LOS ANGELES, Sept. 15, 2021 /PRNewswire/ -- Cadiz Inc. ("the Company,"NASDAQ: CDZI) released its outlook on the new California water year, which begins October 1, 2022, as systemic water shortage in California intensifies.
On the heels of one of the driest years in recorded history, California will begin a new "water year" on October 1st.1 An inventory of existing water assets does not build confidence that we are prepared for yet another dry year. Photos prominently placed in print media are circulating the internet of an empty Folsom Lake, a small puddle formerly known as Oroville Reservoir and a crashing Lake Mead.2
To address the challenge, the California State Water Resources Control Board has taken the unusual step of curtailing diversions on the American River, the Sacramento River and most northern California streams going so far as limiting users with priority rights dating back to the 19th Century.3 The California State Water Project (SWP), which delivers water stored in the Sierra Nevadas, delivered only 5% of its capacity in 2021 and could start the 2022 Water Year with deliveries at 0% of capacity.4 This month the California Department of Water Resources began preparing to take the unprecedent step of invoking Article 18 for the SWP, which would enable it to override whatever contract entitlements there might be in favor of domestic use, fire protection and sanitation requirements. This step might ensure water for particularly hard-hit communities, but it could also make things worse by casting a cloud of uncertainty over the entirety of the SWP. How essential uses will be measured, how necessary water will be delivered and how the rules will impact pending and planned transfers of SWP all remain open, unanswered questions.
Meanwhile, Lake Mead and the entire Colorado River storage system sits at its lowest point in history and the United States Department of the Interior's Bureau of Reclamation is in the process of implementing shortage sharing regulations in the lower Colorado River basin.5 This will undoubtedly impact the 40 million people and 5 million acres of farmland that rely on water from the Colorado River system, including urban, suburban, rural, and farming communities across southern California.6
Against this backdrop the California Legislature ended its session on Friday, September 10, 2021, with surprisingly few bills passed addressing the water supply and infrastructure challenges.7 For example, a bill authored by Senator Melissa Hurtado (D-Sanger) that would have spent $785 million to fix water infrastructure in the area, was shelved despite making it through several committees.8 The Legislature did pass a budget trailer bill before the session ended that dedicated approximately $1.2 billion to fund augmentation of existing programs, additional studies, water recycling projects and cleaning up contaminated water sources. However, the trailer bill does not expressly or urgently address storage and infrastructure that can also improve the immediate outlook for hard hit communities.9
The Federal government is poised to adopt a new infrastructure package that includes provisions that aim to improve western water infrastructure and make investments that should in the long-term assist water short communities, but the path to adoption is presently murky.10 Regardless, it is expected that the federal government will need to focus on the Colorado River in 2022 as Lake Mead and Lake Powell continue to be pushed to their limits.
The news cycle covers the spectacle of drought very well – but not the human cost. The economic consequences of shortage can be measured in lost jobs, lost farms, lost business, and forgone commercial opportunities. Human suffering and declines in the quality of life are much more difficult to capture. These impacts are felt typically in underserved and disadvantaged communities.
Cadiz stands ready to do its part in addressing the long-term systemic shortages now facing the state of California. We believe in providing new water to needy people, through conservation, repurposing existing infrastructure and harnessing the natural advantages of our land holdings. We offer one of the only off-River unpolluted and largely untapped groundwater basins in the West with the physical capacity to store more than 1 million acre-feet and deliver 50,000 acre-feet per year off property wherever it may be needed in California. Our 220-mile pipeline provides a route to help underserved areas of California. These are communities in need that can be assisted by direct delivery of water and exchanges. Regardless, it will take an "all of the above" strategy and commitment to meet the Herculean challenge that faces our state. We are ready to do our part.
About Cadiz Inc.
Founded in 1983, Cadiz Inc. (NASDAQ: CDZI) is a California business dedicated to sustainable water and agricultural projects. We own 70 square miles of property with significant water resources in Southern California and are the largest agricultural operation in San Bernardino, California, where we have sustainably farmed since the 1980s. We are also partnering with public water agencies to implement the Cadiz Water Project, which was named a Top 10 Infrastructure Project that over two phases will create a new water supply for approximately 400,000 people and make available up to 1 million acre-feet of new groundwater storage capacity for the region. Guided by a holistic land management plan, we are dedicated to pursuing sustainable projects and practicing responsible stewardship of our land, water and agricultural resources. For more information, please visit www.cadizinc.com.
FORWARD LOOKING STATEMENT: This release contains forward-looking statements that are subject to significant risks and uncertainties, including statements related to the future operating and financial performance of the Company and the financing activities of the Company. Although the Company believes that the expectations reflected in our forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Factors that could cause actual results or events to differ materially from those reflected in the Company's forward-looking statements include the Company's ability to maximize value for Cadiz land and water resources, the Company's ability to obtain new financing as needed, and other factors and considerations detailed in the Company's Securities and Exchange Commission filings, including the Annual Report on Form 10-K for the year ended December 31, 2020. All forward-looking statements contained in this release speak only as of the date on which they were made and are based on management's assumptions and estimates as of such date. We do not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.