Dam Removal Workshop August 16-17, 2004 ASCE, EWRI

1. Dam Removal WorkshopAugust 16-17, 2004ASCE, EWRI University of California - Berkeley International House Ida and Robert Sproul Rooms Dam Decon

2. “Can Analysis Trump Politics in Dam Removal Decisions” By Willard Price, Ph.D., PE Professor of Operations and Engineering Management University of the Pacific wprice@pacific.edu Dam Decon

3. Themes for this Opportunity to Study Infrastructure Decisions • Dam removal was unheard of until recently, it is so unusual to study “deconstruction” of a dam other than by failure, so why is it a substantial debate? • Deconstruction is not demolition, it is dismantling a structure to reap maximum value of the material waste • Decisions to remove infrastructure allow a test of whether “analysis trumps politics” in these cases, bringing credibility and rationality to the choice Dam Decon

4. Stimuli for Removal • Owner losing interest in continuing the burden of operation and maintenance, especially major rehabilitation investments • Risk of dam collapse, and the resulting disaster, become so high that investment or removal are preferred over the status quo • Returning the natural resource to a free stream becomes a convincing choice (Don’t miss the Irish song: Only our Rivers Run Free) Dam Decon

5. Deciding to Act on Removal (or other choices) • The decision is much more complex than other infrastructure decisions, implications more significant and arguments more fierce • This research seeks to evaluate all factors, integrating variables and their measures in a model that recommends a decision based more on analytical thinking than political preference • Yet politics are so difficult to avoid, even for private owners Dam Decon

6. An Integrating Model • The decision model recognizes three components: • Benefit cost analysis of real/implied cash flows with present value calculations • Multiple criteria decision model with both subjective/objective measures • Rights/obligations necessitating “go - no go” choices • All data are integrated to focus the choice by ranking acceptable alternatives Dam Decon

7. Research Challenges • Surely this review is not the comprehensive theory, certainly no real experience contributed to these arguments, based primarily on the author’s background (Once built a dam) • Any specific case may not require all the variables suggested below or may include concepts not introduced here Dam Decon

8. Research Challenges(continued) • Many hypothetical arguments are proposed to get us thinking and to stimulate ideas as we mature this water resource arena • Much more research should be pursued, including field study, literature, statutes, regulations and case law (An agenda for many) • I can’t wait to test the model on real dam sites, certainly this workshop should provide valuable fodder for further inquiry Dam Decon

9. Research Hypotheses • Given the state of this research, selected hypotheses are introduced throughout this presentation • These hypotheses are worth testing on a case by case basis or across several cases as several dam deconstruction decisions are presented over time • For most of these hypotheses, we expect or hope to reject the inference, yet they intend to provoke interesting discussion Dam Decon

10. Begin with Classic Benefit-Cost Analysis • No doubt we want to consider financial rationality when economics matter to owners or is required by legislation or policy • Observe any decision’s impact on the finances of owners and other stakeholders • Albeit, the decision ultimately may be based on subjective or “softer” values as well as legal obligations, no matter the “hard” B/C ratio Dam Decon

11. Typical Benefit-Cost Framework • All benefits and costs are essentially cash flows measured by their magnitude and time period in which they occur. • Cash flows can be real cash flows for owners or others as well as implied flows or imputed economic values to various sectors of society • Examples below suggest the complexity Dam Decon

12. Suggested B/C Variables • Benefits of dam removal: • Cost reduction of operation/maintenance • Cost reduction of ownership overhead, insurance and liability risk • Revenues from materials recycling, including steel, concrete, soil, piping, equipment and wiring • New recreation revenues (real) with the natural stream, to whomever they accrue • New recreation benefits (implied) or the value received by users who do not provide revenues Dam Decon

13. Suggested B/C Variables (continued) • Costs for dam removal: • Costs of deconstruction, including water diversion, structure removal, right-of-way and project administration and overhead • Costs of removal of sediment, including toxic cleanup and recycling or disposal, other environmental/mitigation burdens • Loss of recreation revenues for public or private vendors • Loss of power revenues and water sales • Reduction in flood damage savings • Loss of property value due to absence of views and reduction of multiple uses, settlements to damaged parties Dam Decon

14. B/C Analysis: Hypotheses • HYP: • Dam Removal can not be justified economically, that is a benefit-cost analysis of real and implied cash flows will produce a B/C ratio < 1 • “Soft” benefit and costs will need to be considered to ensure the B/C ratio > 1 Dam Decon

15. Multiple Criteria Decisions • Allow the measurement of more subjectively valued criteria or variables • Combine both subjective and objective variables (i) in a common scale (0-100) • Weigh the relative importance of each variable (wi) to the overall objective of the project • Score all variables for each alternative (xij), say “remove the dam, reduce/revise dam structure, continue to maintain, rehabilitate or enhance the structure” Dam Decon

16. Multiple Criteria Decisions (continued) • Calculate the total score of each alternative (j), by Sum (wi) (xij), ranking the alternatives, letting the highest score seriously influence the choice • Useful for those benefits or costs not measurable in real or implied dollars, standing alone from B/C • Yet consider integrating all variables selected for evaluation, including benefit and cost data, in the multiple criteria model by “normalizing” all variables to the common scale, often 0-100 Dam Decon

17. More Subjective Criteria, Environmental Variables • Fauna and flora value achieved, sometimes scaled as bio-mass realized • Impact on the ecology of the water course for all natural resources, say water quality, soil, ground water, vegetation, erosion and sediment • Scenic value with and without the dam site • Hiking/visiting value for the natural stream v. the reservoir Dam Decon

18. Typical Multiple Criteria, Uses and Economic Value • Land availability from removal for other uses • Recreation opportunities provided and lost by removal • Water supply value with and without dam • Energy available before and after structure • Flood damage protection with and without dam • Risk of failure and damage before and after dam structure is removed Dam Decon

19. Multiple Criteria: Hypotheses • HYP: • Regulatory permits are needed to remove a dam structure because of impacts on environmental resources or because of dangers to public health or safety • Dam removal permits are not likely to be approved without new legislation Dam Decon

20. Hypotheses (continued) • HYP: • Risk is often neglected in these analyses and the reality of uncertainty often produces “overruns” of costs and “underruns” of benefits; on average these variations from plans negate original affirmative decisions OR • A “posterior” analysis will vary from an “a priori” analysis, frequently realizing less favorable results Dam Decon

21. Hypotheses (continued) • HYP: • Such overruns and underruns are variations caused by: • Deliberate strategies to gain project acceptance by underestimating or underbidding and/or • Lack of imagination or anticipation, also called the absence of “imagineering” (A term used by NASA to explain the Apollo 1 fire) Dam Decon

22. Rights and Legal Obligations • These obligations essentially represent “releases or restrictions” to allow removal or require continuation of the structure • That is they may allow certain action or prevent action, in effect a “go or no go” decision • These obligations often free owners to act or cause owners to risk legal challenges or regulatory impediments to their action Dam Decon

23. Rights and Obligations (continued) • Examples of these considerations: • Fauna and flora legally protected either with dam in place or without the dam • Mitigation mandated to satisfy regulatory obligations • Right to a specified water supply from the reservoir • Required flood protection provided by the dam • Right to an energy supply at a contracted price • Business rights to continued operation guaranteed by public policy or the courts Dam Decon

24. Rights and Obligations (continued) • If any restrictions prevent action to remove a dam or seriously decrease the chance such action will be approved or permitted, then: • Adapt the law or change the regulation • Acquire an exemption from existing obligations • Achieve a political or legal opinion that argues the desired action is permissible • Test rights/restrictions by arbitration/litigation • Pay settlements to aggrieved parties Dam Decon

25. Rights and Obligations:Hypothesis • HYP: • Legal rights or regulatory obligations will require dam removal initiatives to acquire a policy change, legislative revision or legal adjudication Dam Decon

26. Making the Final Decision: Integrating All Information • Ask for a political/governmental choice only in the presence of the above analyses • Expect a permitting agency to base their acceptance on legal obligations first, then consider the owner’s complex analyses • Expect the owner’s board or council to commit only after analyses are argued, yet a positive economic analysis is likely necessary Dam Decon

27. Integrating Information (continued) • All stakeholders must be heard, for the lack of consideration of their views will surely deny their rights and increase the likelihood of project denial • If all stakeholders are included in the planning process, there is less chance they can defeat the decision at administrative, legislative or legal deliberations • HYP: A consensus or WIN-WIN situation is necessary to proceed with dam removal Dam Decon

28. Once Again our Workshop Objective • Our objective is to create a comprehensive review of the dam removal decision, with no expectation of a favorable outcome to deconstruct, for other options are available • Certainly not our task here in Northern California to pave the way for the removal of Hetch Hetchy Reservoir (Some here may have that objective) • In fact, as a Water Commissioner, I am supporting a new dam above Pardee Reservoir on the Mokelumne River (A greater challenge) Dam Decon

29. A Comprehensive Decision: More than Removal • If removal is not viable, other choices may involve reducing or enhancing the existing impoundment structure to: • Rehabilitate and reduce risk of failure • Create new uses and generate new revenues • HYP: • The decision to remove represents the most desirable alternative environmentally, if not economically Dam Decon