WATER POLICY AND PLANNING

EWE Associates' water resource practice focuses on the economic implications to various user groups of Federal, state and local water agency policies. Our economists combine agricultural and environmental economic backgrounds with substantial experience in regulatory settings. This background allows us to apply lessons learned from other resource sectors, notably en-ergy, to the evolving water problems. Professionals at EWE have testified before state and federal regulatory commissions, such as the California Water Resources Control Board, the Public Utilities Commission, and legislative subcommittees.

Clients include Metropolitan Water District of Southern California, TVA, Atlanta Regional Commission, Duck River Agency, California Department of Water Resources, U.S. Bureau of Reclamation, U.S. Army Corps of Engineers, U.S. Dept. of Interior, Santa Clara Valley Water District, California Urban Water Agencies, California Water Association, and associated engi-neering firms.

EWE professionals are experts in water supply issues, pioneering studies concerning economic costs and benefits of water supply reliability. EWE’s work has affected decisions on many of today’s important issues. For example, EWE’s analyses played an important role in the recent historic California Bay-Delta Water Accord.

FRESH WATER RECREATION FORECASTING

EWE Associates’ freshwater recreation forecasting and evaluation is founded on a combination of years of recreation planning experience and a proprietary recreation forecasting computer model. EWE Associates' economists developed the California Travel Cost Model (CTC) in 1987 to both fore-cast attendance and determine the value of freshwater recreation at California reservoirs. EWE has repeatedly updated the CTC model, incorporating the most recent recreational data available to en-sure that it remains the best predictor of freshwater recreation demand in California.

The CTC model estimates the number of visitor-days by activity at 83 California reservoirs as af-fected by site access costs, recreation facilities, reservoir surface area, attributes of substitute freshwater recreation areas, distances from population centers and income. The model can also de-termine the effects that changes in amenities at reservoirs have on visitation, and whether proposed expansions are economically viable. The results of the CTC model can be used in conjunction with other regional models such as IMPLAN to determine broader regional impacts of recreation.

Further information may be found at http://dbw.ca.gov/PDF/DeltaAssessment-PDF/Appendices/Appx. 6-1 Wade Report.pdf

Applications of the CTC Model

Water Supply Planning and Economics

EWE President Dr. William Wade specializes in issues related to environmental resources and water policy working with executives, lawyers, engineers and scientists on multi-discipline regulation, litigation, and planning projects. He has 30 years experience managing and conducting financial and economic evaluations of policies and decisions bearing on natural resources and infrastructure. Since 1986 he has conducted dozens of studies on various aspects of water supply problems, including tradeoffs between protection of instream fisheries, habitat and recreation values versus consumptive use and residential reliability values. Over the last two decades, Dr. Wade has worked on significant natural resource policy issues related to multiple uses of several watersheds:

• Sacramento-San Joaquin Delta, California;
• ACT/ACF, GA-FL-AL;
• Tennessee Valley
          • Duck River
          • Buffalo River
• Republican River, Nebraska;
• Missouri River, Upper Midwest.

Dr. Wade recently worked throughout much of 2002-2003 on TVA’s Reservoir Operations Study, conducting the economic analysis of alternative operations in relation to TVA's mission and the TVA regional economy. During much of 2001 and 2002, he worked on issues related to sharing the water flows of the Republican River Watershed between Nebraska and Kansas.

From 1998 – 2001, he worked on issues related to the ACF/ACT Water Supply disagreement developing NED and RED benefit estimates for Atlanta water supply reliability and Lake Lanier recreation usage. From 1998 – 2001, he and Dr. Brian Roach worked on issues related to the ACF/ACT Water Supply disagreement developing NED and RED benefit estimates for Atlanta water supply reliability and Lake Lanier recreation usage.

From 1995 to 1999 he led a team of economists, working with engineers and Disney planners, forecasting visitation and evaluating amenity options to implement the $300 million Recreation Master Plan for Diamond Valley Reservoir, Riverside County, California, which opened in 2000.

From 1995 to 1999 he led a team of economists forecasting visitation and evaluating amenity options to implement the recreation master plan for Diamond Valley Reservoir, Riverside County, California. In California he presented testimony at SWRCB Bay-Delta Hearings on supply shortage costs before CPUC and CA Legislative Committee on water rates to induce conservation by private water agencies, and presented information on drought impacts to California economy to Associated California Water Agencies Drought Hearings, and other forums.

Water and resource agency clients include the U.S. Army Corps of Engineers (USACE), TVA, U.S. Bureau of Reclamation, Department of the Interior, Minerals Management Services, Atlanta Regional Commission, Nebraska Dept. of Natural Resources, Metropolitan Water District of Southern CA, CA Department of Water Resources, Santa Clara Valley Water District, California Urban Water Agencies, California Water Association, Los Angeles Department of Water and Power, and Duck River Development Agency. Engineering and Environmental firms, with whom we have recently partnered, include Camp Dresser McKee, CH2MHill, Entrix, URS, & EnSafe.

Types of studies include social and economic impact analyses; benefits estimation generally and benefit-cost analyses; recreation planning, forecasting and evaluation; natural resource damage assessments using both economic methods and habitat equivalence; water supply planning and economics, including Integrate Resource Planning; regional impact analyses, regional impact modeling using both IMPLAN and REMI, fiscal impact analyses; rate studies; project financial feasibility; commodity supply/demand forecasting, and price forecasts. While at Foster Associates, Dr. Wade pioneered the use of Social Impact Assessment (SIA) survey methods for an EIS in the Gulf of Mexico to conform to Minerals Management Services rigorous requirements. He has done flood control benefits estimation for the Sacramento, CA, Corps as well as recreation visitation and benefits estimation for all Corp reservoirs in CA.

In California he presented testimony at SWRCB Bay-Delta Hearings on supply shortage costs before CPUC and CA Legislative Committee on water rates to induce conservation by private water agencies, and presented information on drought impacts to California economy to Associated California Water Agencies Drought Hearings, and other forums. He has provided testimony and resource planning presentations to various agencies in Tennessee in recent years.

Selected Recent & Representative projects

Tennessee Valley

TVA, “Economic impacts of Reservoir Operating Alternatives,” 2002-2003
To re-evaluate its ten-year operating plan, TVA formulated seven final alternatives to manage reservoirs and flows in the Tennessee Valley to achieve different policy objectives. For example, alternatives were formulated to maximize power, maximize recreation, mimic nature, etc. Dr. Wade, together with a team of TVA economists, evaluated each of the alternatives in terms of the RED economic impacts to the region. Dr. Wade used the REMI model to estimate regional economic impacts of multiple reservoir management alternatives on regionwide and subregions of the TVA service area. An overview of the project can be found here.  The draft economics section of the DEIS can be found here.

Duck River Development Agency, “Water Supply Planning for the Duck River Watershed,” 2001
Dr. Wade conducted statistical studies to show that streamflows and storage in the Duck River were adequate to meet both instream flow environmental and waste assimilation targets and M&I water demands to 2050. Integrated Resource Planning procedures were used to calculate likelihood, amount and duration of supply shortfalls. Water flows were shown to be sufficient to avoid building a $50 million offstream dam. Benefit-cost ratio was shown to be greatly less than one. Plans for the $50 million dam were shelved.

Buffalo River Watershed, "Economic Effects of Boating on the Buffalo River," 2001.
This interesting study established that boating concessions on the Buffalo River thru several counties of Middle Tennessee bring in direct revenues only second to the world famous white water concessions on the Ocoee River in East Tennessee. Direct spending was shown to ripple through the local counties as a significant contributor to their economic health. Testimony was provided in a TDEC Hearing.

Republican River and Missouri River

State of Nebraska, DNR, “Effect of Water Supply Allocations on Value of Republican River Watershed Agricultural Production,” 2002 & 2003.

This project entailed a number of deliverables by Dr. Wade and Dr. Roach aimed mostly at the agricultural production values affected by allocations of the Republican River flows between Nebraska and Kansas. Recreation usage of reservoirs and the Republican River were reviewed and evaluated. Ultimately, a model was developed that estimated crop production by county in relation to county-specific agroclimatic conditions and applied irrigation. The model was used to predict county changes in corn, wheat and soybean production values in relation to changes in applied irrigation.

State of Nebraska, DNR,”Evaluation of Missouri River Master Water Control Plan on Upper Missouri Watershed,” 2003

USACE benefit values were evaluated for multiple uses of the watershed. Critiques and comments were submitted. Written testimony was provided to State of Nebraska. (Confidential)

ACF/ACT Watersheds

Atlanta Regional Commission, "Economic Benefits of M&I Water Supply Reliability for Metropolitan Atlanta," plus "Recreational Benefits of Lake Lanier water levels," 1999 - 2001; Final Draft, February 2004.
This project entailed numerous deliverable products by Dr. Wade and Dr. Roach over 1999 - 2001, beginning with submitted comments on ACE-contractor deficiencies in the record. Subsequently, rigorous NED and RED benefits were estimated based on benefit transfer methods for supply reliability and recreation. A model was developed relating water supply reliability NED values for Metro Atlanta to releases from Lake Lanier.

A separate model determined NED values for recreation in Lake Lanier to water levels. RED values for recreation were also provided.

Sacramento-San Jaoquin Delta, California

Metropolitan Water District of Southern California,”Forecasting & Evaluating Reservoir Recreation Financial Feasibility and Regional Economic effects,” 1995 - 1999

Dr. Wade's California Travel Cost Recreation Demand Model was used to predict visitation and related benefits for a new reservoir in 1988. Beginning in 1994, this forecast was updated and integrated into a financial feasibility model developed for the project capable of predicting the synergies among recreation activities at the new reservoir. The model was expanded to include concession income from hotels, restaurants, and golf along with traditional reservoir activities that begin with gate fees or overnight camping fees. Literally, hundreds of project amenities alternatives were evaluated with the model. The model was used to eliminate financially uneconomic amenity mixes and expansion plans. A $300 million complex was planned. Management changes at MWD have caused the recreation complex not to be developed as planned. (Planners, engineers and economists spent ~$10,000,000 planning the complex thru proposed public-private contracts with concession operators before the plug was pulled.)

Metropolitan Water District of Southern California, “Regional Economic Effects of Multi-Million Dollar Reservoir Recreation Facilities on local and county economies,” 1995 - 1999.

As part of a five year ongoing recreation facilities planning project in relation to the $2 billion Diamond Valley Reservoir in Riverside County, CA, Dr. Wade used his estimates of visitation and direct recreation expenditures to forecast economic and fiscal impacts on local Hemet, CA, and Riverside County economies. These reports were exceedingly interesting to City and County Commissioners. In part, the underlying studies relied on the IMPLAN model; but, much local data was assembled and used. Surveys were planned and supervised by Dr. Wade in conjunction with a qualified survey firm.

Problems with Bay-Delta Recreation Visitation Estimates—Revisited, 1998.
Various agencies within California have a stake in predicting visitation to the popular Bay-Delta region of Central California. Dr. Wade’s California Travel Cost Model was the basis for predicting visitation to California reservoirs during much of the 1980s and 1990s, having done projects for state and federal managing agencies. In 1998, an agency released results of a study what confused visitor days with activity days, yielding a way too high estimate of visitation to the Delta. Comments were filed. Comments were submitted.

Metropolitan Water District, “Evaluation of Recreation Revenue Shortfalls at Lake Skinner,” 1996.
This recreation “audit” of Lake Skinner sought to discover why revenues continually fell below management targets and access whether a new mix of recreation facilities would enhance visitation and gate revenues. Achieving a successful recreation facility is a challenge. Changes were evaluated and recommendations made to enhance the management of the reservoir.

Metropolitan Water District, “Colorado River Critical Habitat Studies: Environmental Benefits v. Consumptive Losses of upstream flow management,” 1994.

This project evaluated and compared environmental benefits of Colorado River enhancement plans versus down stream M&I benefits. The work entailed review and critique of opposing economic experts and development of California benefit values. A number of similar studies have been conducted over the last 15 years that involve consideration of flows in rivers and streams versus water levels in reservoirs in California and Georgia.

Supply Reliability and Shortage Management, California

During and following the drought of the late 1980s – early 1990s in California, Dr. Wade and his group, then at Spectrum Economics and Foster Associates in San Francisco, conducted an extensive and unique set of studies to pioneer and understand how water supply reliability relates to local, regional and statewide economies. His 1991 monograph on industrial water use remains a seminal document. From this body of work, Dr. Wade and group created and estimated statistical values of water supply reliability, which are used in California water supply planning and elsewhere. Water supply reliability values, sometimes called shortage costs, are an essential part of IRP today. The following list of titles illustrates the range of research undertaken between 1988 and 1994.

• “Economic Costs of EPA Bay Delta Water Quality Standards,” Presentation to California Water Resource Agencies, 1994.
• “Water Supply Planning Simulation and Estimated Shortage Costs Related to Mono Lake Diversion Alternatives,” 1993. Testimony before SWRCB November, 1993.
• “Water Supply Reliability Epochs: Revenue Instability for Retail Water Utilities,” Testimony to CPUC, November 1992.
• “Drought Impacts on California Green Industries,” 1992; Submitted to SWRCB as State Water Contractors Exhibit 20, June, 1992.
• Presentation to California Legislature, Assembly Utilities and Commerce Committee, “Investor Owned Water Utilities: Rates, Reliability, Regulation,” February 1992.
• “Financial Impacts of Decreasing Wholesale Water Supply Reliability on Class A Water Utilities,” 1992.
• Cost of Industrial Water Shortages, Report to California Urban Water Agencies, 1991.
• “The Cost of Water Shortages: Case Study of Santa Barbara,” 1991.
• “Planning for Reliability for California's Urban Water Agencies,” 1991.
• “Review of Reliability Planning Programs of Electric Utilities,” Report to California Urban Water Agencies, 1991.
• “Impacts of Drought on California Economy,” Testimony to ACWA Drought Conference,” October, 1990.
• “Financial Partnerships to Assure Conservation's Role in California Water Supply Resource Planning,” Testimony to CPUC, June 1989.

Energy and Water Economics
Wade@energyandwatereconomics.com
Water Resources Research
1986-2005
(Projects include work by and under direction of William W. Wade)

PDF Version of Water Resources Research
(last updated July18, 2005)