Topic 9: BOR uses a concept called “benefits transfer” to justify the entire cost of the LPP.

What the Draft EIS says or doesn’t say:

  • BOR invokes a questionable “benefits transfer” economic analysis method to calculate “Water Supply Reliability Benefits” that would supposedly accrue to Washington County if the LPP is built.
  • BOR uses 100 years to estimate the present value of these water supply reliability benefits and calculates a “Best” current value of $1.879 billion (oddly close to the estimated total cost of the project), and based on projected growth at 2.516% per year for 55 years and then reduced by 50% for the remainder of the 100 years.

Why this is a problem:

  • The DEIS provides an estimate of benefit due to water reliability of $1.879 billion (table 3.2-8, page 241). But, it doesn’t give any analysis of the reliability of the project. It assumes it is 100% reliable, and it is not. We suspect, at times, there be limited to lower or no yield at all.
  • BOR grasps for a “benefits transfer” economic method to find ways to justify the cost of the LPP—in terms of benefits from avoiding a shortage—choosing values on the high end of their range of values, equal to $300 per household and $1,800 per commercial establishment. But this assumes benefits in water security based on an economic analysis from other areas that BOR fails to confirm.
  • Using a present value period of 100 years is excessive, especially given the trends for how climate change may affect Colorado River flows.

Commenting guidance:

  • BOR should not rely on very hypothetical models with unfounded assumptions, such as “benefits transfer” of water security, to quantify LPP benefits.
  • A full cost/benefit study should be explicitly done for Washington County and invite input from a third party and objective economists.
  • If BOR insists on using a “benefits transfer” method and expects residents to accept it, they must reveal the base study case and the details behind that study.

Personal Note/Experience: 

  • The ‘benefits transfer” approach is a sleight of hand short cut to avoid the hard work of identifying the real costs and benefits of the LPP for Washington County residents? If this is unacceptable to you, make it known to the BOR.
  • The history of the LPP is filled with examples where proponents grasp at some way, any way, to justify the multi-billion-dollar cost and environmental damage. “Benefits transfer” is but the latest example.  If this alarms you, make your concerns known to the BOR.