Private investment can also create cost-effective water infrastructure. As we enter another season of uncertain rainfall, Californians are being asked to finance projects that simply move scarce supplies of potable water around. What is really needed and what investors are willing to fund, is new urban drinking water through desalination and wastewater reuse. Desalination has rescued the State of Israel from chronic water shortages and it can work the same magic in the State of California – if only regulators would stop taking their marching orders from environmental extremists who don’t want to see anything built next to the Pacific Ocean. Wastewater reuse, an even more cost-effective way to deliver drinking water to urban areas, is already a reality in several coastal areas in California and should be extended throughout the state.
The Trump approach is far from perfect, and, Senate Democrats will have the power to extract changes by threatening a filibuster. But rather than replace the private-led approach with new pork barrel spending, we suggest more incremental changes. Our main proposal is to create incentives and mechanisms for public employee pension systems to pool some of their resources into professionally managed infrastructure investment funds. These funds would finance projects in California and around the country. By investing in a geographically diverse set of projects, these investment pools will be less subject to political pressure and more likely to realize stable, positive returns.
So for California Democrats the bad news is that they rule a state now facing a potentially hostile administration. But by finding compromise on infrastructure and other shared priorities, they have the chance to defuse the hostility, create high paying construction jobs and fixing the state’s underfunded transportation, energy and water systems. We hope they take advantage of this opportunity.