On March 11, the San Diego Union-Tribune posted an op-ed, “Desalination makes sense for Orange County”, written by Assemblywoman Pat Bates (Laguna Niguel). It is unclear why she was addressing the California Coastal Commission since the project was not on its March agenda.
The paper chose not to allow comments on her article. So here is my response to her piece which reads as if lifted from a Poseidon Resources press release.
She goaded me from her first sentence: “Anyone who has stepped outside in the past year has undoubtedly seen the effects of our state’s historic drought conditions.”
Perhaps Ms. Bates should take a look around her own district before she goes off with her dire news of “empty reservoirs, dry wells, and brown, arid landscapes across California.”
Orange County is the poster child of disregard for the drought: lush green expanses of grass in front of strip malls, road medians, HOAs, government facilities, and private properties. Any claim she makes that Orange County has “tried” to do its part is laughable.
It is interesting that Ms. Bates would chime in on a project outside her district that runs roughly from Dana Point to Cardiff by the Sea in San Diego County. Her district imports nearly 100 percent of its water. North Orange County imports only 30 percent and it could be zero if we managed the groundwater basin equitably.
“Trying” isn’t good enough, especially when it places the burden of costly boutique desalinated water on those who are actually “doing” something.
Residents of Santa Ana and Westminster are close to an ideal goal of consumption of 100 gallons per person per day. At the other extreme are communities like Villa Park and Northern San Diego County, where 500 gallons per person per day is the norm.
Why is 100 gallons per person per day ideal? Because at that level, North Orange County could get nearly 100 percent of its water from the groundwater basin.
The manner of water allocation used by the Orange County Water District and its member agencies places a disproportionately higher cost burden on those who consume the least amount of water. In effect, those who aren’t just “trying” but are implementing conservation will be subsidizing the explosive costs of ocean desalinated water.
And if North Orange County goes all in for an ocean desalination project, will Ms. Bates be sponsoring a bill to enable the OCWD rate payer to subsidize water sales to South Orange County water agencies?
Ms. Bates then goes on to cheer lead for desalination: “Southern California communities have rallied behind desalinated ocean water as a reliable, safe and environmentally friendly solution to long-term water shortages.”
It is interesting to note that a small consortium of communities in her own district have spent millions of dollars building and evaluating a pilot project in Dana Point only to discover they couldn’t “rally” enough support for such an expensive endeavor.
Ms. Bates reports on the “nearly completed” project in Carlsbad. But we are still waiting to see how the San Diego County Water Authority allocates the costs of this project, a painful task they have been discussing and postponing since 2012. The devil is in the details, details that were not sorted out prior to signing a “take or pay” contract.
Ms. Bates calls desalination “out of the box” thinking but in reality it is a knee jerk reaction by politicians who have ignored California’s failed water policies, archaic water laws, and fractured governance.
Addressing long term water needs requires long term thinking which will never be the domain of politicians in Sacramento.
It is much easier for elected officials to apply a “technical” fix knowing they will be out of office before the bill arrives.
What we need are courageous politicians who dare to engage with citizens in understanding and exploring solutions that actually address water needs and not water wants.
North Orange County does not need an ocean desalination project and hasn’t even figured out what they would do with the water. If Ms. Bates thinks one is needed in South Orange County, then she should address her own district’s needs first.
Belated opposition is hurriedly forming to a plan that would pump an average of 50,000 acre-feet of water per year out of the aquifer in San Bernardino County’s eastern Mojave Desert and convey it in a pipeline to Riverside, Orange and Los Angeles counties to replenish the water supply there.
The Santa Margarita Water District, which services an area that is more than 200 miles from the Cadiz Valley, is the lead agency for what is called The Cadiz Valley Conservation, Recovery and Storage Project. As the lead agency the SMWD, the second largest water district in Orange County, will oversee the California Environmental Quality Act (CEQA) review process for the project.
Santa Margarita will work with the Cadiz Land Company in the proposed undertaking, which is a modified version of the Cadiz Water Project floated by Cadiz Land and the Metropolitan Water District more than a decade ago. The original project called for the Cadiz Land Company pumping water from the Colorado River during wet years, storing it in an underground aquifer beneath the Cadiz Valley, and selling as much as 60,000 acre-feet of the native groundwater and Colorado River water mix to the Metropolitan Water District of Southern California (MWD) in Los Angeles during dry years.
That proposal was ultimately rejected by the MWD’s board of directors after conservationists raised concerns over possible environmental damage. That rejection led to expensive litigation between the Cadiz Land Company and the MWD.
The concept lay dormant for six years. But in 2008 the Cadiz Land Company, also known as Cadiz, Inc., revived the plan in modified form, emphasizing less the drawing of water from the Colorado River and instead proposing to obtain much of the water from sources feeding the area’s dry lakes that are subject to evaporation.
The revived project was given a tentative budget of $536.25 million and is to entail the sinking of 34 wells into the desert and construction of a 44-mile pipeline along a railroad right-of-way until it meets up with the aqueduct that carries Colorado River water to the Los Angeles and Orange County metropolitan areas.
Through the arrangement with the Cadiz Land Company, the SMWD will receive the lion’s share of the water. In addition, Cadiz, Inc. has entered into agreements with Three Valleys Water District, which provides water to the Pomona Valley, Walnut Valley, and Eastern San Gabriel Valley; the Golden State Water Company, which serves several communities in Southern California, including Claremont; Suburban Water Systems, which serves Covina, West Covina and La Mirada; and the Jurupa Community Services District, which serves Mira Loma in Riverside County.
The Cadiz Valley is located just south of the Marble Mountains and northeast of the Sheep Hole Mountains near the National Trails Highway. Cadiz is home to a former railroad stop along the Santa Fe line, 17 miles east of Amboy and 70 miles from Needles.
The public hearings related to the Cadiz Valley Conservation, Recovery and Storage Project were held in Yucca Valley, which is 85 miles from Cadiz, and in Rancho Santa Margarita, which is 217 miles from Cadiz. Many people directly impacted by the project were not notified of the hearings. Neither was the Bolo Station Water Company, which serves the Cadiz Valley and the property adjoining that of the Cadiz Land Company.
Among those at the forefront of the movement to oppose the Cadiz Valley Conservation, Recovery and Storage Project is former Needles city councilwoman Ruth Musser-Lopez, who was previously employed as a Bureau of Land Management Archaeologist assigned to the California Desert District and was active in opposing the first Cadiz Water Project.
Musser-Lopez decried the project as one that would confiscate a vital and rare resource from the desert region. She said the Cadiz Land Company and the SMWD had formed an unholy alliance of a rapacious corporation and a quasi-governmental agency that was abusing the approval and environmental certification processes to violate the rights of the region’s residents while depriving future generations of desert dwellers access to water.
Australians are battling to come to terms with the impacts of the oft-criticized process of national water reform. The ongoing, abrasive debate surrounding the Basin Plan being drafted by the Murray-Darling Basin Authority, outrage over the spiraling costs of currently redundant desalination plants and public protests about sky-rocketing water charges typify the predicament.
Australian water reform was conceived in 1994 by the Council of Australian Governments; nurtured by the prevailing mantra that free-market exposure was the ultimate panacea for undercapitalized and inefficient public utilities. COAG went one giant leap further, in deciding to establish a national water market; arguing that this would direct water to its most productive use.
In the years since these sweeping changes were announced, the wisdom of applying free market principles to the management of an essential natural resource has been largely discredited by events overseas: In the water-supply sector, major corporate players have been accused and, in more than a few instances, convicted of price-gouging, anti-competitive behavior, corrupt practice and fraud. On all continents there are moves to wrest control from private corporations. Globally, more than 90 per cent of water services are now publicly owned.
In Australia there are valid concerns that water reform is leaving crucial decisions, with respect to the “where”, “when” and “how” of water distribution, in the hands of entities whose priority is profit rather than socially and environmentally responsible water use. Questions are being raised as to why our governments have been prepared to implement these radical policies without seeking and obtaining prior electoral mandate and in the absence of adequate constitutional protection of water.
The unbundling of water rights from land title has been the lynchpin of water reform, enabling water entitlements to be leased, treated as equity, bequeathed or permanently traded. In less than three years’ time, there will be no limit on the volume of water access entitlements that can be traded permanently between hydrologically connected irrigation districts anywhere in Australia.
Australian water is now effectively commoditized: allocated to whoever is willing to pay the going price. The market cares not whether you intend to drip-irrigate vegetables, cultivate cotton by flood irrigation, water golf courses – or merely hold your allocation as an investment for a rainy, or not so rainy, day. We are told that water trading will promote the allocation of water to “high value” uses, but the concept of “value” is far from precise. Large-scale agribusiness enterprises may reap high returns from the water they are well positioned to acquire, but their profits are largely internalized, increasingly to overseas interests, minimizing benefit to local communities. More traditional farming may result in lower profit at the farm gate, but is believed to have a more marked flow-on effect on local economies.
This figure equates to the combined water consumption of Sydney, Melbourne and Adelaide (990 gigalitres) over the same period, to produce a crop with a combined value of less than 650 million dollars, in a year when the gross value of national agricultural production was in excess of $46 billion.
In consuming around 850 gigalitres of water, 23 per cent of the total volume diverted for irrigation in the Murray-Darling Basin, the 2008-9 cotton crop contributed only 4 per cent to the total value of agricultural production in the Basin. Our self-sufficiency in terms of food production also suffered: while the value of the cotton crop increased by 198 per cent over the previous year, irrigated vegetable production fell by over 350 million dollars.
Unrestrained exploitation effectively hamstrung the Murray-Darling Basin Authority, and its predecessor the Murray-Darling Basin Commission, in its statutory responsibility to manage the Basin’s water resources in the national interest, and dramatically impaired the inherent ability of the Murray-Darling river system to resist the effects of prolonged drought.
In 2005, Wendy Craik, Chief Executive of the Murray-Darling Basin Commission, confirmed the impotence of her organisation admitting, “We just have to hope it pours with rain”. Two years later, then Prime Minister, John Howard, refusing to deviate from market-based water management and resisting calls to invoke emergency powers, urged the nation to pray for rain. For eight long years, the nation’s most vital river was not allowed to flow to the sea.
The water market conspicuously failed to live up to the expectations of the National Water Initiative, driving down water storages in the Murray-Darling Basin to critically low levels at a time when conservation should have been paramount. The dire consequences for the environment, communities and economy of the Basin were clear for all to see.
In recent months, the raft of resignations from the Murray-Darling Basin Authority – including both the Chair and CEO – the distancing of recently appointed Chair and the Federal Water Minister from the Guide to the Draft Basin Plan, and the current Senate Inquiry into the Provisions of the 2007 Water Act, are further indications of the resolve of proponents of market-driven water reform.
The pressure being exerted by pro-marketeers was reconfirmed just last week, with the disclosure that the Authority is expected to recommend a paltry 2,800 gigalitre increase in environmental water allocation; prompting the Wentworth Group of Concerned Scientists to pull out of the Basin Plan consultation process, stating that it did not wish to be associated with an initiative which was destined to fail and waste billions of dollars.
The number of offshore players active in Australia’s water market bears testament to the rich pickings to be made speculating on the nation’s water reserves. It is believed than around 300 million dollars worth of water licences are currently in the hands of investors and this amount is steadily increasing. However it is impossible to confirm the precise figure: the National Water Commission has advised Fair Water Use that the Water Act prohibits public access to details on water entitlement holders.
Unlike the majority of our traditional farmers, investors are typically guided by global market trends and not merely the prevailing cost of Australian water. There are genuine concerns that, as more speculators, multinational agribusinesses and financial institutions enter the market, the inherent variability in water prices will be potentiated, particularly during drought; threatening the viability of previously profitable rural businesses and increasing pressure on rural communities.
The website of one such organization, US-based, Summit Global Management, contains the following observation: “Water is the most essential life-sustaining substance on earth and the most critical industrial input to the world’s economy. Demand for clean water has expanded unrelentingly as populations soar and societies modernize, and we now face crisis-level shortages for this most basic and necessary resource.”
In 2009, Summit Global’s chief marketing officer, Matt Dickerson, famously stated “There are few areas where we can execute our strategy, but Australia is one of them”.Summit, which in 2009 acquired at least 20 million dollars worth of permanent entitlements to Australian water, last month announced, through its Adelaide-based agent Blue Sky Water Partners, that it is seeking an additional 100 million dollars worth of water rights, focused on main systems such as the Murray-Darling.
In 2010, Australian-based Causeway Asset Management commenced a global drive to raise 100 million dollars of investment capital, to be used to acquire permanent entitlements to Murray-Darling water, stating: “There is a chronic supply/demand imbalance for Australian water which will result in higher water prices. Owning Australian Water Entitlements provides investors with direct exposure to water prices”.
It is clear that such investors are targeting the high returns to be made under leaseback arrangements during periods of water scarcity – an all too regular occurrence in this country. Where is the fundamental national benefit of exposing our water to such activity? What will be the impacts on the farming community, public water supplies and the environment?
In a statement on urban water policy released last month, the Chair of the National Water Commission, the statutory body responsible for driving the process of water reform, urged further deregulation and the construction of more desalination plants and dams – but tellingly made no mention of initiatives to reduce consumption in a country which, in 2004, was rated as the third largest per capita user of water in the world.
This blind commitment to growth, which also suffuses the policy platforms of the major parties, is being used to justify public-private partnerships and the construction of ill-conceived and untenably costly water infrastructure, most notoriously desalination plants. Our governments appear quite comfortable entering into public-private partnerships with multinationals whose track record in terms of corporate responsibility on the global stage is, at best, in-glorious.
In July last year, the Water Services Association projected that increased urban water consumption through to 2025, as a result of a 47 per cent hike in Australia’s population, to 31 million, could largely be met by the combined output of existing desalination plants and those currently under construction. Australians continue to be massaged into accepting this high tech, but inefficient and environmentally toxic industry; governments insisting that desalination is necessary to ensure water security, whilst largely ignoring the potential of “greener” and more efficient alternatives.
It is highly significant that the Productivity Commission itself has recently criticized the move towards desalination plants on economic grounds alone, irrespective of the environmental costs.
Following the change of government in Victoria, it has been revealed that the water bills of Victorian households are set to double over the next five years, as a direct result of costs associated with the Wonthaggi desalination plant. Irrespective of whether the plant is required to operate, Victorian taxpayers face a bill of close to 20 billion dollars over the next thirty years. When former premier Steve Bracks first announced the plant in June 2007, Victorians were informed that it would cost $3.1 billion.
In December last year, the South Australian Water Minister, Paul Caica, confirmed that operational costs of the Port Stanvac desalination plant are projected to total $130 million per year. This figure is additional to construction costs of $1.8 billion. It bears stating that the Government could currently acquire permanent water licenses for 100 gigalitres, the maximum output of the plant, for around $150 million.
In attempts to stave-off persistent criticism of “white-elephant” infrastructure, it is probable that conservation of urban water supplies will continue to be a low government priority, other than during periods of severe drought.
Last year, Mr Caica was also quoted as stating, “I have always said that we will consider lifting the restrictions when the desal plant comes online”.
In 2007, the value of state-owned water assets was estimated at 70 billion dollars: clearly a major temptation for state-governments seeking to balance their budgets.
Nationwide, the corporatization of water utilities has resulted in price hikes and an accent on fixed rather than consumption-based charging; stimulating concerted public protests, such as those currently taking place in south-east Queensland, amid fears that corporatization is a precursor to privatization.
To date, South Australia is the only state to have dabbled with privatization of water supplies – and Adelaide consumers have literally been paying the price: last year the State Government announced that it would not be renewing its contract with United Water, a wholly owned subsidiary of Paris-based, water colossus Veolia Environment, due to allegations of over-charging, to the tune of tens of millions of dollars. Nonetheless, publications such as that released by Deloittes in March 2010 seem to be priming Australians for the progressive sell-off of public water utilities.
It bears repeating that the stated aim of water reform is “to implement a strategic framework to achieve an efficient and sustainable water industry“: but on whose terms? – and to whose benefit?
Despite the fact that polling has indicated that at least 70% of Australians are opposed to it, water privatization is being imposed on the nation, under the guise of water reform; as a result of a closed-door agreement made, nearly twenty years ago, by the then Prime Minister, State Premiers, Territory Chief Ministers and the President of the Australian Local Government Association.
Water reform need not and should not equate to privatization, a process largely incompatible with the protection of water as a public good. Australians have the right to indicate which path they wish to follow, via state-by-state plebiscite if necessary.
Free-trade agreements, which have laid out the welcome mat to overseas speculators, should be renegotiated or scrapped, at least insofar as they apply to water. This is consistent with data released by the Productivity Commission last month revealing that the benefits of free-trade agreements are oversold, creating unrealistic expectations and resulting in only small increases in national income.
Socially responsible water reform cannot proceed in the absence of sound legislated protection of water as a common good. In 2009, the High Court of Australia found that there was “a common law notion that water, like light and air, is common property not especially amenable to private ownership and best vested in a sovereign state”. First drafted over a century ago, our Constitution does not refer to water rights other than related in very general terms to navigation, conservation and irrigation. Section 100 requires amendment if the nation’s water is to be adequately protected in the 21st century and beyond.
Irrespective of whether the 1994 vintage of COAG had a full understanding of the implications of its decision, sincere governments would now admit that water reform is privatizing an all-too-finite and easily abused natural resource – and, by so-doing, poses a serious threat to Australia’s water future.
Ian Douglas is national coordinator of Fair Water Use (Australia). He is currently national coordinator of Fair Water Use (Australia), an independent and national lobby group, formed in early 2008 by Australians who share the vision of a revived Murray-Darling basin and the sustainable environmental, community and economic benefits that would flow from its recovery.
Huntington Beach Councilmember Joe Carchio lashed back at the Surf City Voice today for a commentary that criticized him, three other city council members and one HB planning commissioner for sitting at a table with Poseidon CEOs at a recent water summit that depicted environmentalists as villains and desalination as one solution to the water management crisis in the state of California.
The OC Water Summit, held May 14 at Disneyland’s Grand Californian hotel, which is currently in the middle of a major labor struggle with members of a hotel union, was organized by two Orange County water districts but was sponsored by various corporations, including Poseidon Resources Inc., which has a water privatization and desalination plant proposal currently before the Municipal Water District of Orange County and the city of Huntington Beach.
Carchio sent the SCV an e-mail or text message which stated, “John hard to believe you did learn something about the state of emergency our water system is in did you not listen to Jose and Laura explaning (sic) our situation shame on you for critizing (sic) officials for trying to learn more and solutions no matter where you sit Thanks Joe Carchio.”
Later, at a meeting at city hall, Carchio recounted a childhood experience as a metaphor for his meeting with Poseidon officials. “Just because I had lunch with Ted Williams of the Red Sox doesn’t mean that I am a Red Sox fan.”
Carchio, who clearly supported the proposed desalination plant as early as 2004 when he ran and lost for city council, stated that he is open minded about the desalination plant. “I have not decided how I’m going to vote yet,” he said, referring to the Environmental Impact Report and franchise agreement that will come to the city council for a vote.
Carchio said that he will meet with Merle Moshiri, president of Residents For Responsible Desalination, a Huntington Beach residents group that is opposed to the desalination plant, and said he wants to find out more about various other desalination plants as well, including one slated for Dana Point, which is considered much more environmentally friendly than the plant proposed by Poseidon.
Regardless of whether he ends up supporting Poseidon or not, Carchio said, the instability of the Delta levees creates the need for some type of desalination program in the future.
Poseidon Resources Inc., a multinational water entrepreneur, wants to build desalination plants in the cities of Huntington Beach and Carlsbad in California. Desalination is the most energy intensive and costly source of drinking water and Poseidon always said that their projects would be funded completely with private sector dollars. Local elected officials bought into that, but it was obvious from the start that these two projects would need public funding to exist. In fact, if these projects go through, they will each receive a minimum of $350 in government subsidies, and possibly much more. Here is the story.
Editor’s note: Unfortunately, due to a technical problem, the aspect ratio of the video is incorrect and images appear taller than they should. The Surf City Voice apologizes for the inconvenience. Efforts are underway to correct the problem.
Part III of a series. Originally published May 5, 2009
Poseidon Resources Inc.’s website claims that the desalination plant it wants to build in southeast Huntington Beach, at Newland and Beach avenues, will be a “cost-effective solution to provide residents with a safe and reliable water supply by using existing structures—at no cost to taxpayers.”
Elected officials who voted to approve the desalination plant three years ago have consistently echoed Poseidon’s claim: Poseidon would privately own and operate the plant for its own profit and for its investors—a strictly free market affair with no taxpayer investment or risk, they said.
City council representative Don Hansen praised the project’s supposed free market values to a crowded city council chamber before he gave Poseidon his vote along with three other council members, Keith Bohr, Gil Coerper and Cathy Green.
“My belief is that the market is going to drive the majority of these decisions. I truly believe that,” Hansen said.
If the Poseidon desalination plant is not profitable, he added, it “will never see the light of day. And it’s purely born on private investment dollars, the risk that they [Poseidon] are going to take.”
In a candidates’ debate last year, Hansen warned that “We’re going to need the water” and reassured again that “It’s not us building the plant. It’s all private investment.”
If all goes well for Poseidon, its Huntington Beach plant will produce 50 million gallons of drinking water per day by sometime in 2011. It still needs to obtain additional government permits and must work out a franchise agreement with the city first.
Poseidon plans to build an almost identical desalination plant in the city of Carlsbad. That project is further along in the permit process and if financing comes through it could start construction this summer. Poseidon’s CEOs dream of building large desalination plants at other California coastal locations as well.
Hansen’s appeal to the free market instincts of the voters is persuasive in a city where the call for smaller government is almost a religious doctrine. But attributing either Poseidon project to to free-market karma is misleading because the company could benefit from as much as $1 billion in taxpayer supplied subsidies that would make it easier for Poseidon to attract the private sector financing that it also needs but still lacks in order to build and operate the two plants. Continue reading ‘No Cost’ Desal Costs A Lot: How your tax dollars created the desalination industry→