Tag Archive for: water policy

The Abundance Choice (part 15) – Our Fight for More Water

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There are plenty of ways to ration water, and California’s state legislature is pursuing all of them. Restrict agricultural water allocations until millions of acres of California’s irrigated farmland is taken out of production. Ban outdoor watering entirely in urban areas. Monitor residential indoor water use and lower it to 40 gallons per day per resident, with heavy fines to urban water agencies that cannot enforce those restrictions. But this is a lose-lose proposition, wreaking economic havoc and diminishing the quality of life for all Californians.

The initiative we came up with and attempted to qualify for the November 2022 ballot acknowledged the importance of conservation, but focused on supply. Passage of this initiative would have eliminated water scarcity in California. Looking to the next two year election cycle, the latest possible filing date for a new attempt to place an initiative on the November 2024 ballot is September 2023. A smarter approach would be to file an initiative around March 2023 in order to be gathering signatures from late spring through early fall in 2023. That would avoid competition with other political campaigns that promise to overwhelm 2024, and it would allow signature gatherers to approach voters who are likely to be enduring a second consecutive summer with the most severe restrictions on water use they have ever experienced.

The sad reality however is these plans are worthless without either access to millions of dollars in donations, or a volunteer movement with unprecedented scale and unity. But building a grassroots movement to demand more water supply infrastructure can easily be disrupted by opponents.

This was evident in the press coverage our campaign got, where we were tagged both as extreme Republicans as well as puppets of big agriculture. The smear campaigns worked, as we may have expected. In California, even moderate Republicans – which are a minority of the GOP grassroots but attract the majority of the GOP donations – will not get involved with anything that they think is associated with either the Newsom recall effort, or the so-called MAGA movement. Independent voters and Democrats, even if a cause is explicitly bipartisan, as ours was, will not associate with “extremists.” The impact of these schisms is to kill larger grassroots movements before they’re even born. You can’t unify an electorate in California, or a donor community, if over six million of your potential allies are branded as too toxic for anyone else to dare associate with.

It certainly doesn’t end there. As we have seen, the farmers were divided among themselves. And potential supporters, everywhere, would often vehemently object to one aspect of our plan, and on that basis withdraw their support even though they approved of the rest of it. The most controversial elements of our initiative were to include reservoirs and desalination as eligible projects, and to include provisions that would have streamlined environmental regulations. In each of these controversial cases, we believed they were too important to leave out. But our opponents portrayed those elements of our initiative as extreme threats to the environment. This was unfair and it was inaccurate, but as always, it was very effective. Nobody wants to destroy Mother Earth!

Not only were we tainted as right-wing extremists bent on destroying the planet, we were accused of being puppets of “Big Ag.” This was a smart divide-and-conquer tactic, because it helped cement the perception in the minds of urban voters that farmers are the problem, that farmers are taking all the water. And just as there is some merit to the environmentalist position that our current mode of middle class living is unsustainable, you can make the case that “Big Ag” has gotten more than its fair share of subsidized water. To review a vivid portrayal of the Big Ag players in the western San Joaquin Valley that is so cynical it’s entertaining, read the series “A Journey Through Oligarch Valley,” a 31 page screed written by Yasha Levine in 2013.

Oligarchs Have a Vested Interest in Water Scarcity

You can disagree with Levine without dismissing his entire argument. Where he missed the point by a mile, however, is that oligarchs – all of them, not just “big ag” – have a vested interest in less water, not more water. To the extent that some of the alleged villains in Levine’s book considered supporting our initiative, they were doing it for altruistic reasons more than for their own self interest. Our initiative, had it been approved by voters, and based on how it was written, would have likely resulted in tens of billions of dollars from the state’s general fund going to Los Angeles and other major coastal cities to pay, for example, to reuse 100 percent of urban wastewater, to restore portions of the Los Angeles River with natural habitat and spreading basins to recharge aquifers during storms, and replace the toxic pipes in Los Angeles public schools.

Steve Greenhut, in his 2020 book Winning the Water Wars, has this to say about the financialization of water and land: “The state needs to reform its regulatory barriers to water trading, so water-rights holders are better able to sell water to those who need it most. California also needs a better pricing system to allow markets to work their magic. But pricing must come against a backdrop of water abundance rather than one that leaves everyone fighting over an artificially capped supply.”

When water pricing comes “against a backdrop of water abundance,” one thing is certain. The price of water will drop. The primary beneficiaries of lower prices will not be the so-called oligarchs of Big Ag and the hedge funds that are gobbling up farmland for the water rights. In many cases lower prices for water will impede their efforts to buy out smaller farmers and it will undermine speculative investments in farm properties. The beneficiaries of lower prices will be farmers that produce vital row crops that are only economically viable when water is affordable, ensuring California continues to produce diverse agricultural products in-state. The beneficiaries of lower water prices will be urban water agencies and their ratepayers, including businesses that rely on affordable water. And the only way to accomplish this is for the state to pay for massive investments in water infrastructure, just like it did back in the middle of the last century.

To pay for more water, the price tag we’re looking at today is actually more affordable than it was back then. The 1957 California Water Plan had a total estimated construction cost of $11.8 billion. The state budget in 1957 was $1.9 billion, with capital outlay of $440 million, 23 percent of the entire budget. Through a combination of bonds and general fund allocations, back in 1957 the California state legislature resolved to spend an amount equal to six times their annual budget to build water infrastructure.

These comparisons are stunning, because they illustrate just how big these legislators back then were willing to think.  In 2022 dollars, $11.8 billion is worth $113.8 billion. For water infrastructure, that’s a huge number, dwarfing the amounts that have been suggested in even the most ambitious recent proposals. Yet it is only is equal to 40 percent of today’s $286 billion state budget. While California’s legislature is spending money today on things they couldn’t imagine back in 1957, that doesn’t mean California’s policymakers can’t commit to spending one hundred billion dollars, or more, on water infrastructure today. Sixty five years ago, as a percentage of that year’s state budget, California’s legislators committed more than twelve times as much.

A 21st Century Water Plan to Match the 20th Century Plan

Imagine what Californians could do with $118 billion dollars to spend on water infrastructure, keeping in mind this hypothetical budget is only using state funds and doesn’t account for local or regional government matching or private investments:

Every one of these budget items would qualify as an eligible project under our initiative as it was written, with the only limitation being that funding would cease when 5.0 million acre feet of water per year was being produced by new projects. The order in which the projects to increase the supply of water appear on this chart is not random. Notwithstanding the fact that getting reliable and consistent cost projections per project category is difficult because projects in the same category can often have very different costs based on very different circumstances, these projects are listed in the order of cost-effectiveness. And at the top of this list, fairly unambiguously ranked as the most cost-effective way to get more water, is to raise the height of the Shasta Dam.

To delve too far into the politics or the costs of these various projects and project categories is not the point of this report. Yes, Shasta Dam is a Federal project, but it belongs in any discussion on how to increase California’s water supply. And some of the urban wastewater recycling quotes I saw, from authoritative sources representing water agencies in Northern California, showed a projected ultimate per unit cost that exceeded current projections for the proposed Huntington Beach desalination plant. That certainly doesn’t mean we eliminate wastewater recycling as an option.

The point of this report is the amount of money it would take to create permanent water abundance in California in this century is an amount that the planners back in 1957 would have considered trivial. What is 118.5 billion in today’s dollars, only forty percent of the state budget, in 1957 dollars was six times the state budget at that time. The argument that one typically hears from conservatives – government spending is wasteful – may be true but could not be less relevant in this case. And the argument often heard from liberal economists, that even wasteful government spending creates a positive ripple effect because all that wasted money gets spent over and over again in the economy, could not be more true in this case.

The Case for Government Subsidizing Construction of Water Infrastructure

The reason the government subsidizes water projects is because affordable and abundant water lowers the overall cost of living and doing business. It lowers the cost of food. It lowers the cost of housing. It lowers utility bills. This is an economic ripple effect that has no rival. Government funds spent on high speed rail create good union jobs, and the increased spending by those workers stimulates the economy. But that’s as far as it goes. High speed rail, if it’s ever built in California, will be a permanent drain on the economy. There are better, faster, cheaper solutions to transportation challenges. But affordable and abundant water is a core enabler of economic prosperity.

Conservatives ought to see the appeal in the case for subsidizing water infrastructure because without the subsidies on the front end, to build huge capital projects that smash the price equilibrium for water and make it affordable, there will be a greater need for subsidies on the back end. Billions will instead have to be spent on an enforcement bureaucracy to ration scarce water, along with the enforcement hardware – such as dual residential meters to monitor indoor vs outdoor use – and additional billions will have to be perpetually spent to subsidize low income families that cannot afford their water bills, food, and housing.

Investing in abundance at the level of basic economic essentials – water, energy, and transportation infrastructure – is the role of government. Without debating whether or not other spending priorities are an appropriate role for California’s state government, they should not have arisen at the expense of infrastructure spending. Not only has the state legislature effectively created a zero sum game, where new spending priorities supposedly preclude massive spending on infrastructure, but what infrastructure spending survives is mired in bureaucracy and litigation.

It would be a productive compromise to accept the reality of bureaucracy and litigation doubling or tripling the cost of infrastructure, if the most worthwhile projects were ultimately built. After all, that wasteful excess spending would trickle through the economy as bureaucrats and litigators spent their paychecks. Accepting this compromise seems to be the consensus among most infrastructure advocates at water agencies around the state. Let’s wait thirty years to get permits, let’s give the environmentalists everything they ask for, let’s settle for pennies on the dollar in terms of actual usable water, because that’s better than nothing.

The problem with this reasoning is it accepts the legitimacy of scarcity. It accepts the premise that a middle class lifestyle is unsustainable. It rejects the possibility that technological innovation will solve the challenge of producing abundant and affordable energy, and ignores the fact that producing another five million acre feet of water per year in California would only require a minute fraction of the additional generating power the state legislature is going to need to achieve their goal of an electric age.

Choosing abundance by investing in providing the basics of life, starting with water, is the only way California can set an example to the rest of the world. It is also the only choice that accurately reflects California’s legacy and culture. It is a choice that embraces the power of adaptation and chooses optimism over pessimism. It is also a realistic choice, because choosing abundance by adopting an all-of-the-above approach to producing water is the only path consistent with how every aspiring nation on Earth intends to serve their citizens. California’s designs, for dams and desalination plants, wastewater treatment plants and facilities for stormwater capture, can be the cleanest, best solutions in the world.

The initiative we developed, perhaps more than anything else, was an attempt to inspire Californians to think big. Across so many of California’s industries throughout its history that has been an intrinsic theme. Today California’s high tech industry is changing the world. California’s music and entertainment industries remain one of the defining cultural influencers on earth. California is a land of big mountains and big trees, a big valley, a perfect climate, and one of the most beautiful coastlines anywhere. California is a land of dreamers who made their dreams come true. California’s first water plans exemplified the best of that century’s ideas and potential and created a marvel that remains unrivaled. Using everything we’ve learned, it is time to do the same in California for this century. It is time to make the abundance choice.

This article originally appeared on the website of the California Globe.

How Much Water Went Into Growing the Food We Eat?

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The rains bypassed sunny California in January and February 2020, encouraging talk of another drought. California’s last drought was only declared over a year ago, after two wet winters in a row filled the states reservoirs. To cope with the last drought, instead of building more reservoirs and taking other measures to increase the supply of water, California’s policymakers imposed permanent rationing.

This predictable response ignores obvious solutions. Millions of acre feet of storm runoff can not only be stored in new reservoirs, but in underground aquifers with massive unused capacity. Additional millions of acre feet can be recovered by treating and reusing wastewater, and by joining the rest of the developed nations living in arid climates who have turned to large scale desalination.

All of this, however, would require a change in philosophy from one of micromanagement of demand to one that emphasizes increasing supply. To understand why a focus on increasing supply is vastly preferable to reducing demand, it helps to know just how much water California’s urban residents consume compared to other users.

As a matter of fact, the average California household purchases a relatively trivial amount of water from their utility, when compared to how much water they purchase in the form of the food they eat. For this reason, reducing residential water consumption will not make much of a difference when it comes to mitigating the effects of a prolonged drought.

To illustrate this point, it is necessary to determine just how much water is available to Californians, and how much of that water is being consumed by residential households in California. When making this analysis, one must not only estimate how much water California’s households purchase from their utility, but how much water is embodied in the food they eat.

Total Annual Water Supply and Usage in California

Here’s a rough summary of California’s annual water use. In a dry year, around 150 million acre feet (MAF) fall onto California’s watersheds in the form of rain or snow, in a wet year, Californians get about twice that much. Most of that water either evaporates, percolates, or eventually runs into the ocean. In terms of net water withdrawals, each year around 31 MAF are diverted for the environment, such as to guarantee fresh water inflow into the delta, 27 MAF are diverted for agriculture, and 6.6 MAF are diverted for urban use. Of the 6.6 MAF that is diverted for urban use, 3.7 MAF is used by residential customers, and the rest is used by industrial, commercial and government customers.

Put another way, Californians divert 65 million acre feet of water each year for environmental, agricultural and urban uses, and the planned permanent 25% reduction in water usage by residential customers will only save 0.9 million acre feet per year – or 1.4% of total statewide water usage. One good storm easily dumps ten times as much water onto California’s watersheds as would be saved via a 25% reduction in annual residential water consumption.Armed with these facts, there’s a strong argument that cutting back on residential water consumption will not make a significant difference in California’s overall water use. There are additional facts that can put this argument into an even sharper context: How much water do California’s households consume in terms of the water that was required to grow the food they eat, and how does that amount compare to the water they purchase from their utility for indoor/outdoor use?

The “Water Footprint” of Food per Ounce and per Calorie

While the information to determine this is readily available, it isn’t typically compiled in this context, so here goes. The best source of comprehensive data on the “water footprint” for various types of food comes from the Water Footprint Network, a project initially funded by UNESCO. An excellent distillation of that information was produced in April 2015 by Kyle Kim, John Schleuss, and Priya Krishnakumar, writing for the Los Angeles Times. Information on calories per ounce was found on the website “fatsecret.com.” Information from these various sources is summarized on the following table.

As can be seen on the above chart, when evaluating the water efficiency of various food sources, it is misleading to rely only on gallons per ounce, since the number of calories per ounce are highly variable. But putting these two variables together to calculate a gallons per calorie measurement is quite useful. Clearly, meat products require a huge amount of water per calorie. The most efficient sources of meat protein are found in chicken, which at 0.37 gallons per calorie is around four times as water-efficient as red meat. Some sources of protein from vegetables are surprisingly efficient, including avocados at 0.20 gallons per calorie, and the almond – much maligned as a water waster – at 0.15 gallons per calorie. But we digress.

How much water does it take to feed the average household in California, and how does that compare to the amount of water they buy from the utility for indoor/outdoor use?

Total Annual Consumption of Water-in-Food per Household

The next table, below, provides this estimate based on a typical diet. The estimate of 2,000 calories necessary to sustain the average human (men, women, children) comes from WebMD. The breakout of food consumption by category, while somewhat arbitrary, relies on data on “the average American diet“c ompiled by researcher Mike Barrett, writing for the Natural Society website. In turn, Barrett relied on USDA and other government sources for most of his data, which is reflected here.To summarize, in one year, the average American consumes a quantity of food that required 1.3 acre feet of water to grow. In turn, at 2.91 people per household in California, the average household consumes a quantity of food per year that requires 3.9 acre feet of water to grow.

Average Annual Water Use per California Household

Putting all of this together yields a revealing table, below, that shows that the average California household purchases a relatively trivial amount of water from their utility, when compared to how much water they purchase in the form of the food they eat. By dividing the 3.7 million acre feet of water used by residences each year in California by the 12.8 million households in California, the average annual water consumption per household is 0.289 acre feet. By contrast, the amount of water that is eaten, so to speak, by the average California household is 3.9 acre feet, thirteen and a half times as much.

By the way, it is irresistible to point out that drinking water, that quantity each human requires for their daily hydration, based on the 0.5 gallon per day recommendation from the Mayo Clinic, comes out to a paltry 0.0016 acre feet per year per household – not even a rounding error when compared to the other uses. Think about that the next time you have to ask for your water at a California restaurant.There is no Reason Water Cannot be Abundant and Affordable

For decades, when it comes to water, California’s policymakers have prioritized demand restrictions instead of supply enhancements. This is consistent with their priorities in other critical areas, certainly including energy and transportation. “Induced demand,” the idea that if you build it, more will use it, is the nightmare axiom that governs this policy. It certainly would never have to do with the possibility they’d rather put all those operating funds into their pay and pensions instead of expanding public infrastructure.

The problem with this, however, is that eventually the conservation option begins to yield diminishing returns, and then all you have left is punitive rationing. And once via punitive rationing you have wrung all of the redundancy and surplus out of the system, you have no resiliency if any part of the system fails. That is where California is today. The abundance choice is the only viable option if Californians are to improve their quality of life. In no particular order, here are some reality checks that California’s voters and elected officials ought to consider:

(1)  Projects that increase water supply via sewage reuse, runoff storage via reservoirs or aquifers, and desalination, are options that benefit all users, urban and agricultural.

(2)  Increasing the supply of water from diverse sources creates system resiliency which can be of critical benefit not only in the face of persistent drought, but also against catastrophes that may, for example, disable a pumping station on a major aqueduct.

(3)  The energy costs to desalinate seawater, approximately 4.0 kilowatt-hours per cubic meter, are overstated. Desalination plants can be co-located with power plants, eliminating power loss through transmission lines, whereas far-flung pumping stations consume significant amounts of electricity. Depending on transmission loss and desalination plant efficiency, the amount of lift beyond which desalination consumes less power than pumping is only about 1,500 feet.

(4)  Public investment in water saving home appliances, for example via tax rebates to consumers to purchase them, by contrast, do not increase the overall supply of water.

(5)  It is nearly impossible to engage in excessive use of indoor water in a household, because 100% of the sewage is treated and released as clean outfall to the environment. Moreover, sewage is increasingly treated and reused as potable water, and eventually 100% of indoor water waste will be cycled immediately back for reuse by households.

(6)  One preferred way to reuse household sewage is referred to as “indirect potable reuse,” where the treated water is percolated into aquifers where it is eventually pumped back for household reuse. This practice has the virtue of banking the water against supply disruptions, recharging the aquifer which is especially beneficial in coastal areas where there can be salt water intrusion, and even, as water is repeatedly cycled through the aquifer, causing an ongoing improvement to the quality of the water in the aquifer as treatment progressively reduces levels of undesirable residual toxins.

(7)  While achieving 100% reuse of sewage will render indoor water conservation pointless, the virtues of outdoor water use are understated. Healthy landscaping, consisting of abundant vegetation including lawns, reduce the incidence of dust-borne pathogens, reduce the incidence of asthma, and clean and moisturize the air. Replacing grass playing fields with artificial turf introduces toxins, causes more ACL and other sports injuries, and retains heat – often to the point of making these faux fields unplayable unless they are, ironically, watered.

(8)  Simply giving up consumption of red meat would reduce the average household’s water consumption by nearly 2.0 acre feet per year. By comparison, the average Californian household’s total water consumption from the utility averages 0.29 acre feet per year. That is, just replacing consumption of red meat with an equivalent caloric intake of chicken will save the average household seven times as much water as they buy from the utility for all uses, indoor and outdoor.

Policies designed to reduce household water use are a good idea, but must be kept in perspective. What has already been done is more than enough, and priorities now must shift towards investment in infrastructure to increase the supply of water. Nearly all water diversions in California, about 90%, are either to preserve ecosystem health or to supply agriculture. Indoor water overuse is becoming a myth, and will become entirely irrelevant as soon as 100% sewage reuse capacities are achieved. Outdoor water use should not be thoughtless, but allowing grass and perennials to die, or converting landscaping to “desert foliage,” is a cultural shift that is not necessary or desirable.

Along with investing in infrastructure to increase the supply of water, public education to help Californians adopt healthier diets would have the significant side benefit of being sound water policy. A trivial change in patterns of food consumption yields a major reduction in water required for food. For example, a public education campaign that caused a voluntary 10% reduction in red meat consumption (from 25.0% of all calories to 22.5% of all calories) would reduce California’s water consumption by 2.5 million acre feet per year. By comparison, total outdoor residential water consumption in California is estimated at only 1.8 million acre feet per year.

Perhaps, in lieu of renouncing escalating and entirely unnecessary mandates to reduce household water use, those of us who love our lawns might at least be granted a waiver if we were to present an annual affidavit to document our below-average consumption of red meat. Our smart refrigerators might actually submit the report to the utility, sparing us the paperwork.

This article originally appeared on the website American Greatness.

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Towards a Grand Bargain on California Water Policy

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When it comes to water policy in California, perhaps the people are more savvy than the special interests. Because the people, or more precisely, the voters, by huge majorities, have approved nine water bonds in the past 25 years, totaling $27.1 billion. It is likely they’re going to approve another one this November for another $8.9 billion.

The message from the people is clear. We want a reliable supply of water, and we’re willing to pay for it. But the special interests – or whatever you want to call the collection of politicians, unelected bureaucrats with immense power, and other stakeholders who actually decide how all this money is going to be spent – cannot agree on policy. A recent article in the Sacramento Bee entitled “Why San Francisco is joining Valley farmers in a fight over precious California water,” says it all. “Precious California water.” But what if water were so abundant in California, it would no longer be necessary to fight over it?

As it is, despite what by this time next year is likely to be $36 billion in water bonds approved by voters for water investments since 1996, the state is nowhere close to solving the challenge of water scarcity. As explained in the Sacramento Bee, at the same time as California’s legislature has just passed long overdue restrictions on unsustainable groundwater withdrawals, the political appointees on the State Water Resources Control Board are about to enact sweeping new restrictions on how much water agricultural and municipal consumers can withdraw from the Sacramento and San Joaquin rivers.

This is a perfect storm, and every conservation, recycling and storage project currently funded or proposed will not make up the shortfall. In 2002, well before these new restrictions were being contemplated, the California Dept. of Water Resources issued an authoritative study, “Averting a California Water Crisis,” that estimated the difference between demand and supply at between two and six million acre feet per year by 2020. An impressive response from the public during the most recent drought, combined with some investment in water infrastructure has narrowed that gap. But the squeeze is ongoing, with tougher challenges and tradeoffs ahead.

Abundance vs Scarcity

When thinking about solutions to California’s water challenges, there is a philosophical question that has to be addressed. Is it necessary to persistently emphasize conservation over more supplies of water? Is it necessary to always perceive investments in more supplies of water as environmentally unacceptable, or is it possible to decouple, or mostly decouple, environmental harm from investment in more water supplies? Is it possible that the most urgent environmental priorities can be addressed by increasing the supply of water, even if investing in more water supplies also creates new, but lessor, environmental problems?

This philosophical question takes on urgent relevance when considering not only the new restrictions on water withdrawals that face Californians, but also in the context of another great philosophical choice that California’s policy makers have made, which is to welcome millions of new immigrants from across the world. What sort of state are we inviting these new residents to live in? How will we ensure that California’s residents, eventually to number not 40 million, but 50 million, will have enough water?

It is this reality – a growing population, a burgeoning agricultural economy, and compelling demands to release more water to threatened ecosystems – that makes a grand political water bargain necessary for California. A bargain that offers a great deal for everyone – more water for ecosystems, more water for farmers, more water for urban consumers – because new infrastructure will be constructed that provides not incremental increases, but millions and millions of acre feet of new water supplies.

The good news? Voters are willing to pay for it.

How to Have it All – A Water Infrastructure Wish List

When considering what it would take to actually have water abundance again in California, the first step is to try to determine the investment costs, imagining a best case scenario where every good idea got funded. Here’s a stab at that list, not differentiating between local, state and federal projects. These are very approximate numbers, rounded upwards to the nearest billion:

Projects to Increase Supplies of Water

(1) Build the Sites Reservoir (annual yield 0.5 MAF) – $5.0 billion.

(2) Build the Temperance Flat Reservoir (annual yield 0.25 MAF) – $3.0 billion.

(3) Raise the height of the Shasta Dam (increased annual yield 0.5 MAF) – $2.0 billion.

(4) So Cal water recycling plants to potable standards with 1.0 MAF capacity – $7.5 billion.

(5) So Cal desalination plants with 1.0 MAF capacity – $15.0 billion.

(6) Desalination plants on Central and North coasts with 0.5 MAF capacity – 7.5 billion

(7) Central and Northern California water recycling plants to potable standards with 1.0 MAF capacity – $7.5 billion.

(8) Facilities to capture runoff for aquifer recharge (annual yield 0.75 MAF) – $5.0 billion.

Total – $52.5 billion.

Projects to Increase Resiliency of Water Distribution Infrastructure

(9) Retrofit every dam in California to modern standards, including Oroville and San Luis – $5.0 billion.

(10) Aquifer mitigation to eliminate toxins with focus on Los Angeles Basin – $7.5 billion.

(11) Retrofit of existing aqueducts – $5 billion.

(12) Seismic retrofits to levees statewide, with a focus on the Delta – $7 billion.

Total – $24.5 billion.

The total of all these projects, $77 billion, is not accidental. That happens to be the latest best case, low-ball estimate for California’s completed high speed rail project. Without belaboring the case against high speed rail, two comparisons are noteworthy.

First, an ambitious program to create water abundance in California and water infrastructure resiliency in California based on this hypothetical budget is achievable. These numbers are deliberately rounded up, and the final costs might actually be lower, whereas it is extremely unlikely that California’s high speed rail project can be completed for $77 billion.

Second, because people will actually consume these new quantities of water that are being supplied and delivered, private financing will be attracted to significantly reduce the taxpayer’s share.

The Impact of a $77 billion Investment on Water Supply, Resiliency, and Ecosystems

As itemized above, at a capital cost of $52.5 billion, the total amount of water that might be added to the California’s statewide annual water budget is 5.5 million acre feet.

This amount of water would have a staggering impact on the demand vs. supply equilibrium for water. It is nearly equal to the total water consumed per year by all of California’s urban centers. Implementing this plan would mean that nearly all of the water that is currently diverted to urban areas could be instead used to ensure a cool, swift flow in California’s rivers, while preserving current allocations for agriculture. The options for environmentalists would be almost unbelievable. Restore wetlands. Revive the Delta. Refill the shrinking Salton Sea.

The environmentalist arguments against the three dams are weak. Shasta Dam is already built. The impact of expanding the Shasta Dam is purportedly the worst on McCloud creek, where it will affect “nearly a mile” of what was “once a prolific Chinook salmon stream,” (italics added). That negative impact, which seems fairly trivial, has to be balanced against the profound benefit of having another 500,000 acre feet of water available every summer to generate pulses of swift, cool water in the Sacramento River. The proposed Temperance Flat Reservoir is proposed on a stretch of the San Joaquin River that already has a smaller dam. The Sites Reservoir is an offstream reservoir that will not interfere with the Sacramento River.

The environmental benefits of these dams are not limited to their ability to ensure supplies of fresh water for California’s aquatic ecosystems. They can also be used to store renewable electricity, by pumping water from a forebay at the foot of the dam into the reservoir during the day, when solar energy already brings the spot price of electricity down to just a few cents per kilowatt-hour, then generating hydro-electric power later in the evening when peak electrical demand hits the grid. This well established technology has already been implemented on dams throughout California, and remains one of the most cost-effective ways to store clean, but intermittent, renewable energy. It will also be a profit center for these dams.

The environmentalist arguments against desalination are also weak. The energy required to desalinate seawater is comparable to the energy necessary to pump it from Northern California to the Los Angeles Basin. The outfall can be discharged under pressure a few miles from shore, where it is instantly disbursed in the California current. The impact from the intakes is grossly overstated by environmentalists, when considering that even if all of these contemplated desalination plants were built, the water they would intake is only a fraction of the amount of water taken in for decades by California’s power plants that are sited on the coast and use seawater for cooling.

As for the Delta, the primary environmental threat to that ecosystem is the chance that an earthquake destroys the hundreds of miles of levees, causing the agricultural areas behind those levees to be flooded. Not only would agricultural contaminants enter the water of the Delta, but the rush of water flooding into the areas behind the levees would cause salt water from the San Francisco Bay to rush in right behind, creating conditions of salinity that would take years to remove, if ever.

This is why investing in levee upgrades and a Delta Smelt hatchery is a preferable solution to the Delta tunnels. The tunnels would ensure a resilient supply of water from north to south, but the Delta would still be vulnerable to levee collapse. Levee upgrades and a Delta Smelt hatchery would accomplish both goals – resiliency of the water supply and of the Delta ecosystem. Moreover, the presence of massive water recycling and desalination facilities in Southern California would take a great deal of pressure off how much water would need to be transported through the Delta from north to south.

How to Finance $77 Billion for Water Infrastructure

Funding capital projects depends on three possible sources: operating budgets, general obligation bonds, or revenue bonds. Operating budgets, which used to help pay for capital projects, and which ought to help pay for capital projects, will never be balanced until real pension reform occurs. So for the most part, operating budgets are not a source of funds.

A useful way to differentiate between general obligation bonds and revenue bonds are that the general obligation bonds impose a progressive tax on Californians, since wealthy individuals pay about 60% of all tax revenues in California. Revenue bonds, on the other hand, because they are serviced through sales of, for example, water produced by a desalination plant, are regressive. This is because all consumers see these costs included in their utility rates, and utility bills constitute a far greater proportion of the budget for a low income household.

The Grand Bargain – Creating Water Abundance in California
(MAF = million acre feet)

By financing water infrastructure through a combination of revenue bonds and general obligation bonds, instead of solely through revenue bonds, water can remain affordable for ordinary Californians. The $24.5 billion portion of the $77.0 billion wish list, the funds for dam, aqueduct, and levee retrofits, along with aquifer mitigation, are not easily serviced through revenue bonds. A 30 year general obligation bond for $24.5 billion with an interest rate of 5% would cost California’s taxpayers $1.6 billion per year. Some of these projects, to the extent they are improving water delivery to specific urban and agricultural consumers, might be funded by bond issuances that would be serviced by the agencies most directly benefiting.

To claim that 100% of the revenue producing water projects can be financed through revenue bonds is more than theoretical. The Carlsbad Desalination Plant financing costs, principle and interest payments a nearly $1.0 billion for the plant’s construction, are paid by the contractor that built and operates the plant, with those payments in-turn funded through the rates charged to the consumers of the water. The contractor also retains an equity stake in the project, meaning that additional capital costs incurred privately are also funded via a portion of the rates charged to consumers.

Some of the revenue producing assets on the grand bargain wish list may also have a portion of them paid for by general obligation bonds. Determining that mix depends on the consumer. For example, a revenue bond for the reservoir projects may be applied to agricultural consumers who are willing to pay well above historical rates to have a guaranteed source of water for their orchards, which have to survive through dry years.

For urban consumers in particular, making the more expensive projects financially palatable may require general obligation bonds to cover part of the costs, so the remaining costs are affordable for ratepayers. For example, desalination is a relatively expensive way to produce water, making it harder to finance 100% with revenue bonds. But without desalination, wastewater recycling and runoff capture are not sufficient local sources of water in places like Los Angeles. The overall benefit to Californians of adding another 1.5 million acre feet per year to the state’s water supply, using desalination which is impervious to droughts, may be worth having some of its cost financed with general obligation bonds.

To fund roughly 50% of the revenue producing water supply infrastructure ($26.2 billion) and 100% of the water resiliency and distribution infrastructure ($24.5 billion) on this list would cost taxpayers about $3.0 billion per year. While this might strike some as an unthinkable amount to even consider, these projects meet all the criteria for so-called “good debt.” Constructing them all would solve California’s challenge of water scarcity, possibly forever. All of the projects are assets yielding ongoing and long-term benefits that will outlast the term of the financing. At the same time, water would become so abundant in California that prioritizing water allocations to revive ecosystems would no longer provoke bitter opposition. And California’s residents would live again in a state where taking a long shower, planting a lawn, and doing other water-intensive activities that are considered normal in a developed nation, would once again become affordable and normal.

Other Ways to Help Pay for Water Abundance in California

Enable and Expand Water Markets

Even if a grand bargain is struck between environmentalists, farmers, and water districts, and massive investments are made to increase the supply of water, enabling and expanding water markets will help optimize the distribution of available water resources. Similarly, reforming California’s labyrinthine system of water rights might also help, by making it easier for owners of water rights to sell their allocations. Fostering water markets while protecting water rights have interrelated impacts, and ideally can result in more equitable, appropriate water pricing across the state. It might also help make it unnecessary to impose punitive tiered rates or rationing on household consumers.

Reform Environmentalist Barriers to Development

CEQA, or the California Environmental Quality Act, is a “statute that requires state and local agencies to identify the significant environmental impacts of their actions and to avoid or mitigate those impacts, if feasible.” While the intent behind CEQA is entirely justifiable, in practice it has added time and expense to infrastructure projects in California, often with little if any actual environmental benefit. An excellent summary of how to reform CEQA appeared in the Los Angeles Times in Sept. 2017, written by Byron De Arakal, vice chairman of the Costa Mesa Planning Commission. It mirrors other summaries offered by other informed advocates for reform and can be summarized as follows:

  • End duplicative lawsuits: Put an end to the interminable, costly legal process by disallowing serial, duplicative lawsuits challenging projects that have completed the CEQA process, have been previously litigated and have fulfilled any mitigation orders.
  • Full disclosure of identity of litigants: Require all entities that file CEQA lawsuits to fully disclose their identities and their environmental or, increasingly, non-environmental interest.
  • Outlaw legal delaying tactics: California law already sets goals of wrapping up CEQA lawsuits — including appeals — in nine months, but other court rules still leave room for procedural gamesmanship that push CEQA proceedings past a year and beyond. Without harming the ability of all sides to prepare their cases, those delaying tactics could be outlawed.
  • Prohibit rulings that stop entire project on single issue: Judges can currently toss out an entire project based on a few deficiencies in environmental impact report. Restraints can be added to the law to make “fix-it ticket” remedies the norm, not the exception.
  • Loser pays legal fees: Currently, the losing party in most California civil actions pays the tab for court costs and attorney’s fees, but that’s not always the case with CEQA lawsuits. Those who bring CEQA actions shouldn’t be allowed to skip out of court if they lose without having to pick up the tab of the prevailing party.

Find Other Ways to Reduce Construction Costs

The Sorek desalination plant, commissioned in Israel in 2015, cost $500 million to build and desalinates 185,000 acre feet of water per year. Compared to Carlsbad, which also began operations in 2015, Sorek came online for an astonishing one-sixth the capital cost per unit of capacity. Imagine if the prices Israelis pay to construct desalination plants could be achieved in California. Instead of spending $15 billion to build 1.0 million acre feet of desalination capacity, we would spend less than $3.0 billion. How did they do this?

The bidding process itself adds unnecessary costs to public infrastructure projects. Moving to a design-build process could significantly reduce duplicative work during the plant’s engineering phase. Project labor agreements are another practice that at the very least deserve serious reconsideration. Would it be possible objectively evaluate the impact of project labor agreements, and determine to what extent those mandates increase costs?

What about economies of scale? If ten desalination plants were commissioned all at once, wouldn’t there be an opportunity for tremendous unit savings? What about creativity? Elon Musk, who has disrupted the aerospace industry by building rockets at a fraction of historical prices, said “the construction industry is one of the only sectors in our economy that has not improved its productivity in the last 50 years.” Is he even partly correct? Is that worth looking into?

Shift Government Spending Priorities

Cancel High Speed Rail: The most obvious case of how to redirect funds away from something of marginal value into water infrastructure, which is something with huge public benefit, is to cancel the bullet train. The project is doomed anyway, because it will never attract private capital. But what if Californians were offered the opportunity to preserve the planned bond issuances for high speed rail, tens of billions of capital, but with a new twist? If voters were asked to redirect these funds away from high speed rail and instead towards creating water abundance through massive investment in water infrastructure, there’s a good chance they’d vote yes.

Cancel the Delta Tunnels: By investing in levee hardening, the Delta’s ecosystems can be fortified against a severe earthquake. Reducing the possibility of levee failure protects the Delta ecosystems from their worst environmental threat at the same time as it protects the ability to transfer water from north to south. Investing in hatcheries to increase the population of the threatened Smelt is a far more cost-effective way of safeguarding the survival of that species. And investing in infrastructure on the Southern California coast to make that region water independent greatly reduces the downside of a disruption to water deliveries through the Delta. Canceling the Delta Tunnels would save $20 billion, money that would go a long way towards paying for other vital water infrastructure.

Reform Pensions: The biggest out of control budget item, by far among California’s state and local agencies, is the cost of public sector pensions. A California Policy Center analysis released earlier this year, based on public announcements from CalPERS, estimated that the total employer payments for pensions for California’s state and local government employees is set to nearly double, from $31 billion in 2018 to $59 billion by 2024. And that is a best case baseline. If there is a severe market correction, those required contributions will go up further. No discussion of how to find money for other government operations can take place without understanding the role of pension costs in creating budget constraints.

Reduce State Spending: Other ways to shift spending priorities in California, while worth a discussion, are mostly controversial. Returning the administrator to faculty ratio in California’s UC and CalState systems to its historical level of 1:2 instead of the current 1:1 would also save $2.0 billion per year. Outsourcing CalTrans work and eliminating redundant positions could save $2.5 billion per year. Reducing just state agency headcount and pay/benefits by 20% would save $6.5 billion per year. Just enacting part of that, incremental pension reform for state workers, could stop the runaway cost increases that are otherwise inevitable.

California’s state budget this year has broken $200 billion for the first time. Of that, general fund spending is at $139 billion, also a record. Revenues, however, have set records as well. The rainy day fund is full, and an extra deposit of $2.6 billion has it overflowing. Why not spend that $2.6 billion on water infrastructure? For that matter, why not spend all of the $1.4 billion of cap and trade revenue on water infrastructure?

Financing more water infrastructure will more likely come via public and private debt financing. But redirecting intended future borrowings, in particular for high speed rail and for the Delta Tunnels, could cover most if not all of the infrastructure investments necessary to deliver water abundance to Californians. And at the least, redirecting funds from government operating budgets can defray some of the operating costs, if not some of the capital costs.

Work to Build a Consensus

How many more times will California’s voters approve multi-billion dollar water bonds? The two passed in the last four years, plus the current one set for the November ballot, raise $20 billion, but only $2.5 billion of that goes to reservoir storage. Only another $3.3 billion more goes to any type of supply enhancements – mostly to develop aquifer storage or fund water recycling. Meanwhile, consumers are being required to submit to permanent water rationing, and dubious projects are being funded to save water. Artificial turf is a good example. There isn’t a coach in California who wants their athletes to compete on these dangerous surfaces. On a hot day in Sacramento, the temperature on these “fields” can reach 150 degrees. They are actually keeping sprinkler systems operating on these horrendous boondoggles, just to reduce the deadly heat buildup.

Credibility with voters remains intact to-date, but cannot be taken for granted. If a grand bargain on California’s water future is struck, it will need to promise, then deliver, water abundance to California’s residents.

Change the Conventional Wisdom

California’s current policies have stifled innovation and created artificial scarcity of literally every primary necessity – not just water, but housing, energy and transportation. Each year, to comply with legislative mandates, California’s taxpayers are turning over billions of dollars to attorneys, consultants and bureaucrats, instead of paying engineers and heavy equipment operators to actually build things. The innovation that persists despite California’s unwelcoming policy environment is inspiring.

California’s policymakers have adhered increasingly to a philosophy of limits. Less water consumption. Less energy use. Urban containment. Densification. Fewer cars and more mass transit. But it isn’t working. It isn’t working because California has the highest cost of living in the nation. Using less water and energy never rewards consumers, because the water and energy never were the primary cost within their utility bills – the cost of the infrastructure and overhead was the primary cost.

Changing the conventional wisdom applies to much more than water. It is a vision of abundance instead of scarcity that encompasses every vital area of resource consumption. A completely different approach that could cost less than what it might cost to fully implement scarcity mandates. An approach that would improve the quality of life for all Californians. Without abandoning but merely scaling back the ambition of new conservation and efficiency mandates, embrace supply oriented solutions as well. Build wastewater recycling and desalination plants on the Pacific coast, enough of them to supply California’s massive coastal cities with fresh water. Instead of mandating water rationing for households, put the money that would have been necessary to retrofit all those homes into new ways to reuse water and capture storm runoff.

Paying for all of this wouldn’t have to rely exclusively on public funds. Private sector investment could fund a large percentage of the costs for new water infrastructure. Water supplies could be even more easily balanced by permitting water markets where farmers could sell their water allotments without losing their grandfathered water rights. If the bidding process and litigation burdens were reduced, massive water supply infrastructure could be constructed at far more affordable prices.

The Grand Bargain

Water abundance in California is achievable. The people of California would welcome and support a determined effort to make it a reality. But compromise on a grand scale is necessary to negotiate a grand bargain. Environmentalists would have to accept a few more reservoirs and desalination plants in exchange for plentiful water allocations to threatened ecosystems. Farmers would have to pay more for water in exchange for undiminished quantities. While private financing and revenue bonds could cover much of the expense, taxpayers would bear the burden of some new debt – but in exchange for permanent access to affordable, secure, and most abundant water.

This is the third and final part of an investigation into California’s water future. Part one is “How Much California Water Bond Money is for Storage?,” and part two is “How to Make California’s Southland Water Independent for $30 Billion.” Edward Ring is a co-founder of the California Policy Center and served as its first president.

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