December 18, 2024

VIDEO: Weekly California Water Market Report

Investing in the Future: The Cost of the Delta Conveyance Project

Last week, the Metropolitan Water District (“MWD”) voted to fund pre-construction work on the Delta Conveyance Project (“DCP”). The DCP has faced questions regarding high construction costs and uncertain environmental impacts on the Delta. The project would place a 36 ft. diameter pipe 100-130 ft. underground for approximately 45 miles through the Delta. The goal of the project is to increase capacity within the State Water Project (“SWP”) when capturing flood flows during extreme weather events.*

As water passes from north of the Delta (“NOD”) to south of the Delta (“SOD”) some water flows out to the San Francisco Bay. Outflow is generally estimated to be 20-30% and varies based on hydrology and regulations within the Delta. During wet periods, losses for the SWP increase due to capacity constraints for SWP exports. The current design of the DCP is estimated to increase annual SWP supply by 395,000 acre-feet on average and cost $1,325 per acre-foot in 2023 values.**

The cost per acre-foot of water provided by the DCP is higher than historic average unit prices of spot market transfers. The closest values occur in 2022 when spot market prices averaged $1,080/AF and the DCP value was $1,270/AF. 2022 marked the third year of drought in California with the max spot market transaction occurring at $2,000/AF.

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