22 May 2009

California Lags

My recent trip to a workshop in Phoenix [prior post] opened my eyes on a different dimension of water as a valuable and necessary commodity for urban land development. For example:
  • Vidler spent $100 million developing 8 tafy at Fish Ranch that was sold for urban development north of Reno. The PPP deal transferred infrastructure (but NOT rights) to Washoe county. Vidler spent $12,500/af to acquire and develop the rights but sold them for $45k/af (now $30k) to real estate developers.

  • Flagstaff, AZ spent $2 million drilling a well that supplies 100 gpm (160 afy). Although $12,500/af may seem steep, it's better than "running out" of water. Flagstaff has deep wells and ornery rock layers, but they cannot slow development. Next stop -- a pipe to the Colorado River. (Good luck!)

  • Prescott, AZ sold 2,700 af of effluent for $25k/af to a NYC investment company. (That price is high. 60% of the effluent of the effluent can be reused, so it's more like $17,000/af.) The buyer is now selling pieces of that water to developers. (Note that the buyer is not paying money until it sells the rights; not quite a slam dunk for the city...)
I bet that California water owners would LOVE to see numbers like these, but they will not UNTIL we get:
  • groundwater under control
  • water rights clarified
  • water transfers streamlined
There's a to do list for DWR/SWRCB!

Bottom Line: Water markets CAN work, but they need an institutional foundation that integrates legal, political, engineering and environmental factors.