The Public Role of Engineering: The California State Water Project

Among the mistakes leading to an excessively favorable evaluation of the California State Water Project were use of an extremely low discount rate, failure to reduce demand estimates in the face of higher prices, failure to take additional sources of supply into account, and the inappropriate use of the next cheapest alternative method of estimating the benefit of water deliveries. The California Department of Water Resources and various independent consultants compounded the problem by presenting their evaluations and conclusions in deceptive and confusing ways. Excessive disdain for economic analysis applied to project evaluation, and institutional pressures account for much of the problem. Suggested solutions include better evaluation standards, more professional discipline, and better staffing and procedures for legislative consideration of technological questions.