Rebuilding California’s Infrastructure (Desalination)

Part 4 of 6 Part Series

By Ed Ring, Jill Eicher, Kevin Dayton and Marc Joffe
November 23, 2016

This is Part Four of “Rebuilding California’s Infrastructure,” to access the other five sections, click on the links below. To access the entire six-part study in a single, printable PDF document, DOWNLOAD HERE.

Part One: Introduction
Part Two: Water Reuse
Part Three: Water Storage
Part Four: Desalination
Part Five: Energy and Transportation
Part Six: Financing Models and Policy Recommendations

DESALINATION – INTRODUCTION

Desalination – converting salt water into drinking water – promises to free Southern California from water insecurity. Although desalinated water is more expensive than water from other sources, its supply is far more reliable. In this section we survey desalination plants in California, elsewhere in the US and abroad, we consider the economics of desalination and we address criticisms of this option.

California is facing a shortfall in water supply that seems to be only widening. Currently, California’s rivers are receiving about half of their natural flow. According to Mike Sweeney of the Nature Conservatory’s California chapter, taking more than 20% of a river’s natural flow can negatively impact its function and ecosystem.[1] While the last winter cycle has temporarily raised reservoir levels, climate scientists believe that the drought could continue for years to come.[2] Furthermore, the rainfall from El Niño was mostly in the northern part of the state, leaving Southern California more vulnerable to continued drought. For these reasons, local water suppliers have begun to consider various methods of increasing water supply in a way that is independent of weather.

Desalination is one such method that has now entered the implementation stage with the recent opening of a 50 Million Gallon Per Day (MGD) capacity plant in Carlsbad (San Diego County). A second plant of similar size in Huntington Beach (Orange County) is nearing final approval.[3]

The company behind these initiatives is Poseidon Water, founded in 1995. Poseidon is a unit of Brookfield Infrastructure Partners, a group that specializes in managing infrastructure projects. This chapter contains extended discussions of the Carlsbad and Huntington projects, and provides information on desalination projects elsewhere in California, the United States and globally. We find that while desalination is relatively costly, the extra expense may be justified by the supply security it brings.

THE CARLSBAD DESALINATION PLANT

It was a coincidence that the Carlsbad Desalination Plant was completed after four years of drought in California. Over 17 years, the primary argument of the San Diego County Water Authority for building the desalination plant was water supply reliability.

During a drought in the early 1990s, it became apparent that San Diego County was vulnerable – as it was 95% dependent on water supplied from Northern California and the Colorado River. The San Diego Water Authority adopted a deliberate strategy to diversify its supply sources and develop a local source for water. Desalination produced water locally, perpetually, and didn’t rely on water infrastructure to the north that could be damaged or destroyed by earthquakes.

Michael Lee, a spokesperson for the San Diego Water Authority, told us that San Diego County is consuming twelve per cent less water today than it was in 1990, even as its population has grown thirty per cent and its economy has grown eighty per cent. By 2035, the city of San Diego plans to obtain thirty per cent of its total water supply from another local source altogether—not from rivers, oceans, or aquifers but from sewers. As previously discussed, a process similar to desalination (known colloquially as “toilet to tap”) can be used to treat recycled wastewater.

After four years of drought, San Diego County has enough water to meet 99 percent of normal demand without conservation.[4] However, the state has not exempted the County from statewide conservation mandates.

WHAT’S INNOVATIVE ABOUT THE CARLSBAD DESALINATION PLANT

Traditionally, desalination has been accomplished through a thermal process: saltwater is boiled and the steam is captured, cooled, and condensed into water. But most desalination plants built today use “reverse osmosis” technology to remove material from water. The website for the Carlsbad Desalination Plant divides the desalination process into five stages:[5]

  1. Pretereatment. At full operation, 100 million gallons of ocean water per day enters the desalination plant from an intake pipe that was used by the adjacent NRG Energy’s Encina Power Station to cool turbines. The water is pumped through tanks that contain layers of coal, sand, and gravel. Organic material (such as algae) and suspended particles are filtered out. Dissolved salts remain.
  2. Secondary Pretreatment. “Microfiltration” removes very small suspended impurities. By the end of this process, material that could clog the membranes in reverse osmosis is removed.
  3. Reverse Osmosis. Pumps force water at high pressure (7000 horsepower of energy or 1100 pounds per square inch) through more than 2000 fiberglass tubes containing over 16,000 thin membrane filters. Dissolved salts, other minerals, viruses and bacteria are removed, leaving water molecules. Meanwhile, devices capture energy remaining from the high pressure stream and transfer it back to the intake of seawater. It is claimed these devices reduce the desalination plant’s power use by 146 million kilowatt-hours of energy per year.
  4. Post Treatment. For the half of the water to be supplied to customers, chlorine is added to disinfect it and some minerals are added. The other half of the water (salty brine) – 35,000 gallons of brine per minute – is pumped as discharge into the Agua Hedionda Lagoon (another legacy of the Encina Power Plant) for eventual return to the ocean. The high-salinity discharge from the Carlsbad plant must, by California law, be diluted before it hits the brine pit. Four gallons of seawater are mixed with each gallon of effluent, which means that the water returning to the ocean has no more than 20% higher salinity than the ocean water itself.
  5. Product Water Storage. Drinkable water is pumped through a 10-mile long 54-inch wide pipeline to an aqueduct owned by the San Diego County Water Authority’s Second Aqueduct in San Marcos and blended with other water supply.

Forcing seawater through thin membranes to remove dissolved material uses less energy than boiling the water to collect it as steam. Advances in reverse-osmosis technology have cut the total amount of energy used in desalination in recent decades. Carlsbad is expected to use 4,898 kilowatt/hours per acre-foot, to desalinate ocean water and deliver it to households, according to Poseidon’s report to the Department of Water Resources. Poseidon used state-of-the-art technology to reduce energy requirements and promised that plant operations would have a zero net carbon footprint. [6]

The plant can produce up to 50 million gallons a day, equivalent to 56,000 acre-feet of water per year, enough to meet the needs of approximately 400,000 people.[7] The plant is expected to provide 8% of the Authority’s drinking water.[8]

COST FOR CUSTOMERS OF WATER PRODUCED BY THE CARLSBAD DESALINATION PLANT

San Diego County Water Authority customers have already been paying a lot more for water because of infrastructure improvements and – ironically – because of successful water conservation campaigns that reduced revenue for the water district.  In May 2014, the San Diego County Water Authority projected that ratepayers would pay an extra $5.14 per household for the supply of desalinated water.[9]  That cost was incorporated into the 2016 water rates. [10]

For example, the average residential household bill for water in the City of San Diego at the end of 2015 was $70.81. It increased 9.1% to $77.25 in January 2016 (and increased another 6.9% in July 2016, with more scheduled increases thereafter).[11]  The additional $5.14 would have been 7.3% of the total bill for December 2015.

For the first fiscal year of desalinated water production, the Authority has projected a total cost of $113.6 million, including debt service, for the minimum amount of 48,000 acre feet.[12]  This is compared to $45.2 million for an equivalent amount of imported water.[13]

Water customers for most large American cities, including San Diego, have experienced gradually higher costs for water in the past 15 years.[14]  Recent increases in water costs in San Diego are a result of debt service on major infrastructure projects (such as the Capital Improvement Program and Emergency and Carryover Storage Project), planned infrastructure such as Pure Water San Diego, and conservation, which reduced usage, reduced revenue, and compelled rate increases.

San Diego County Water Authority defends the desalination plant as a way to diversify water sources and ensure supply regardless of droughts and earthquakes. But it also justifies desalination costs based on its long-term projections of the cost of imported water. The cost of the Authority’s imported water has doubled since 2008,[15] and the Authority projects that the cost of imported water from the Colorado River and the Delta will eventually exceed the cost of desalinated water, perhaps by 2030.[16] The Carlsbad plant is expected to operate for at least 30 years.

FINANCING AND PLANT ECONOMICS

The San Diego County Water Authority is the second water agency in the United States to build a large reverse osmosis seawater desalination plant, and therefore it was able to avoid some of the mistakes made in the development of the first US plant near Tampa, Florida. The Authority entered into a 30-year water purchase agreement with Poseidon Water – offloading construction and operational risk into a private company.

The San Diego County Water Authority agreed in 2012 to purchase between 48,000 and 56,000 acre-feet of desalinated seawater per year for 30 years. (An acre-foot is about the amount of water two average-sized families use in one year.) The agency will pay between $2,131 and $2,367 an acre-foot, more than double what it will pay to import water next year from the Metropolitan Water District of Southern California.

Plant construction costs were financed by a $167 million equity investment from Poseidon and $734 million of debt, taking the form of municipal bonds issued by the California Pollution Control Financing Authority.[17]  Premiums on the bond sale and interest income on bond proceeds provided an additional $24 million necessary to meet total construction costs of $925 million.

The bonds financed the desalination plant, a 10-mile pipeline connecting the plant to the San Diego County Water Authority’s distribution system and other pipeline improvements. Poseidon’s investment and bond servicing obligations apply only to the plant; the Water Authority services the pipeline bonds, whose face value was $203 million.

After 30 years of operation at the Carlsbad plant, the Water Authority has the option – but not the obligation – to purchase the plant for $1. The agency also has the right to buy the facility after 10 years.[18]

The official statement contains thirty years of projected revenue and operating cost data for a base case and four alternative scenarios. Although these projections are included to show debt service coverage ratios (i.e., the quotient of operating income and debt service), they can also be used to calculate the return of Poseidon’s $167 million equity investment. Those calculations are shown in Appendix 1. ROI under the five scenarios ranges from 7.78% to 12.35%.

Water officials say the authority’s backing saved ratepayers about $200 million in financing costs. Because the bonds were issued in the municipal bond market, interest payments are exempt from income taxes – enabling the issuer to attract investors at lower interest rates. In addition, “A large, modern technologically advanced desalination project like the one in Carlsbad is not financeable without a secure, financially viable customer for the water,” authority spokesman Michael Lee told the Los Angeles Times. “It is the take-or-pay contract with the water authority that made the project financially viable.”[19]

The Authority tapped relatively experienced companies to be partners for the project, including Poseidon Water, IDE Technologies, Stonepeak Infrastructure Partners and Kiewit-Shea Desalination. Perhaps as a result, the Carlsbad facility was named “International Plant of the Year” by Global Water Intelligence.[20]

OBSTACLES – COST AND FINANCIAL RISK

Environmental groups have spearheaded much of the criticism of the cost of the plant, the cost of the water it produces, and the terms of the 2012 agreement between The San Diego County Water Authority and Poseidon Resources. In particular, the agency has been criticized for agreeing to buy water from Poseidon whether they need it or not.

The City of Santa Barbara had negotiated a Water Purchase Agreement with its desalination plant developer Ionics Inc., but that agreement included a provision allowing the city to pay Ionics Inc. a “standby charge” much lower than the cost to operate the plant. The city paid the lower standby costs for five years and then bought the plant. It sold off the plant’s outdated technology to help cover costs, and has recently contracted to have it re-commissioned. It’s expected to be ready in October 2016. Santa Barbara’s new contract with IDE Americas Inc. to re-commission the plant also includes a provision to pay a standby charge.[21]

San Diego County Water Authority officials argue that a similar standby charge arrangement with Poseidon Water was not possible because their project was much larger and costlier. Officials told the San Diego Union Tribune that “Without long-term commitments to recoup expenses, the company (Poseidon Water) never could have justified taking on the debt to build the huge project.”.[22]

OTHER SEAWATER DESALINATION PLANTS IN CALIFORNIA

While the Carlsbad plant has a high profile, it is the not the first desalination initiative in California., Various local governments have adopted the process on a small scale during the past 25 years. A selection of California projects is listed in the following table.

Operating Desalination Plants in California
20161123-cpc-infrastructure-desal1

Sources for Table:

City of Santa Barbara (2016). Desalination Project Status.

City of Santa Barbara (2016). Fiscal 2017 Water Rates.

Sand City Coastal Desalination Plant (nd). Water Technology.

California American Water (May 16, 2013). Advice Letter to California Public Utilities Commission.

Sand City (February 16, 2016). Council Minutes.

Jennifer Warren (June 25, 1991). Catalina Discovers the Ocean: Desalination to Supply a Reliable Water Source. Los Angeles Times.

Southern California Edison (June 8, 2015). Catalina Island Water System Fact Sheet.

Lauren Bartlett (November 23, 2015). New Desalination Plant Comes to Catalina Island. Inside Edison.

CONTROVERSY OVER THE HUNTINGTON BEACH PLANT

About a dozen other seawater plants are under consideration or construction elsewhere along the California coast.[23] Among these is the 50 MGD plant proposed for Huntington Beach.

Poseidon Water has sought to build a Huntington Beach desalination plant since 1998, the same year it began the process in Carlsbad.[24] In both cases, construction has been held up by environmental regulation and lawsuits. In 2013, it appeared that Poseidon would finally get its permit to build the plant approved by the California Coastal Commission after the International Scientific and Technical Advisory Panel, ISTAP, concluded that the proposed plant was feasible and prudent.[25]

However, the Coastal Commission unanimously voted to delay their decision until Poseidon conducted a study of the ocean floor to determine the feasibility of using subsurface intake pipes to bring water into the desalination plant.[26] Shortly afterwards, Poseidon withdrew its permit application to conduct the study. After an independent study determined that subsurface intake pipes were too expensive to be feasible, Poseidon re-submitted its application in September 2015. The new plan would reduce seawater intake to 106 million gallons of seawater to produce 50 million gallons of desalinated water daily, down from 127 million gallons in the previous proposal. The new proposal also added 1 millimeter screens to the intake pipes in order to protect marine wildlife.[27]

The Huntington Beach desalination plant would pump about 50 million gallons a day, increase water bills by 6%, or $3 per month, and would supply 15% of water for the Orange County Water District.[28] Poseidon would cap its price at 20% above the rate set by the Metropolitan Water District, which is a major supplier for the Orange County Water District, for the first ten years. The Coastal Commission has approved the plan on the condition that the plant will shut down if the environmental impact is worse than anticipated until the issues can be remedied, Poseidon says it will restore local wetlands to mitigate environmental impact.

The Orange County district buys untreated water from the Municipal Water District for $660 per untreated-acre foot. The Municipal Water District currently charges $1003 per acre-foot for treated water. A Los Angeles Times report estimated the cost of Huntington Beach desalinated water at $1812 per acre foot, before any water district subsidies.[29]

In February of 2016, the Municipal Water District of Orange County revised their projection for future water demand downwards by 17%[30], bringing into question the need for a $1 billion desalination plant in Huntington Beach and increasing criticism from environmental groups. Poseidon Water claimed that desalination was necessary despite the lower demand estimate. However desalination continues to offer the district important advantages including local control, greater supply reliability and protection from price spikes for imported water.

Orange County Coastkeeper argues that the proposed plant would spike local energy costs, pollute the ocean and kill large numbers of marine animals.[31] Poseidon counters that the plant will be 100% carbon neutral (like the Carlsbad facility), that it will protect ocean water quality and that sea life can adapt to the slightly elevated brine levels caused by plant discharges.[32]

While environmental concerns need to be evaluated during a plant approval process, they should be adjudicated more quickly. Thus far, Poseidon has been seeking approval for the Huntington Beach plant for 18 years. Although the plant has the support of most local residents, nearby cities, and government agencies, the proposal has been bogged down in 18 years of costly and redundant applications and studies that drive up prices and discourage future investment. The first step in promoting any sort of water infrastructure development, whether desalination or otherwise, would be untangle the regulatory knots and thereby unlock innovation.

RESPONDING TO THE COST-BASED ARGUMENTS AGAINST DESALINATION

In May 2016, a coalition of environmental-oriented organizations released a report summarizing current data about how seawater desalination plants in California would affect marine life.[33] Coming from an environmentalist perspective, the report was skeptical about seawater desalination as an appropriate and useful option for water supply in California. However, it identified some legitimate shortcomings in economic analysis and public knowledge of seawater desalination.

For example, the report noted that “costs, benefits and limitations of desalination are not well understood by the California public” and asserted that the public relied on “misinformation and sweeping generalizations” about the potential value of seawater desalination.

Criticisms of desalination’s expense often fail to take into account the concepts of marginal cost and marginal utility that underpin contemporary microeconomics.[34] In a free market, the supply of a product is based on its marginal cost of production, i.e. the cost of producing the very last and most expensive unit. An equilibrium is theoretically achieved when the marginal cost of supplying water equals its marginal benefit to consumers.

If a consumer captures rainwater directly, the price of his water is virtually zero. If a public utility captures rainwater and pipes it to the consumer, the cost per gallon is only slightly higher. These facts tend to anchor our view about what water should cost.

But this price opinion becomes less applicable when free or near-free sources are insufficient to meet consumer demand. In such cases, consumer utility may be optimized by using sources of water that are more expensive – even sources that are much more expensive.

Desalinated water produced by the Carlsbad plant is sold to the San Diego Water Authority for about $2,200 per acre foot. An acre foot of water is equal to 325,853 gallons, so the wholesale price per gallon of Carlsbad desalinated water is less than seven tenths of one cent per gallon.

Market prices offer evidence that demand for water exists at prices much higher than seven tenths of a penny per gallon. The International Bottled Water Association estimates that the wholesale cost of domestic non-sparkling bottled water was $1.20 in 2014 – more than 150 times the wholesale cost of Carlsbad desalinated water.[35] Despite the high price, nationwide bottled water consumption reached 11.7 billion gallons in 2015 and is expected to surpass carbonated soft drink sales in 2017.[36] (Although bottled water is normally intended for drinking, it has been used for broader purposes when the tap water supply becomes unreliable as it has in Flint, Michigan.[37])

Unlike bottled water, tap water is not typically supplied on a free market, and is not priced in accordance with consumer demand. Political considerations and the earlier observation about the free availability of rainwater push the price of tap water down to levels well below the marginal consumer value it provides.

The assumption that all water should be priced at or near the cost of obtaining our least costly supplies unnecessarily limits consumer welfare. If individuals are willing to pay extra to take longer showers or water their lawns, social utility is maximized by letting them pay the additional cost rather than compelling them to conserve.

Environmentalists may prefer to tackle water supply shortages through water restrictions, even if it means taking large swaths of land out of agricultural cultivation and encouraging population decline in areas with insecure water supply.[38] In contrast, we see seawater desalination as a potentially positive solution that allows for economic growth, job creation, and revenue generation that, in turn, facilitate further advances in infrastructure, programs, and services for the public. Opponents of seawater desalination may try to marginalize or vilify this perspective from an ideological viewpoint. That would be a disservice to current and future generations of Californians.

BRACKISH GROUNDWATER AND SURFACE WATER DESALINATION

Aside from seawater, desalination technology can also be applied to brackish (salty) water underground, in lakes and in rivers. Several brackish water desalination facilities already operate in California. The state’s potable water supply could be increased by expanding some of these facilities and adding new ones. Because brackish water sources typically contain less salt than seawater, less energy is required to desalinate it. As a result, desalination of brackish surface water and groundwater is usually less costly than seawater desalination. In this section, we briefly outline a number of brackish water desalination projects in California.

The Chino Basin Desalter Authority, a joint powers authority in the Inland Empire, began operation in 2000. In fiscal year 2015, it was contracted to provide 24,600 AFY (or about 21.9 MGD) of desalinated water to eight water agencies.[39] The authority is currently completing an expansion which will add 10,600 AFY (or about 9.5 MGD) of capacity at an expected cost of $143 million.[40] According to the Authority’s 2016/17 Budget, it is charging agencies an average of $871 per acre foot to cover both operating and capital costs.[41] In FY 2015, the authority incurred O&M costs of $12.8 million and delivered 25,795 acre feet of water.[42] This implies unit O&M costs of $496 per acre foot.

The Alameda County Water District opened its Newark Desalination Facility in 2003. This was the first large-scale brackish water desalination facility in Northern California. The plant’s initial capacity was 5 MGD but it was expanded to 10 MGD in 2010. Initial construction cost was $20.2 million and projected operating cost was $241 per acre foot.[43] Although the district does not publish costs per acre foot by source, it reported that the desalination facility saved customers $4.3 million in 2013 by replacing imports of more expensive water from the San Francisco Public Utilities Commission.[44]

The Mission Basin Groundwater Purification Facility provides 15% of the water supply in the City of Oceanside (San Diego County). The plant started operation in 1992 with a capacity of 2 MGD and was expanded to its current 6.4 MGD capacity in 2002.[45]

Also in San Diego County, the Richard A. Reynolds Groundwater Desalination Facility has been purifying brackish well-water for the Sweetwater Authority since 1999. Construction is currently underway on an expansion, which is expected to increase the facility’s production from 5 MGD to 10 MGD in 2017. The cost of the expansion project is $42 million, of which half is being provided by the state and a quarter by the US Bureau of Reclamation. The Authority expects that the facility will produce water at a cost of $510 per acre foot, much less than the $1,200 per acre foot cost of imported water.[46]

DESALINATION ELSEWHERE IN THE UNITED STATES

A number of desalination plants operate in other states. While most of these have been built and maintained by the public sector, we survey them to demonstrate the widespread application of desalination within the United States and to provide additional data points with respect to construction and operational costs.

In 1995, the City of Cape May, at the southern tip of New Jersey’s coastline decided to address a long-term decline in fresh well-water supplies by building a desalination plant. Three years later, a 2 MGD facility was completed and placed in service. Eighteen years later it continues to operate and the city is planning to expand its capacity.[47] Water from the Cape May desalination plant is the purest in New Jersey and the plant has allowed the city to become a net exporter of water after years of importing.[48]

More controversial is the Taunton River Desalination Plant in Southeast Massachusetts. The plant was authorized in 2002 as a response to chronic water shortages in the nearby city of Brockton.  By the time the plant opened in 2008, conservation measures had reduced Brockton’s water demand to the point that it no longer needed water from the facility. City officials were criticized for agreeing to pay the private operator – Aquaria Water – $120 million over 20 years to build and operate the plant. If and when the city consumes water from the facility, it must also pay $1.23 per thousand gallons (which equates to $401 per acre foot).[49] In June 2016, a drought resulted in declining water levels at Silver Lake, Brockton’s main water source. The city responded by drawing 3.8 million gallons per day from the Aquaria facility.[50]

Despite the controversy over the Taunton River plant, another desalination facility was built on nearby Palmer River by the Swansea Water District. The 1.2 MGD plant opened in 2013 and cost $18 million to build.[51]

Texas has 46 desalination plants[52] with aggregate capacity of 123 MGD. All of these plants process brackish groundwater or brackish surface water.[53] No seawater desalination plants are currently operating or under construction in the state, although the Laguna Madre Water District has voter approval to borrow $15.7 million to fund a seawater desalination plant on South Padre Island.[54]

Texas’ largest brackish water desalination facility is the Kay Bailey Hutchinson Desalination Plant in El Paso. The plant cost opened in 2007 and cost $91 million to build.[55] Although it has a capacity of 27.5 MGD it does not normally run at full capacity. According to the Texas State Controller, the plant produces 3.5 million gallons on an average day at an operating cost of $489 per acre foot.[56]

Another large brackish water desalination facility was built by the federal government in Yuma, Arizona. Under a 1944 treaty, the United States is obligated to provide Mexico with 1.5 million acre feet of water from the Colorado River (the River empties into the Gulf of California in the Mexican State of Baja California).[57] To ensure that Mexico received sufficient amounts of water without excess salinity, the Bureau of Reclamation opened a desalting plant in 1992 near the border to remove salts from irrigation return flows in Southern Arizona and supply the purified water to Mexico. The plant has generally remained in standby mode because the US was able to meet its annual water obligation without operating it. But, in 2010 and 2011, the Bureau conducted an extended pilot run of the facility. During the pilot run, the plant produced 22,666 acre feet of purified water at a cost of $10.22 million. While this implies an operating cost of $451 per acre foot, the Bureau forecasted much lower costs if the facility began continuous operation – in the range of $45 to $52 per acre foot. The much lower operating cost of this facility is the result of the lower salinity of its intake water:  water processed by the Yuma facility contained an average of 2,621 parts per million (ppm) of salt.[58] By contrast, seawater has a salinity of 35,000 ppm.[59]

The only large seawater desalination plant currently operating in the United States outside California is the Tampa Bay Seawater Desalination Plant in Florida. The 25 MGD facility was completed in 2007 at a cost of $158 million (substantially over the initial budget of $110 million but well below the cost of the Carlsbad facility). Since opening, the plant has operated at varying rates. In 2012, Cooley and Ajami estimated the unit cost of Tampa Bay desalinated water at $1,600 per acre foot assuming average production of 11 MGD. Their estimate includes both operating and debt service costs.[60] Based on data provided by Tampa Bay Water’s Budget Administrator, Lynda Vatter, we calculate that plant operating costs ranged from $1,097 to $1,121 per acre foot during the three most recent fiscal years in which production exceeded 9 MGD.[61]

The Tampa desalination site has an inherent advantage which contributes to its ability to operate at a lower cost than Carlsbad. It is located on an estuary where the water is somewhat less salty than ocean water. Like Carlsbad, the Tampa plant was built next to an already existing power station, and is able to take advantage of waste heat generated by this facility.[62]

Overall, Florida has over 140 desalination facilities producing 515 million gallons of potable water daily. The vast majority of Florida’s plants process brackish ground and surface waters. Aside from Tampa, the only other seawater desalination plants are smaller facilities in the Florida Keys.[63]

INTERNATIONAL CASES

In this section we discuss desalination in Israel at some length and then list notable facilities in other nations.

DESALINATION IN ISRAEL AND ITS RELEVANCE TO CALIFORNIA

Israel now obtains about half of its water supply from desalination plants built since 2004.[64] Those facilities are listed in the accompanying table.

Desalination Plants Operating in Israel
20161123-cpc-infrastructure-desal2

Sources for Table:

Israel Water Authority (2015). Water Sector in Israel.

Israel Water Authority (2016). Desalination in Israel (Hebrew).

Israel Ministry of Foreign Affairs (2011). Agreement signed for construction of desalination plant in Ashdod.

Dalia Tal (2004). Construction of Palmachim desalination plant will begin at end of October. Globes.

Global Water Intel (2012). Palmachim expansion financing sealed.

Deltek Group (2016). Annual Report 2015.

Water Desalination and Reuse (2011). Agreement at last on Ashdod water price.

Desalination has freed the nation of eight million from dependence on the Jordan River, which has suffered ecological damage from water consumption and has been a flashpoint of tension with neighboring countries.[65]

A similar initiative in California could also free the state of contested water supplies from the Sierras and Colorado River. Large numbers of California water users are concentrated near the Pacific Coast, especially in the southern part of the state. Three coastal counties – Los Angeles, San Diego and Orange – have over 16 million residents spread over roughly 9,000 square miles. Simply satisfying the water needs of these inhabitants would greatly diminish the state’s overall water security challenge; it is not necessary to pipe desalinated water to sparsely populated inland areas.

With coastal Southern California residents each consuming about 80 gallons of water per day[66], the implied regional demand for potable water is about 1.3 billion gallons. The Carlsbad plant has a capacity of 50 million gallons per day, representing 4% of total demand.  A similar sized plant in Huntington Beach would double the supply of desalinated water – covering 8% of regional requirements.

As Israel’s experience shows, individual plants can be scaled up and built within a short distance of one another, suggesting that desalination could put a very large dent in the amount of water Southern California needs to import. The Sorek plant has more than twice the capacity of the Carlsbad and proposed Huntington Beach facilities, and the Israel’s five major desalination plants are sited along less than 100 miles of the Mediterranean coast.

While environmentalists express concern about the energy used by desalination, it is worth noting that the process has become more energy efficient over time.. Israel’s Sorek plant which became operational in 2013 is more energy efficient than facilities built previously.[67] This may explain why the plant is able to sell water to Israel’s water authority for 52 cents per cubic meter, equating to $641 per acre foot – a small fraction of the costs for Tampa or Carlsbad water. A further investment in desalination technology research can continue the trend toward reducing its cost and environmental impact.

OTHER COUNTRIES

Most of the International Desalination Association’s list of the 50 largest seawater desalination plants are in the Middle East. Outside of Israel, in the Middle East there are desalination plants operating in Saudi Arabia and the United Arab Emirates. Other countries with unreliable water supplies such as Australia and Singapore operate seawater desalination plants. South Africa has also partnered with Iran to develop desalination plants.

A particularly notable plant is Ras al-Khair in Saudi Arabia, the world’s largest. Its capacity is five times that of the Carlsbad facility in California, proving that desalination technology can be readily scaled to meet growing water demand.

Desalination Plants Elsewhere in the World
20161123-cpc-infrastructure-desal3

Sources for Table:               

Colin Simpson (2013). UAE’s largest power and desalination plant opens at Jebel Ali. The National (UAE).

Deema Almahabi (2014). Saudi’s Start Production at World’s Biggest Desalination Plant. Bloomberg.

Water Technology (2015). Tuaspring Desalination and Integrated Power Plant, Singapore.

Tom Freyberg (2013). Singapore’s Second Desalination Facility Set to Open with Combined Power Plant. WaterWorld.

Wikipedia (2016). Victorian Desalination Plant.

Veolia Water (nd). South Africa’s largest seawater desalination plant.

CONCLUSION

As this survey shows, a number of nations and two other US states have made strong commitments to desalination technology. Arguments that California is somehow different from all these other jurisdictions seem labored. Instead, California’s hesitant embrace of desalination is mostly attributable to environmental activism, regulatory complexity and politicized water pricing.

Southern California can achieve full water supply security by adding a water source, which while relatively expensive, is still at least 100 times less costly than bottled water. Recent declines in energy prices and continued improvements in desalination technology promise further economies in the process of removing salt from seawater as well as from brackish groundwater and river water. While environmental concerns deserve to be heard, the state should provide a more efficient path for private investors to get final decisions on their desalination project proposals.

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FOOTNOTES

[1] Justin Fredrickson (July 20, 2016). Commentary: Environmental Demands for Water Keep Expanding. AgAlert.

[2] Orlowski, Aaron (June 6, 2016). Due to La Niña, Drought Could Get Worse This Winter. The Orange County Register. 2016.

[3] Anthony Clark Caprio, (May 15, 2015). O.C. district to work toward water-purchase deal with proposed desalination plant. Los Angeles Times..

[4] San Diego County Water Authority (October 1, 2015). Regional Water Conservation Still Critical Despite Potential for Increased Rainfall.

[5] Carlsbad Desalination Plant Web Site (n.d.)

[6] San Diego County Water Authority (December 10, 2008). Carlsbad Seawater Desalination Project: Energy Minimization and Greenhouse Gas Emission Plan.

[7] San Diego County Water Authority (2016). Desal Process: Desalting the Sea.

[8] San Diego County Water Authority (2016). Seawater Desalination.

[9] San Diego County Water Authority (May 19, 2014). Water Authority Proposes 2015 Rates to Maintain Reliable Water Supply.

[10] Anne Stanko (December 14, 2015). Nation’s Largest Seawater Desalination Plant Enhances Water Supply Reliability for San Diego County. Carlsbad Desalination Plant web site.

[11] City of San Diego (2015). Our Water System: Investing in Our Future

[12] San Diego County Water Authority (September 9, 2015). Water Revenue Refunding Bonds, Series 2015A Official Statement.

[13] Ben Bergman (December 14, 2015). San Diego water glut threatens to overshadow new desalination plant. KPCC web site.

[14] Black and Veatch (2013). 50 Largest Cities Water/Wastewater Survey

[15] City of San Diego (2014). Frequently asked questions about the proposed water rate changes for 2014 and 2015.

[16] San Diego County Grand Jury (May 15, 2013). Reduce Dependence on Imported Water.

[17] California Pollution Control Financing Authority (December 20, 2012). Official Statement: Water Furnishing Revenue Bonds.

[18] San Diego County Water Authority (September 27, 2012). Water Authority Releases Proposed Carlsbad Desalination Water Purchase Agreement

[19] Morgan Cook (November 25, 2015). While other parts of California are bone dry, San Diego faces the opposite problem: too much water. Los Angeles Times

[20] San Diego County Water Authority (April 22, 2016). Carlsbad Desalination Plant Named International Plant of the Year for 2016.

[21] Morgan Cook (November 21, 2015). Desal plant launches amid ample water. San Diego Union-Tribune.

[22] Ibid.

[23] California Water Boards (April 24, 2015). Proposed Desalination Amendment: Creating a Consistent Permitting Process.

[24] Jaimee Lynn Fletcher (November 7, 2013). Controversial H.B. Desalination Plant Seeks Final Approval. The Orange County Register.

[25] Shirley Detloff (August 22, 2015).  Study Confirms Prudence of H.B. Desalination Plant. The Orange County Register.

[26] Ed Joyce (November 14, 2013). Poseidon withdraws Huntington Beach desalination permit application; coastal commission tables vote (Update). Southern California Public Radio.

[27] Erika Agullar. (August 27, 2015).  Poseidon Plans to Reapply for permit to build Huntington Beach desalination plant. Southern California Public Radio.

[28] Los Angeles Times (October 19, 2015). Editorial: In Huntington Beach, a desalination plant that makes sense.

[29] Anthony Clark Carpio (January 9, 2015). Will you be drinking ocean water? O.C. Water District to discuss buying from desalination plant. Los Angeles Times.

[30] Aaron Orlowski (February 5, 2016). Orange County Will Demand Less Water in the Future, New Forecasts Say. The Orange County Register.

[31] Raymond Hiemstra (March 5, 2015). How Will the Huntington Beach Poseidon Desalination Plant Impact You? Orange County Coastkeeper.

[32] Poseidon Water (2010). Protecting the Environment. Huntington Beach Freshwater.

[33] Water in the West (May 2016). Marine and Coastal Impacts of Ocean Desalination in California.

[34] Liberty Fund (2012). Margins and Thinking at the Margin. Library of Economics and Liberty.

[35] International Bottled Water Association. How Much Does Bottled Water Cost? Accessed October 21, 2016.

[36] International Bottled Water Association. Bottled Water Market. Accessed October 21, 2016.

[37] Christina Zdanowicz (March 7, 2016). Flint family uses 151 bottles of water per day. CNN.

[38] See, for example, Kathleen Parker (2010). Population, Immigration, and the Drying of the American Southwest. Center for Immigration Studies. And Dan Bacher (May 2, 2016). Tribunal Considers Rights of Nature in Imperiled San Francisco Bay-Delta. Daily Kos.

[39] Chino Basin Desalter Authority (2016). Facilities.

[40] Chino Basin Desalter Authority (June 9, 2016). Official Statement: Desalter Revenue Refunding Bonds, Series 2016. Page 12.

[41] Chino Basin Desalter Authority (2016). Adopted Budget Fiscal Year 2016/17. Exhibit A.

[42] Chino Basin Desalter Authority 2016A Refunding Bonds Official Statement.  Pages 16 and Appendix A, Page III.

[43] Alameda County Water District (n.d.). Newark Desalination Facility.

[44] Alameda County Water District (2014). Reliability by Design.

[45] City of Oceanside (n.d.). Mission Basin Groundwater Purification Facility.

[46] Sweetwater Authority (n.d.). Fast Facts: Richard A. Reynolds Groundwater Desalination Facility Expansion.

[47] Mayor Edward J. Mahaney, Jr. (January 1, 2016). City of Cape May State of the City Address. Reprinted in Cape May County Herald.

[48] Richard Denger (September 4, 2012). Desalination plant proved to be winning gamble for Cape May. The Press of Atlantic City. http://www.pressofatlanticcity.com/communities/lower_capemay/desalination-plant-proved-to-be-winning-gamble-for-cape-may/article_61eed314-f61b-11e1-9505-001a4bcf887a.html.

[49] Amy Crawford (June 2013). How Brockton’s Desalination Plant Cost Them Millions. Boston Magazine.

[50] Marc Larocque (July 3, 2016). Brockton water board chair fights back in Silver Lake flap. The Enterprise.

[51] Bill Hall (April 18, 2014). Swansea desalination plant ranked third in world.

[52] Texas Water Development Board (2012). TWDB Desalination Plant Database. http://www2.twdb.texas.gov/apps/desal/DesalPlants.aspx.

[53] Texas Water Development Board (n.d.). Desalination Facts.

[54] Texas Water Development Board (December 1, 2014). 2014 Biennial Report on Seawater Desalination.

[55] R. Alan Shubert (October 1, 2015). Overview of the El Paso Kay Bailey Hutchison Desalination Plant. Texas Desal Conference.

[56] Texas State Comptroller (January 14, 2014). Texas Water Report: Going Deeper for a Solution.

[57] Congressional Research Service (November 10, 2015). US Mexico Water Sharing: Background and Recent Developments.

[58] Bureau of Reclamation (July 2012). Yuma Desalting Plant Pilot Run Final Report.

[59] US Geological Survey (2016). Saline Water.

[60] Heather Cooley and Newsha Ajami (November 2012). Key Issues for Desalination in California: Cost and Financing. Pacific Institute. Page 32.

[61] Lynda Vatter (September 13, 2016). Cost spreadsheet provided via email.

[62] Florida Department of Environmental Protection (April 2010). Desalination in Florida: Technology, Implementation and Environmental Issues.

[63] Florida Department of Environmental Protection (May 2014). Fact Sheet: Desalination.

[64] David Talbot (2015). Ten Breakthrough Technologies: Megascale Desalination.

[65] Brett Walton (July 25, 2016). Israel’s Mediterranean Desalination Plants Shift Regional Water Balance. Circle of Blue.

[66] South Coast water usage in April 2016 was 77 gallons per day per person and May 2016 usage was 81 gallons per pay per person. Southern California Public Radio (2016). Where is California water use decreasing?

[67] Talbot, MIT Technology Review.

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ABOUT THE AUTHORS

Marc Joffe is the Director of Policy Research at the California Policy Center. In 2011, Joffe founded Public Sector Credit Solutions to educate policymakers, investors and citizens about government credit risk. His research has been published by the California State Treasurer’s Office, the Mercatus Center at George Mason University, the Reason Foundation, the Haas Institute for a Fair and Inclusive Society at UC Berkeley and the Macdonald-Laurier Institute among others. He is also a regular contributor to The Fiscal Times. Prior to starting PSCS, Marc was a Senior Director at Moody’s Analytics. He has an MBA from New York University and an MPA from San Francisco State University.

Jill Eicher Jill Eicher is a researcher focusing on innovative financing models for public-sector agencies. Most recently, she was a Visiting Scholar at Stanford University’s Global Projects Center, working on the development of a cooperative investment model for public pension funds to deploy capital into U.S. infrastructure. She co-founded the Fiduciary Infrastructure Initiative, a research-driven venture focused on the applicability of international pension cooperatives making direct infrastructure investments as models for the U.S. A graduate of Wellesley College, Eicher did post-graduate work in mathematics and was issued a patent for her method for assessing investment risk.

Ed Ring is the Vice President of Policy Research at the California Policy Center. His work has been cited in the Los Angeles Times, Sacramento Bee, Wall Street Journal, Forbes, and other national and regional publications. Previously, as a CFO primarily for start-up companies in the Silicon Valley, he has done financial accounting for over 20 years, and brings this experience to his analysis and commentary on issues of public sector finance. From 1995 to 2009 he was the editor of EcoWorld, a website covering environmental issues from a free-market perspective. Between 2007 and 2010 he launched in partnership with AlwaysOn Media the highly successful “GoingGreen” clean technology investor conferences, held annually in San Francisco and Boston. He has an MBA in Finance from the University of Southern California, and a BA in Political Science from UC Davis.

Kevin Dayton is a policy analyst for the California Policy Center, a prolific writer, and the author of frequent postings about generally unreported California state and local policy issues on the California Policy Center’s Prosperity Forum and Union Watch. Major policy reports written by Kevin Dayton include For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction. Dayton spent more than 17 years in various federal, state, and local policy positions for Associated Builders and Contractors (ABC), including ABC of California State Government Affairs Director from 2005 to 2012. He was also a legislative assistant in the U.S. House of Representatives for Congressman Gary A. Franks (R-Connecticut) from 1992 through 1994. Dayton is a 1992 graduate of Yale University, where he majored in History.

ABOUT THE CALIFORNIA POLICY CENTER

The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

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