$73 million in public benefits said to justify dam

Wyoming water developers say a 280-foot high dam that would serve up to 100 irrigators in southwest Wyoming would generate $73.7 million in public benefits, qualifying for a state subsidy of near that amount.

The dam proposed on the West Fork of Battle Creek in Carbon County’s Little Snake River drainage would cost $80 million, developers say. In 50 years it would provide more in public benefits than the $19.4 million it would create in new private irrigation value. Those public benefits include $26.5 million in new economic activity that would arise from irrigators earning more cash, $26.8 million from instream flow, $5.4 million in Wyoming construction, $5 million in new public economic activity generated by fishing, and $4 million from flatwater fun and camping.

Lawmakers on the Select Water Committee meet Friday in Cheyenne to consider 2018 planning and construction requests, including a $40 million appropriation for the West Fork Reservoir. Separate omnibus planning and construction bills will be considered by the entire Legislature during its 2018 budget session that begins Feb. 12.

The $40 million request by the Wyoming Water Development Commission to continue planning and design and start construction could raise questions from lawmakers, Wyoming Water Development Office director Harry LaBonde said.

“Because of the large appropriation required, it will certainly [draw] additional scrutiny,” he told WyoFile Monday. Yet LaBonde is “as reasonably confident as I normally am when we bring these construction and planning bills forward,” he said.

The requested appropriation “is not enough to complete the project,” he said. “Yes, there needs to be additional funding sometime in the future. We are in conversations with the State of Colorado for a cost-share there,” where some of the new benefits would accrue. “That would be a potential source.”

Beyond that, LaBonde would not speculate where the remaining $40 million might come from.

Public benefits mean public funding

Public benefit figures come from a study prepared for the Water Development Commission. As proposed, irrigators in the Savery-Little Snake River Conservancy, an irrigation taxing district that would benefit from the dam, wouldn’t be required to pay 33 percent of the dam costs. That’s the amount the state “typically” requires of irrigators on projects, the 483-page “level II, phase II” final report on the dam says.

Nor would irrigators have to fund 25 percent of the cost, a lower level of responsibility authorized in cases of “severe financial hardship.”

Instead, they’ll pay 8 percent.

The calculated public benefits of the 10,000–acre foot reservoir, proposed on 100 acres of National Forest, qualify the district to make only an 8 percent contribution — through a state loan. Consequently, the water commission would approve payment of 92 percent of the cost, the report says. That would put the state’s obligation at about $73.6 million.

State involvement at the high level is justified because many will benefit from a dam on the West fork of Battle Creek, the study says. Irrigators shouldn’t have to foot the entire bill, according to the report.

“Financing small reservoir construction in rural Wyoming is challenging because it is difficult to assess fees to the many individuals benefiting from the project,” the study says. “Because the proposed enlargements [two sizes were studied] are multi-purpose, expecting irrigators to assume total financial responsibility for project costs is unreasonable.”

“Pork” or public boon?

The project is “pork,” a former member of both the Wyoming Water Development Commission and Wyoming House of Representatives has said. Jeb Steward in November told the commission the economic analyses “appear to the casual observer an effort to force the numbers to achieve the desired results of leveraging a higher grant portion from the State…”

Water developers have rejected that charge. The Water Development Commission voted in November to advance the plan, without dissent.  It will make a final recommendation to lawmakers during a meeting in Cheyenne on Wednesday and Thursday.

Steward told commissioners he doesn’t think the West Fork Dam should be funded and asked, among other things, why calculated irrigation benefits increased from $35 million to $51 million between a draft and final study of the project. The consultants’ work is hard to follow, he said, and hasn’t been peer-reviewed. Water development staff attributed the “urgency” in funding and building the $80 million dam to Gov. Matt Mead’s 10-in-10 program, in which Mead seeks to build ten water storage projects in a decade.

Many of the figures calculating the public and private benefits are listed in the final report prepared by Wenk Associates, Inc. and released last fall. In addition, water development staff answered Steward’s questions in writing, saying that part of the increase in benefits came from recalculating the value of irrigation benefits. The new calculations account for water that would flow from irrigated fields back into waterways to be used again downstream.

The final report also quantified benefits that had been mentioned but not tallied in a preliminary investigation, the letter to Steward said.

Calculating public benefits

In calculating public benefits, the final report cited “the multiplier effect of new sources of income in a regional economy” and the well-being or “consumer surplus” of recreational users who don’t have to pay for a benefit. Projected expenditures from hikers and campers are quantified as is the value of new instream flow which supports fish and wildlife and other items. Wenk Associates cite studies that estimate the amount of leakage in canals, the amount of water an acre of grass or alfalfa would use, the increased value of resulting crops, and other variables.

Before calculating indirect benefits, consultants estimated direct benefits to irrigators, who today could not use all the water the dam would provide. “Based on the currently irrigated acreage, there is not always a demand for this much water,” the final report says, “however, additional water may allow irrigators to put permitted, but fallowed land into production …”

Consultants used “crop-water production functions” to calculate benefits to irrigators. Carefully monitored field experiments allow estimates of evapotranspiration, the amount of water it takes to grow an acre of alfalfa or grass, and the resulting yield. Using that complex calculus, Wenk estimated $19.4 million worth of new revenue over the 50-year life of the project.

The direct boost to irrigators subsequently creates a secondary boon that qualifies as a public benefit, the report says. Those “stem from the multiplier effect of new sources of income in a regional economy,” the report says. In other words, more money in the irrigators’ pockets means more local economic activity. That increased economic activity counts as a public benefit.

The Bureau of Economic Analysis of the U.S. Department of Commerce’s latest estimate of the multiplier for Wyoming farm income is 2.63, the report says, “meaning that for each dollar of additional farm income, total income in Wyoming increases by $2.63.”

Based on that figure, total irrigation benefits would amount to $51 million over 50 years, $26.5 million of which qualifies as a public benefit, the report says.

Other benefits are more difficult to quantify, the report says, even with various studies that estimate spending by campers, boaters and anglers. Ultimately, Wenk estimated recreation benefits from the lake at $4.3 million.

Arriving at a value for fishing below the proposed dam was even trickier. A 4.2 mile reach of the West Fork of Battle Creek downstream of the reservoir is expected to become a new publicly accessible tailwater fishery, despite impairment from an abandoned copper mine. But most of the access to the enhanced fishery — some 22 miles — will be privately owned. Consultants had to tease out public from private benefits generated by new tailwater  fishermen.

All told, they estimated $26.8 million in instream flow benefits to publicly accessible reaches and another $5 million from indirect benefit of private-enterprise fishing.

Consultants recognize that the isolated location of the dam could provide “a sense of solitude that some recreationalists seek and consider priceless.” However, there appears to be no accounting for the disruption to the existing environment in the steep, narrow West Fork drainage that is incorporated into the review of costs and benefits. The review could not quantify several environmental benefits to wetlands and wildlife as well.

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Finally, Wyoming would accrue only $5.4 million in construction money from the $73.7 million building cost, given that outside material and contractors would likely be used for the project.

Irrigators across 19,046 acres could foot their portion of the bill, the report says, but more work needs to be done. “…Willingness to pay for West Fork Reservoir will have to be discussed further with the [irrigation] District,” the report says. “Ultimately, any financing plan will need to be approved by the WWDC and ultimately the Legislature.”