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MMWD Water Supply Update: Reservoir expansion too expensive
This is a follow up to my article MMWD Water Supply Update published on April 10. Within this article, I indicated that the MMWD explored reservoir expansion as a long-term water supply option. But, at the time MMWD did not have any cost estimates. Now, it does.
On April 30, 2024 the MMWD disclosed the capital costs of the reservoir expansions. And, they came in at a shockingly higher level than expected.
The MMWD narrowed its reservoir expansion selection down to three projects as shown on the table below provided by MMWD at their Board meeting on April 30, 2024 (See "Potentially feasible" in orange and "Feasible" in green).
Below I map out the resulting yearly debt servicing costs for the three reservoir options selected as "Feasible" or "Potentially feasible" within the table above.
Each reservoir expansion (new or existing) would add 20,000 acre-feet in storage. This would increase MMWD reservoir storage capacity from 80,000 to 100,000 acre-feet.
The extra 20,000 acre feet would be associated with very high capital expenditures to construct them ranging from $291 million to over $600 million. The resulting year debt service (assuming a 30-year term, 4% rate, fully amortized) would range from close to $17 million to over $35 million a year.
How much extra water per year would the reservoir expansion provide?
It depends. You have to consider different scenarios with droughts lasting 1, 2, 3, or 4 years. Given that, this is how much extra water per year the storage would provide:
- an extra 20,000 acre-feet per year (AFY) over 1 year, or
- 10,000 AFY over 2 years, or
- 6,667 AFY over 3 years, or
- 5,000 AFY over 4 years.
If you factor additional water evaporation at about - 1,000 AFY, you then can deduct - 1,000 AFY from all the above figures. Now, the adjusted figures look like this:
- 19,000 AFY over 1 year, or
- 9,000 AFY over 2 years, or
- 5,667 AFY over 3 years, or
- 4,000 AFY over 4 years or
What would be the cost of this additional water?
The table below discloses the $AFY for the three reservoirs over drought periods ranging from 1 to 4 years.
The Soulajoule reservoir expansion would be associated with substantial inundation of private farmland and ranches. And, the farmers and ranchers are already pushing back against this option. So, Soulajoule is probably a no-go (not so "Feasible" after all).
The Upper Nicasio is also running into issues associated with inundating private land.
Are all costs factored in?
No, far from it. According to MMWD, the cost for land purchases (affecting Soulajoule, Upper Nicasio) are not factored in. That is bound to be a large cost, especially when factoring potential lengthy lawsuits. Also, the cost for engineering and permits are also not included. Yearly maintenance and other costs are probably not included either.
Kent Lake is associated with its own separate issues. MMWD owns the land. So, that's good. But, it is the territory of the Northern Spotted Owl. In order to not disturb the Owl, MMWD would be limited to only a few months a year to build the Kent Lake reservoir expansion. Thus, the Kent Lake expansion construction project could last years, maybe even a decade.
So what is the outlook for the reservoir expansion options?
As reviewed, it is rather discouraging. The costs are surprisingly high. And, the logistics look forbidding (inundation of private lands or constructing into the Owl territory).
So, what's left?
As reviewed last month, water recycling and reuse are not economically feasible. The same is true for reservoir expansion.
Maybe desalination is worth a more focused look after all.
THE END
Gaetan Lion is an independent researcher with expertise in economics, econometrics, investments, risk management, statistics, and quantitative analysis. His areas of interest include demographics, economics, investments, Climate Change, health care, sports, and politics.