State taxpayers on hook to pay most of $825 million Odessa irrigation project


Agricultural Economists warn Washington Legislature of serious flaws in agencies’ analysis, advise objective assessment before committing State funds to capital projects


Two renowned agricultural economists are warning that the U.S. Bureau of Reclamation (Bureau) and Washington Office of Columbia River (OCR) erred in an economic analysis being circulated in the Legislature.   The analysis, called the Odessa Subarea Special Study (OSSS) and costing $15 million, suggests, but does not recommend or propose, that $825 million be spent expanding surface irrigation by 70,000 acres in eastern Washington by pumping water from the Columbia River at Grand Coulee Dam.  


“Legislators faced with budget choices need to know that the Odessa Subarea Special Study is littered with problems and questionable assumptions,” said Norm Whittlesey, one of the authors of the review.  “To assure taxpayers that project benefits for capital expenditures exceed total costs, the Legislature should require an objective assessment prior to committing State funds to any capital project.”

  

In a letter to Washington Legislators, Whittlesey-Butcher highlighted 4 flaws from their review of the OSSS:


(1)  The Odessa analysis severely distorts expected benefits projected from surface water irrigation by assuming that dryland wheat farming loses $171 per acre per year for 100 years (dryland wheat farming in eastern Washington is actually successful), and that potatoes would occupy 41% of the area irrigated.  Correcting these false assumptions will cut projected benefits to less than one-half the project costs.


(2)  The Bureau and OCR want to spend $825 million in capital costs, averaging $12,000 per acre.  But the per-acre market value of irrigated land is only $4,000 – one-third the value of the cost.   There is no rational reason for Legislators to invest State funds in a project where costs far exceed the value gained by beneficiaries.


(3)  The State will have to pay for most of the $825 million:  the Odessa project won’t qualify for Federal funding because of the economics, and irrigators won’t be able to pay $12,000 per acre.  This will include the current proposal to spend $31.7 million to expand the East Low Canal to serve the Odessa Subarea.


(4)  Pumping water uphill at Grand Coulee Dam takes energy, and water diverted from the Columbia River is also unavailable to generate power at downstream dams.   Energy costs will be significant: $300 per acre (more than the estimated net income from irrigation on all but the most lucrative crop, potatoes).   These costs will be imposed on the region’s ratepayers – 70% of whom are in Washington State. 


In recent years the Legislature has funded the Office of Columbia River more than $100 million on studies, planning, and pre-project investments designed to irrigate more land in the Columbia Basin.  The money has largely been spent on studies of capital projects and, to date, additional land has not been irrigated.


“We recommend that the State turn attention from large, very expensive capital projects to solve its water scarcity and allocation problems and consider more efficient alternatives,” said Walter Butcher.   “Affordable solutions include water markets, dry year option markets, early season markets, and regulation of groundwater according to state law or, if necessary, buying the groundwater rights and preserving them only for municipal use.”


Norman Whittlesey and Walter Butcher are retired professors of agricultural economics from Washington State University and each has more than 40 years of professional experience in the fields of irrigation development economics and water policy.


Links:


Letter to Washington State Legislators

Review of Odessa Subarea Special Study


GAO Report, 1986

Odessa Economics, webpage

Odessa:  Aquifer in Crisis




Odessa Economics


  1. -Norman Whittlesey & Walter Butcher.  Review of Odessa Subarea Special Study.  March 2013.


- Norman Whittlesey & Walter Butcher. Letter to Washington State Legislators.  March 5, 2013.


- Norman Whittlesey.  Odessa Subarea surface water supply alternatives by CSRIA:  comments on economic features.  Jan. 2012


- Norman Whittlesey and Walt Butcher.  Expansion will not resolve Odessa woes (Capital Press Dec 30, 2010


- Norman Whittlesey, Walter Butcher and M.E. Marts:  Water Project Subsidies: how they develop and grow

- U.S. Government Accountability Office:  Water Resources - Issues Concerning Expanded Irrigation in the Columbia Basin Project

- Norman Whittlesey, Walter Butcher:  comments on Bureau's EA for Lake FDR drawdown

- Joel R. Hamilton, A Review of “The Economic Impact of a Possible Irrigation-Water Shortage in Odessa Sub- Basin: Potato Production and Processing”, Sanjoy Bhattacharjee and David Holland, School of Economic Sciences, Washington State University, June 6, 2005.

Columbia River Flows & Fish


- National Academies of Science: Managing the Columbia River: Instream Flows, Water Withdrawals, and Salmon Survival

Odessa Groundwater


- Rachael Paschal Osborn:  Odessa Aquifers:  Crisis in Sustainability


Odessa Subarea Special Study


- CELP:  Odessa Subarea Special Study

- USBR:  Odessa Subarea Special Study

- CELP et al comments on the Odessa DEIS

- Office of Columbia River (Dept of Ecology)


Weber Siphon

- Weber Siphon & the Columbia Basin Project

- Letter to Interior Sec. Salazar

- Letter to the Office of the Inspector General


Expanding Federal Irrigation to the Odessa Subarea


- Economics -

Norman Whittlesey and Walter Butcher are retired professors of agricultural economics from Washington State University and each has more than 40 years of professional experience in the fields of irrigation development economics and water policy.

Walter Butcher            Norman Whittlesey