This Man Wants To Make $2 Billion Selling Desert Water

A man who owns water rights in the Mojave Desert has a controversial plan to make $2 billion by pumping 814 billion gallons of water to sell to drought-plagued communities in southern California, including Los Angeles.

Scott Slater, the 57-year-old chief executive of Cadiz Inc., owns the water rights connected to “45,000 acres of land along route 66, about 75 miles north-east of Palm Springs,” The Guardian reported. Slater recently spoke to the newspaper about his plan and the controversy that has surrounded it.

“Yes, it’s quite a lot of money. It’s worth whatever the community who wants the water is willing to pay for it to meet their demands. In a condition of scarcity, all water, all water that’s reliable, becomes more valuable,” he said, per the report. “People see this development as a private sector initiative and they have a very visceral, negative reaction to that.”

The plan is sure it bring in significant amounts of money for Slater.

“Slater has already got contracts to sell the water for $960 an acre ft (the amount of water it takes to cover an acre of land in a foot of water). That works out at $2.4bn over the 50 years of the company’s water extraction deal with San Bernardino County,” the report said.

The plan raises questions about the value of water, an ongoing concern for water utilities who often say that water rates are too low and detached from the true value of water.

“The price of water in California has been steadily rising, as has demand from a growing population, while the state struggles with four years of severe drought. Slater says water is worth as much as $2,200 an acre ft in San Diego, where it is shortest supply. A decade ago the price was less than $100,” the report said, citing Slater.

Despite the seeming economic viability of the plan, Slater is meeting policy hurdles.

“His problem is convincing politicians, regulators and the public that pumping water 200 miles from the desert aquifer to LA is a good idea,” The Guardian reported.

“In the latest setback, the US Bureau of Land Management (BLM) ruled that the company cannot lay a 43-mile pipeline alongside an existing railway line to transport water to the Colorado river aqueduct and on to the cities of the Californian coast. It means Cadiz will have to seek federal approval for the pipeline, which will trigger a long and expensive environmental impact review,” the report said.

Many experts argue that the price of water does not reflect its true value. As one New York Times analyst put it: "The price of water going into Americans’ homes often does not even cover the cost of delivering it, let alone the depreciation of utilities’ infrastructure or their R&D. It certainly doesn’t account for other costs imposed by water use — on, say, fisheries or the environment — caused by taking water out of rivers or lakes.”

For all things drought, visit Water Online’s Water Scarcity Solutions Center.