A parched landscape exposes need for new solutions

31-03-2014 | Foresight | Thomas Guennegues



At a meeting with farmers from California’s Central Valley in February, Barack Obama called for widespread action to manage the impacts of the ongoing drought and announced USD 183 million in federal aid for drought relief. The persistent drought in California really started some ten years ago, and the situation is not expected to improve in the near future.

California’s two main water sources are showing signs of distress. Runoff from the Sierra Nevada snowpack, which provides a steady flow during spring and summer and helps replenish the aquifers, has been affected by climate change: in January the snowpack had only reached 12% of its normal depth for that time of the year. The Colorado River, which supplies water to California and four other Southwestern states, has also been increasingly under pressure. The water level at Lake Mead, the biggest reservoir on the river and in the entire US, has dropped in recent years. The magnitude of this decrease has prompted Las Vegas, which relies on Lake Mead for 90% of its water, to start construction of a new USD 816 million supply pipe as the water level drops below the existing pipe.

The drought is also threatening the delicate balance between the state’s different water requirements for agricultural, municipal and industrial use. California’s Central Valley produces around 30%–50% of all produce in the US, making it the largest agricultural producer in the country. But with a water withdrawal rate of 80%, it is also the state’s largest water consumer. It will be increasingly difficult for the agricultural sector to continue to consume water at this rate without impacting other stakeholders, and will eventually need to increase its contribution to the costs.

To address California’s water woes, a combination of solutions will have to be implemented along the entire water supply chain. Distribution companies such as American States Water will have to increase water conservation efforts through differentiated tariffs and infrastructure development. Farmers will need to use ever smarter technologies to reduce water needs, such as Trimble’s GPS solutions, which help them identify specific areas that need to be irrigated. Finally, new water supply solutions will need to be put in place, such as the construction of desalination plants, some of which are already in progress, or water reuse projects offered by Suez Environnement.

"The Increasingly threatening drought situation will force all Californian water consumers to rethink their water usage, and innovative companies along the water value chain that offer solutions to help relieve some of the effects of the drought are expected to benefit."
thomas-guenneguesThomas Guennegues, CFA
Senior Equity Analyst
RobecoSAM Sustainable Water Strategy

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