Cadiz Inc. Presents The Groundwater Banking Solution for California

To address climate change, California must make meaningful investments in water supply reliability

LOS ANGELES--(BUSINESS WIRE)-- Today, Cadiz Inc. (NASDAQ: CDZI) posted on its website a new white paper discussing the opportunity for groundwater storage in California. An excerpt is reprinted below and a full copy of the paper is available at https://www.cadizinc.com/2020/09/29/the-groundwater-banking-solution-for-california/.

“California’s water infrastructure was designed to provide protection from the fluctuations between wet and dry years that characterize its climate. Over the last century, engineers built a sprawling network of reservoirs and canals to store and deliver a consistent, reliable supply of water throughout the state. However, this infrastructure is not always capable of providing an adequate supply of water to the state’s growing population.

Storage of water in California and the West has historically been principally obtained through the construction and operation of dams and surface reservoirs. As the need for additional storage to accommodate changing hydrology has increased, California has largely retreated from the construction of dams as the primary water supply strategy in California due to cost and environmental concerns. The last major dam built in Northern California was New Melones Dam in Calaveras County, in 1979, with a capacity of 2.4 million acre-feet. In 2003, the Metropolitan Water District built Diamond Valley Lake, an off-stream surface storage facility which holds 800,000 acre-feet at a cost of over $2 billion. The combination of the current environmental regulatory framework and limited public funding for large infrastructure projects without state and federal subsidies have made it extremely difficult to construct dams.

Groundwater banking offers a number of benefits, including minimal surface disruption, no interference with beneficial uses of surface water and little to no evaporation. For example, the Colorado River’s largest reservoirs Lake Mead and Lake Powell lose as much as 500 billion gallons of water to evaporation annually – that’s five times more water than the city of Denver uses in one year. In California, there are limited studies on the total amount of water that evaporates from reservoirs and open-air water infrastructure. The CA Department of Water Resources once estimated that California’s reservoirs and ponds generally lose 1 to 2 meters of water to evaporation every year. On a summer day, a reservoir or pond might lose about 9,000 gallons per acre of water surface.

Climate change requires California to make investments in water supply reliability. Groundwater banking has the advantage over other supply options of being effective in a variety of settings and typically in a cost-effective manner. Delta protection is requiring those agencies exporting water from the Delta to make investments in reducing their reliance on exports – and this will require storage. Meanwhile, the Delta Conveyance program to improve reliability of Bay-Delta supplies for southern California carries a price-tag of more than $15B in its current formulation. The feasibility of design, building and financing that project is presently under intense scrutiny and without storage to regulate deliveries, it likely faces tough sledding. Desalination, although fiercely resisted by environmentalists in some locations, has been successfully permitted in San Diego and Santa Barbara at price points of $2,150 and $3,150 per acre-foot respectively. Comparatively, groundwater storage provides a less costly, less impactful option that offers added flexibility and is beneficial to local communities, especially for banks that can convert surplus water into reliable supply for communities in need. Recently the Municipal Water District of Orange County evaluated supply augmentation projects available to its service area and all options were conservatively valued at more than $1000/acre-foot.

Located on privately owned land in the Mojave Desert, the Cadiz Water Project area overlays a massive aquifer with federally protected headwaters. Scientists estimate that this aquifer contains more than 20 million acre-feet of water, rivaling Lake Mead—the largest reservoir in the US. —. Groundwater that is not used for farming at Cadiz slowly flows to hyper-saline dry lakes, where it turns salty and evaporates. By better managing this aquifer system which has been farmed since the late 1980s without any adverse environmental impacts, the Cadiz Water Project would augment supply and storage capacity in Southern California.

In Phase 1, the Cadiz Water Project will capture an average of 50,000 acre-feet of fresh water annually that would have otherwise been lost to evaporation. This conserved water will be delivered to communities across Southern California via a pipeline. Phase 1 also offers up to 150,000 acre-feet of carry-over storage (water stored by preventing loss of fresh water to high-salinity and evaporation).The Project will operate under a groundwater management plan that has been approved by San Bernardino County.

In Phase 2, the Cadiz Water Project will provide new storage space for banking imported surplus water in wet years. The project will be accessible by two pipelines connecting to Southern California’s main sources of imported water supplies. The first would be a pipeline to be constructed wholly within a 43-mile railroad right of way and interconnect with the Colorado River Aqueduct (“CRA”). The second will utilize an existing 30” steel pipeline to move water northwest through San Bernardino, Los Angeles and Kern Counties. As a result, participating water agencies could bank excess water from the Colorado River Aqueduct, the State Water Project, and potentially the Los Angeles Aqueduct in Cadiz’s underground basin for future dry years. The Cadiz area has an estimated 1 million acre-feet of imported storage capacity.

Once implemented, the Cadiz Water Project would be the only large groundwater bank adjacent to the Colorado River Aqueduct and have the potential to directly interconnect with the State Water Project and other northern California sources of supply.

The Project offers:

• Minimal losses in recharge, migration or uncontrolled pumping;
• Highly porous clays and silts support high infiltration rates, and ease of management and recovery;
• Very low TDS;
• Spreading and in-lieu storage;
• Two conveyance inputs and outputs;
• Judicially validated groundwater management plan;
• No overlying land competition and protected headwaters.

Cadiz has the flexibility to be integrated into a variety of portfolios while maintaining overlying farming and fully protecting the environment and ensuring sustainability. Groundwater banking will continue to be an optimal solution to manage California’s rapidly changing water supply and demand. Cadiz is well-positioned to help.”

To read a full copy of the paper, visit - https://www.cadizinc.com/2020/09/29/the-groundwater-banking-solution-for-california/

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, the receipt of additional permits for the water project and other factors and considerations detailed in the Company’s Securities and Exchange Commission filings.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201001005158/en/

Courtney Degener
213-271-1603
[email protected]

Source: Cadiz Inc.

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