New USC Report Shows Promise of the Portfolio Approach
Posted March 11, 2013
Last week, the University of Southern California released an ambitious new report entitled “Water Supply Scarcity in Southern California: Assessing Water District Level Strategies,” which provides extensive support for the portfolio-based conceptual alternative developed by environmental groups, water agencies and business organizations. Here are a few highlights:
The portfolio-based approach proposes an analysis of the trade-offs between investments in the Delta and investments in local water supplies designed to reduce reliance on the Delta. The USC study explicitly addresses the need for such an analysis, stating that: “The Bay Delta Plan is proposing to construct twin tunnels to bypass the Delta, thereby reducing the Delta’s vulnerability and increasing the reliability of imported water for Southern California. With a projected cost of $23.7 Billion to be paid by user fees, this project could foreclose other water supply options for Southern California.” (Page x.) It goes on to state that: “Some investments, such as the SWP proposed tunnels will preclude others due to financial constraints. Trade-off analysis and full-accounting (including energy and emissions intensity of options) should be included in such analyses.” (Page 313)
The report reinforces the practical reality of the trade-offs facing water managers by highlighting that for LADWP, “Moody’s ratings in 2012 already warns that ‘very high debt will require’ water price increases. Price increases for a municipal agency can be politically contentious, subject to Mayoral-City Council conflicts and public opposition.” (Page xiii.) It also concludes that “(t)he increasing price of imported water is a major factor in local water agency efforts to conserve water and to invest in new water supply sources.” Page xi. Clearly, given these financial realities, designing the right portfolio of Delta and local investments is important for Southern California water users.
The portfolio approach proposes ambitious investments to reduce reliance on imported water. The USC study also highlights the risks of a high reliance on imported water: “LADWP’s Achilles’ heel is its large dependence on imported water.” It also highlights extensive planned investments to reduce this reliance, reporting that LADWP’s “plans include over $600 M in recycling facilities; a share of $940 M in groundwater clean up, $110 M in stormwater capture, as well as sizable investments in conservation.” (Page xiii.) The report highlights the effectiveness of these local strategies, concluding that “(t)he two strategies considered to be the most feasible across the scenarios [by SoCal water agencies at a series of workshops], and, therefore, the most robust, were recycling and stormwater capture.”
The portfolio approach includes a recommendation for greater integration of water agency operations and a Southern California regional conjunctive use strategy. The USC report also recommends the development of a “Southern California Regional Groundwater Strategy” that is designed to advance “regional supply projects, including stormwater capture, conjunctive management, recycling and groundwater desalination projects.” (Page xxvii).
Finally and perhaps most importantly, the report recommends that state water planning efforts include the development of “a coordinated strategy for water management in the State that incorporates the State Water Project/Bay Delta Conservation Plan, climate change adaptation, water conservation, and water quality, and regional groundwater and other water supply strategies. All of these elements require substantial investment to ensure a sustainable water supply future for the State.”
Read together, the conclusions and recommendations in this new report include striking parallels with the methodology of and elements in the portfolio-based approach.
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