Department of Agricultural and Resource Economics

The two main objectives of the East Bay Municipal Utility District (EBMUD) water supply management program are to cope with a failure of the aqueducts in the Delta due to earthquake and flood damage and to mitigate periodic shortages. EBMUD emphasizes construction of additional terminal storage, specifically development of a reservoir in Buckhorn Canyon, to meet both objectives. Better alternatives--cheaper and less environmentally damaging--are (to cope with failure) use of existing terminal storage and interties, along with an eventual phased construction of secure aqueducts in the Delta, and (to mitigate shortages) purchase of high quality Mokelumne River water from the nearby Woodbridge Irrigation District, along with sharply rising block rates to induce conservation by EBMUD customers. Additional terminal storage, only as a last resort, would better come from some marginal addition to capacity at the planned Los Vaqueros Reservoir rather than construction of a new reservoir in Buckhorn Canyon. Under plausible assumptions, the cost of providing high quality water during a shortage is 10 times as high under the Buckhorn option as it would be with water purchases and conservation.