25 Mar 2009

Mississippi Pipeline to Colorado?

This story made me laugh. I understand the fear that Gary Hausler has about urban users slowly sucking dry the farms in CO. But how does he rationalize $22,500 per acre foot? That pencils out to a delivered cost of about $.07 per gallon. Currently, the city of Denver, which just raised its water rates, pays about two-tenths of one cent per gallon for treated water. The pipeline water would cost at least 36 times what city residents currently pay. If Denver boosts its first tier water charge from $1.81 per 1000 gallons to $65, and demand still necessitates capacity expansion, then the legislature could revisit the pipeline. Until then, I hope they continue to laugh at his proposal just like I will.

Bottom Line: Projecting future demand based on current cheap prices is foolish.