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.

4 comments:

  1. WaterSource/WaterBank22 May, 2009 06:16

    It would take a rather large book to address all of the topics you have touched upon:

    $25,000 per acre foot for domestic purposes ( subdivisions) is cheap, if it is truly in place and a turn-key purchase.

    Contrary to popular belief, an acre foot of water for domestic purposes is enough on a consumptive use ( CU ) basis to supply a 25-50 homes !.

    If the average person uses 100 gallons per day and there are an average of 3.5 persons per home, the necessary diversion is 0.39 acre feet per year. However, if the use is strictly in-house domestic use, the C.U. with a municipal central sewer system is only 5%. Therefore, one acre foot of C.U. credit is enough for 50 domestic homes !

    The developer can get started tomorrow, from a water availablity standpoint, for a cost of only $500 per home for the water ( plus the cost of the water/sewer infrastructure )!

    Note: If they capture the grey water multiply the $500 X 16 ! (The C.U. would jump from 5% to 80% !)

    If the domestic water is from wells, it is generally accepted that a 10% C.U. factor is appropriate so the cost is $1000 per home for the water,( plus the cost of the well(s)& septic tank and leach field(s) ).

    Changing water rights around to arrive at C.U. credits is not as difficult as it may seem. Records are often the key ingredient.

    Well & water right owners who do not want records of their diversions to be kept by a reputable governmental agency are shooting themselves in the foot. It is these historic diversion records, that occured when there was NO DAMAGE to the prior vested rights of others, that create the VALUE of the water use !

    My experience has been that the Courts provide the necessary PROPER NOTICE to all so that an analysis can be made to determine possible DAMAGE. ( There are actually WATER COURTS within the District Court system in CO for such purposes.)

    If you bring your own container of water to the line at the drinking fountain, (approved C.U.) it is yours to sell ... for the going market price based on supply & demand !

    Wonder what a million acre feet of C.U. credits with adequate storage is worth ?

    Maybe someday it will be worth it for CA, AZ, NV and the Bureau to investigate ...

    WaterSource/WaterBank waterrdw@yahoo.com

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  2. About Flagstaff and that pipeline to the river:

    There is an existing pipeline that that runs past Flagstaff (to the North, I think) from Laughlin Nevada. This pipeline carried Coal slurry from the Reservation to Southern Cal Edison's power plant at Laughlin. The plant is now closed. The pipeline unused.

    Quite frankly, I'm surprised that they haven't considered this as an alternative to drilling a well.

    dg

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  3. @Delbert -- interesting idea. I'll fwd it to the flagstaff guys...

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  4. Flagstaff Guy03 June, 2009 15:45

    As for the slurry line from Lake Mohave, the USBR has already looked @ that as an alternative to get Colorado River water to the Flagstaff area. However, for a variety of reasons that I'm not familiar with... they determined the use of that pipeline as unfeasible (pumping costs, etc). The USBR then conducted another study with folks on the Coconino Plateau including the Navajo & Hopi to look for other alternatives & solutions in 2006. That's where the pipeline concept from Lake Powell came to be....

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