Creating a Cleantech Water Challenge to Replace the California Water Wars

Water has been something to drink and fight over in California and the West since settlers first inhabited this vast dry area.  These stories of the building of the Los Angeles and San Francisco water systems contain enough material to make many Hollywood movies with plenty of roles for both heroes and villains.

The reason there are water wars in the West is the resource is scarce and gaining access or control over it has always been seen as a zero sum game. Until the 1960’s the demands of a growing population and industry aligned the interests of many parties to overcome these conflicts.  California built some of the world’s most ambitious water conveyance and storage systems to deliver high quality, clean Sierra Nevada mountain run-off to agribusiness and urban users.

The environmental movement made us much more aware of our negative impacts on our natural resources.  In truth there were many bad practices and horrible outcomes from cutting corners and dumping the mine spoils or agricultural run-off in our rivers and streams, or sucking those rivers dry to quench the thirst of far off cities.  The adoption of Federal and State environmental laws ended most of those bad practices and imposed a regime for considering environmental impacts that is responsible, transparent and a good balancing of the interests of people, business and the environment.

But that did not end the water wars—in fact it made them worse.  But unlike the Old West where such challenges were settled by gunfights now they were fought out in the courts.  This year is the 40th anniversary of the adoption of the National Environmental Policy Act (NEPA) and not far behind it is the California Environmental Quality Act (CEQA).  Add the Endangered Species Act (ESA) and the Clean Water Act (CWA) and the alphabet soup of environmental protections seems complete.

But there still is no agreement on Water Strategy

Since Pat Brown (Jerry Brown’s father) was governor the various interests in water have tried to find common ground to no avail. Huge fights have occurred over the last fifty years on issues ranging from whether to build a Peripheral Canal around the San Francisco Bay-Delta region to export water to Southern California without harming the fishery in the north.  Huge fights have occurred over the declining Salmon runs, over Delta Smelt and over state practice to stock the rivers with sports fish like the striped bass.

Since the 1970’s little new water storage reservoirs of consequence has been built despite substantial growth in California’s population.  Governor Schwarzenegger has proposed more than $10 billion in bonds for new water projects but California is currently broke so their fate is unknown.

Does this sound like a hopeless story?

The water business is hopelessly fragmented and thus resisted any practical efforts at consolidation or change.  Municipal utilities dominate the landscape.  Water supply, water right, water chemistry and other factors limited the scalability of the business and discouraged entrepreneurs.

What California needs is a new cleantech revolution focused on the water industry.  This is not an M&A challenge of buying up small municipal water companies and aggregating them—there is no money in that.  This is bigger, much bigger.  It is the challenge of science and technology, of new ideas and reinventing the business models that drive the business.  It is a focus on securing California’s water future so it can live into its economic promise.

We see a lot of the seed corn for this new water revolution at work today in recycling water for reuse, in desalination of brackish waters instead of sea water for more cost effective treatment, in groundwater injection of excess run-off, in reducing the water intensity of agribusiness, in changing the post WWII pattern of green lawn landscaping into low water use native plant choices.  These things are a start but alone they are not sufficient.

IDEAS FOR CALIFORNIA’S WATER FUTURE

California Water Efficiency Standards. Much as it has done for energy efficiency California should establish standards for water efficiency that require every new home and building to include a gray water reuse system to collect water from showers, sinks and laundry and rooftop run-off sufficient to meet the landscape needs of the property with a goal of reducing water use by 50% or more.

Water Banking.  California has a problem with salt water intrusion into the San Francisco Bay Delta resulting from over pumping of water from aquifers in the Great Central Valley.  One way to stop that salt water intrusion is to reducing pumping in the agricultural heartland of California or alternatively to recharge the aquifers.  At East Bay Municipal Utility District in Oakland, California where I served as Assistant General Manager for Operation, Planning and Maintenance we tried hard—very hard to get San Joaquin County to partner with us to re-purpose the aquifers in that County to store injected Sierra water run-off in those wet years for use in dry years and avoid the need for a new above ground water reservoir.  This strategy would have reduced the salt water intrusion harming the agricultural interests in the Central Valley and enabling EBMUD to store water for dry year emergencies.  No deal—fears over restrictions on water rights and withdrawal rates prevented a compromise. It is still a good idea and there are plenty of other aquifers in California that could serve as a water bank.  The State should create a water banking system and facilitate deposits to both reduce salt water intrusion and create a fungible, tradable, reliable water storage system with the facilities God gave us.

Creating a California Water Exchange Market in Water Trading.  The system of water rights is ancient, hereditary and feudal.  It often fails to either protect the right holder in being able to use his water to its highest and best purpose and it frustrates the public policy needs of the State in assuring adequate, reliable water supplies.  The biggest surprise in studying California Water rights is that more than two thirds of all California water rights are held by commercial or agribusiness interests not urban water use.  Yes, California needs more water, but it could greatly facilitate the best use of existing water resources by creating a market for underutilized water and water rights.  Giving water rights holders an effective way to monetize those water rights in an fair, transparent auction process achieves several important policy goals at the same time.  It encourages the highest and best use of California’s scare water resources and it prices those water resources at fair market value based upon supply and demand thus creating a powerful incentive to use water wisely. In fact, the State of California might be one of the biggest beneficiaries of such a system offering blocks of water for sale in the California Water Exchange to monetize the asset.

California Water Smart Grid Cleantech Market. California should create a functional equivalent of the Smart Grid for its water industry incorporating the long term supply and demand plans of its major state, municipal and private water utilities, agricultural interests and investors.  Integrating the water infrastructure will not solve the water chemistry, supply or other issues but it begins a process of integrating the water grid using best practices, consistent standards for treatment to enable water mixing and exchange where possible, and a system of mutual aid by exchange of water contracts in the event of emergencies like earthquakes and wildfires.  But a water smart grid can do more—much more by enabling a scalable system of water efficiency and demand response, water technology applications and the addition of new water production facilities built, owned and operated by investors seeking to make additional supplies of water or make a profit from water demand response and technology applications to the system.  By creating a scalable market for cleantech attractive to investors, California can unleash the creative energies and resources of Silicon Valley to help solve its water problems.

CREATING A CLEAN TECH WATER CHALLENGE TO REPLACE THE CALIFORNIA WATER WARS

Unleashing the creative power of Silicon Valley and aligning its interests with the financial, environmental, and revenue growth interests of the State of California and its people is the best way to solve both the water wars problem and get California’s economic mojo back.