Last night, the California Legislature pulled the massive $11 billion water bond from the November ballot and moved it to 2012. The Pacific Institute recently published a comprehensive independent analysis of the bond analyzing its cost, provisions, and legal requirements.
The proposition [The Safe, Clean and Reliable Drinking Water Supply Act] would have funded a wide variety of projects across the state, including large surface reservoirs, ecosystem restoration, some limited conservation and efficiency, and other water-related investments. The size and design of the bond, including what some described as “water pork,” however, led to significant and growing opposition. In particular, the bond included a provision that would have allowed private entities to own and operate taxpayer-built reservoirs and other water-storage projects. Indeed, this provision, criticized in the Institute’s recent analysis, was removed from the package by the vote yesterday to delay the rest of the bond.
Opposition also surrounded the size of the proposition: even though several billion dollars in previous water bond funds remain unspent, the annual repayments from the new bond would have cost $725 million per year (at a 5% interest rate) to $809 million (at 6% interest) — all to be repaid by the General Fund rather than water users — a departure from past bond design. Over the 30-year repayment period, the original bond would have cost taxpayers around $22 billion with interest included.
Time to go back to the drawing board. There remains much to be done to fix California’s water system, but the focus should be on faster and cheaper efforts to improve water-use efficiency and reduce the enormous amounts of waste in the system, to restore ecosystem flows, and to identify new sources of supply that do not require massive capital investment for little water return, such as conjunctive use of surface and groundwater storage, water recycling, and environmentally and economically appropriate desalination. In particular, the efforts to reduce urban water use by 20 percent by 2020 should be accelerated, and extended to the agricultural sector as well. This will require financial incentives and investment in efficiency technology, education, the sharing of experiences on how to maintain healthy agricultural productivity while using less water (see the Pacific Institute’s “success stories” reports and videos on these experiences), and new standards for water-using appliances and fixtures for developers, homeowners, and businesses.
Pulling the bond is not the end of the Legislature’s responsibility around water, it is the beginning.