*3.3. Economic Analysis of Selected Salt Management Strategies*

The first part of this paper laid out the theoretical underpinning and principles of a collaborative strategy that was anticipated would be necessary by the state regulator and that is necessary to achieve cost-effective and equitable salt management strategies. The cost and institutional feasibility of these strategies should be juxtaposed against paying the fine that the Regional Water Board has formulated to provide an incentive for regional basin cooperation and coordination without creating an undue burden on stakeholders or incentivizing stakeholder litigation. The seven subareas were chosen, not only from a hydrological perspective but also from a jurisdictional and institutional viewpoint. This paper now provides an economic rationale for a couple of effective salt management strategies that were proposed for consideration in the region.

We start by comparing the strategy of building and maintaining temporary holding ponds to store salt loads until they can be safely discharged to the San Joaquin River without exceeding objectives at any of the three compliance monitoring sites. Other means of providing temporary storage are surface and subsurface drainage reuse or short-term storage of salt load in the shallow groundwater, achieved by temporarily switching off tile drainage sump pumps. The analyses in [39], and prior in the United States Department of the Interior, Bureau of Reclamation model report [40], provide realistic cost parameters for various temporary salt storage options relevant to real-time management of salt loading to the San Joaquin River.

The CDM Smith report [39], refers to two regions that can be relevant to two of our sub areas: Tulare Lake Bed (TLB) (Note that the Tulare Lake bed is outside our study area. It does not export salt to the San Joaquin River. However, the costs of ponds may be relevant to our study.) and San Joaquin River Quality Improvement Project (SJRIP). Table 4 summarizes the relevant results to our work from the report of [39].

We used the observed data for the region during 2001 through 2021 as the basis for calculating the excess annual salt load above the regional allowances that could either be disposed of to the river with an excess fine paid, or be temporarily stored and reduced through reuse, recirculation, or storage in the shallow groundwater system (shut off sump pumping). The cost values in Table 4 are based on several assumptions. First, it is assumed that the cost per ton of salt stored in the pond include variable, fixed, and the opportunity cost of the land assigned to the pond. We used the working assumption in [39], without changing them.

**Table 4.** Costs and effectiveness in removing salt of the evaporation pond technology in two locations in the Central Valley.


Source: Extracted from [39], Tables 2 and 3. Note: pond cost assumed to be equivalent to the cost of an evaporation pond. Selenium issues have pretty much nixed mixed evaporation ponds for the past 20 years. However, any selenium in drainage will warrant bird hazing and the cost of temporary holding ponds may not be that different from evaporation ponds. Values elaborated by authors, based on data in [39].

The pond technology in [39], was assessed in two regions in the Central Valley. However, in our analysis we used the cost and effectiveness values in each region as our higher and lower values within which the technology performed. One set of values suggested that it took USD 9.62 per ton of stored salt and with an effectiveness rate of 90%. The second set of values suggested a USD 24.72 per ton of temporary storage of salt with an effective rate of 11% (Table 4).

Salt load that exceeded the allowance for disposal was subject to a fine. Taxes were either by days of exceedance of salt concentration or by total tons of salt above the level of allowance (Tables 2 and 3). The analysis in this paper refers only to tons of salt observed on a monthly basis between 2001 and 2021. Two levels of fine rates have been arbitrarily used (USD 10/ton and USD 20/ton) to reflect incentive–provision fines on the part of the stakeholders in the subarea. Since the analysis spans over 20 years (2001–2021) we used a discount rate to allow comparisons of sums between 2001 and 2021. We used the directive for using a real discount rate of 7% [41]. That source requires the use also of a 3% discount rate, but for our purposes this was not necessary.

The WARMF model provided the salt load allocation for each of the seven subareas that was developed for the Real-Time Program by the Regional Water Quality Control Board based on the original salt load TMDL. These salt load allocations provide an initial basis for negotiation and allow the excess salt loads over and above the subarea allocation to be calculated. If treated, we applied the cost and effectiveness parameters to calculate the treatment cost. Since effectiveness is always less than 100%, the remainder of the salt to be disposed of was subject to the fine. Then, we compared the total annual cost of treating the salt plus paying the incremental fee to the total annual cost in the case that the salt load is not treated and is disposed of in its entirety.
