building a new siphon made sense — became moot three years ago, when Secretary of the Interior Ken Salazar announced that $50 million in stimulus money would be authorized for the project.
With actual expenditures of $36 million, the new siphon barrel should be completed this year. It is large enough to carry all the water that would be needed to complete the Columbia Basin Project. The cost of the siphon has been taken out of the calculations for the Odessa subarea bailout and for the project as a whole. Now, the projects have become that much cheaper. It has therefore become somewhat easier to get to one. "If you pay for things on the side, they don't have to go into the cost column," says John Osborn of Center for Environmental Law and Policy. "That's what the Bureau and the Department of Ecology did with the Weber Siphon."
"It's important to recognize that . . the state funding an agricultural lobby group doing an economic analysis is really just part of a larger story," Osborn says. In his view, "since the 1940s, the Bureau has had as an objective the expansion of the canal infrastructure. . . . This is just the latest round."
Sandison says the state does not support the irrigators' proposal. "Separating [the Odessa bailout] into two projects to us is not wise." He explains that "since the infrastructure is in place north of 90, if you take the lands that are easily served by a canal that is already at full capacity, you've skewed the economics." Then, the area south of I-90 ends up being the higher-cost part of the project and suffers in the cost calculations.
On its own, the southern part would never get to one. Even in the never-never land of federal water projects, cherry-picking the cheapest part of the area "dooms the southern part," Sandison says. And even the northern part wouldn't be a slam-dunk. The irrigators' proposal would use federal water, flowing through federal canals. Therefore, Sandison explains the feds would "have to start a new EIS on this different project." This might take a while.
Noting that the state and the Bureau announced their own new alternative for the Odessa subarea nearly a year after the public comment period ended, the Center for Environmental Law and Policy's Osborn suggests that "the process is structured to justify [a] predetermined outcome." He argues that by now, "FDR's personal decision to try to help Depression-era farmers is a dream that's gone bad."
Whether pumping surface water to the Odessa subarea is a good idea or a bad one, it's officially your idea. That is, it's not only the current administration's current policy, it's state law. The 2006 legislation says that the "Department of Ecology shall focus its efforts to develop water supplies for the Columbia River basin on the following needs: (a) Alternatives to groundwater for agricultural users in the Odessa subarea aquifer."
Because the legislature has spoken unequivocally, Sandison explains, "we're trying to get [water] to as many of the 102,000 acres as possible." Therefore, from the state's point of view, "it's one project."