San Francisco Should Pay Yosemite the Dam Rent: PERC Report

I ran across this interesting idea from Sara Sutherland at PERC. There are many dams on FS land. I wonder if it would make sense to harmonize regulations for dam permittees across BLM, NPS and FS, possibly with some kind of negotiated transition period? It’s interesting to think about the idea “are they paying “enough” and what you would base “enoughness” on. Sutherland has some ideas, including the benefits of a dam-free valley.


In 2018, Yosemite National Park had the highest deferred maintenance backlog of any national park in the country, with $646 million worth of overdue maintenance projects. The park may have a long-overlooked source of funding to tap for maintaining and preserving the public’s access to its scenic grandeur: an outdated lease on part of its property.

The Hetch Hetchy Valley, located entirely within the park, provides water to San Francisco and other Bay Area communities. In addition, San Francisco receives approximately one-tenth of its power from hydroelectricity generated by the gravity-driven flow from the Hetch Hetchy Reservoir. The 1913 Raker Act authorized the unprecedented dam inside the park and also set the fee that the city pays to rent the entire valley in which the dam sits: $30,000 per year. It may be the worst contract in the history of the National Park Service.

While the lease price has remained constant over the past century, the value of the valley has not. Yosemite today is exceptionally congested—it is the fifth most visited national park—and restoring the Hetch Hetchy Valley would increase both the quantity and quality of recreational opportunities available to the park’s 4.5 million annual visitors. A benefits-transfer study conducted by a consulting firm calculated the potential recreational-use value of undamming the valley to be between $1.7 billion and $5.4 billion.

San Francisco’s water supply is also valuable. The city earns about $440 million annually from the sale of Hetch Hetchy water to its own customers and other municipalities. Thus, there is clearly a trade-off between keeping the dam and tearing it down. The former would continue to prevent recreation in the valley, while the latter would force the Bay Area to reassess its entire water supply. What is also clear is that under the current agreement, Yosemite, its visitors, and the American public are all losing.

In light of the park’s needs, the annual lease price San Francisco pays could be adjusted to raise revenue that could help maintain infrastructure inside the park, a move that would also be consistent with how other national parks structure their concessions and special-use contracts. Three methods can provide a range of potential lease prices.

A more equitable payment to the park from the city for its use of Hetch Hetchy water would provide enormous benefits for the 4.5 million people who visit the park each year. It is time to update the century-old arrangement between Yosemite and San Francisco.

Options to Adjust Hetch Hetchy Lease Price:

Account for inflation that has occured since the price was set by the Raker Act.
Treat San Francisco as a National Park Service concessioner and charge a franchise fee according to agency rules.
Set the annual price equal to the annual value of an undammed Hetch Hetchy Valley.

6 thoughts on “San Francisco Should Pay Yosemite the Dam Rent: PERC Report”

  1. Wonderful Idea. ?

    I’d bet that their screams would be heard all of the way to the Atlantic.?

    While we are at it, make everyone bring notarized copies of their last 7yrs of Federal income taxes (less if your time out of H.S. is less than 7
    ). Anbody who averages more than $75,000/yr adjusted pays double a sustainable usage fee, over $175,000 pays 4X and double it for every additional $100,000 until they average over $1,000,000/yr. If they forget to bring their tax filings, they get to turn around and go home.

  2. San Franciscans love the idea that their drinking water comes from Yosemite (and other reservoirs in the National Forests). What most do not know is that canals runs through the city of Modesto, uncovered and unfenced. It kinda smells funny, too.

    The original plans included more recreational opportunities at Hetch Hetchy and a highway around the reservoir. In truth, the area is so rugged that there isn’t even a trail that goes around it. They don’t even allow swimming or human-powered watercraft.

  3. Brilliant!

    The water resource, essential for life, is arguably the most valuable of all of the ecosystem services. An annual fee of $30,000 for use of this billion dollar resource is unthinkable. It will be interesting to see where this idea goes.

  4. I’m sure there are versions of this subsidy all over the National Forest System. Another big one that comes to mind is the Bull Run Municipal Watershed for Portland, which excludes people from the Mt. Hood National Forest. But how about any small community that gets its water from a national forest, leading to extra costs (monetary and ecological) for the Forest Service to manage the area to protect the water supply (as Sharon often suggests in the fuel reduction threads). And I suspect the benefit to these communities is much greater than whatever they may be paying for any kind of permit they may have. (I used to hear about how it saves them from having to build a filtration plant.)


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