An organization representing irrigators who would be affected if the four lower Snake River dams are breached issued a white paper on Nov. 20 putting the cost of compensation at between $446 million and $622 million.
Darryll Olsen, board representative of the Columbia-Snake River Irrigators Association, told Clearing Up the white paper is in response to two separate processes looking at removing the dams—the federal Columbia River System Operations environmental impact statement, which is under a court order to evaluate breaching the dams in one of its alternatives; and a Washington state study by independent researchers funded by the state Legislature, following the state's Southern Resident Orca Task Force recommendations.
"The Irrigation Sector assets are real and dam breaching or pool drawdown actions would critically impair pump station capabilities, agricultural production, and on-site processing operations. All of these direct economic impacts would have to be addressed under a responsible and market-based strategy," the paper says.
Olsen said CSRIA has been less than confident with the draft EIS process. "The Columbia River operating agencies have conducted a very closed EIS process," he said. It has not convened technical committees used in past draft EIS analyses, which provides a vetting process for impacts contained in the alternatives, including economic impacts, he said. Olsen said federal agencies have had only one meeting with CSRIA, even though it is an intervenor in the lawsuit that led to the court-ordered EIS. "They did not understand the pump station configurations or minimum operating pool impacts, and didn't offer much confidence in how they were going to approach economic methodologies," he said.
Olsen said the economic analysis methods being used are not up-to-date, so the CSRIA decided to put together its own economic analysis. Copies have been sent to the federal action agencies and to the Washington governor's office.
Federal agencies are required to identify mitigation measures in the EIS alternatives, and take into account the risks and liabilities. The state study looking at dam impacts indicated it would fully consider all irrigation sector impacts and viable mitigation strategies.
Olsen said lands watered in the upper McNary Dam area were included because they would likely be affected by breaching or drawing down their reservoirs. "You really can't go in and knock out four lower Snake River dams and expect that reach below Ice Harbor to operate the same as it does today," he said. If the McNary reservoir drops by 2 to 5 feet, he said, "you've absolutely hammered those pump stations on that upper McNary system."
Olsen said his white paper uses recent sales to determine that the 90,640 acres being irrigated from surface and groundwater along the Ice Harbor and upper McNary pools are currently valued at $1.49 billion—or an average of $16,400 per acre. CSRIA assembled land purchasers who, combined, said they would be willing to pay between 50 and 70 percent of the land's current value if the dams were removed or if the reservoirs were drawn down. Olsen said although two of the entities indicated they would not purchase the property, others were willing to take the risk despite the many unknown costs. "What they said is, the value is not zero. Somebody is going to be willing to accept the risk, but they're not going to pay full market value," he said. "They said that the discount on the value is 30 to 50 percent per acre."
The compensation cost is based on this "distressed" asset value of between 30 and 50 percent of market value for Ice Harbor Pool properties, which comes to between $263.76 million and $439.6 million; and a 30 percent distressed value of upper McNary pool properties, which comes to $182.19 million.
The compensation figure considers the value of assets—irrigated land and infrastructure—along with devaluation of land under a dam-breaching or pool drawdown scenario, he said.
The figure does not consider lost value of about 275,000 acres that irrigate from the lower McNary and John Day pools, which "could easily be comparable to, or exceed, the asset changes affecting the Ice Harbor and Upper McNary pools given the larger acreages involved and depending on pool elevation operations," the white paper says.
Olsen said $466 million to $622 million is the amount that would have to be paid to the irrigation sector upfront to bring asset values back to a baseline value, which would require annual payments from both BPA and the State of Washington of between $12 million and $16.8 million each.
"We think the compensation or mitigation costs ought to be shared by BPA and Washington state," he said—BPA because it is responsible for repaying the dams and selling power from them, and the state because it receives benefits of irrigation and taxation of the farmland.
"Receiving the risk mitigation response compensation, the Irrigation Sector would be responsible for pump station and infrastructure modifications, incurred agricultural production income losses, and impaired market functions. All these obligations would be incurred by the private sector irrigators," the white paper says.