Solutions for Prioritizing Investment in California’s Critical Water Infrastructure

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OPINION – We’ve all heard the line from the famous poem “water, water everywhere, nor any drop to drink.” While that poem was about a sailor in the high seas surrounded by undrinkable ocean water, the same can be said about California’s inability to capture, store and move water due to our outdated and inadequate system of infrastructure.

Indeed, California experienced the wettest January on record and the deepest snowpack in decades. And recent late February storms have brought more rain and snow. It’s almost starting to feel like water is, quite literally, everywhere. But due to an inadequate and aging water infrastructure system, we are wasting much of that water and our farms, homes and businesses throughout the state are only getting a small fraction of water supplies than otherwise would have been possible had California been adequately investing in upgrading and modernizing our water infrastructure system.

In particular, our lack of investments and strategy for water infrastructure is destroying our family farms and agricultural economy — one of California’s leading economic and job-creating engines that feeds our state, the nation and the world with fresh fruits, nuts, vegetables and foods.

The Milken Institute recently analyzed gaps in infrastructure funding and policy barriers that ultimately prevent infrastructure development and completion in California. The new report suggests that the state must develop a coordinated approach to prioritize projects and harness innovative financing mechanisms to meet the state’s critical water infrastructure needs.

Overall, California’s water system lacks cohesion and, in turn, strategic governance. With a mix of federal, state and local agencies managing infrastructure projects without built-in coordination, funding priorities and programs are split among inland, suburban and rural water users – creating unmet costs and development gaps within the state’s water system.

There is an opportunity for state and federal governments to play a role in prioritizing projects, facilitating access to capital, and helping to create financial and political leverage. And as the recent mega drought combined with mega storms has demonstrated, immediate political action is needed to best prepare the state for the future under a changing climate – with intense dry periods and periodic extreme wet conditions.

We encourage policy leaders at the federal, state and local level to improve critical water infrastructure investments by:

Establishing a centralized agricultural water infrastructure center. Coordination is key. Convene local, state, and federal entities to identify which projects need to be prioritized. In their most recent Infrastructure Report Card, the American Society of Civil Engineers gave California a C- for our dams, D for inland waterways, D for levees, D+ for stormwater, and a C- for drinking water. It’s clear there is work to be done. Once projects are prioritized, the council could work on identifying and providing detailed action plans to facilitate access to grants and funding and ensure that the state and federal shares of projects are covered so that the financial burden is shared appropriately.

There is an opportunity for state and federal governments to play a role in prioritizing projects, facilitating access to capital, and helping to create financial and political leverage.

Creating new credit-enhancement tools and adjust/expand existing programs to increase project funding. Relying solely on government funding isn’t practical. To attract more private capital, the state and federal governments should expand credit-enhancement tools and prioritize eligible projects. Direct grant funding is not the only way state entities may be able to support projects; zero-interest loans or credit-enhancement tools can also increase project affordability and bankability, especially for local or regional projects. The state should consider a state general obligation bond to fund a Regional Agriculture State Revolving Fund that could support ongoing water infrastructure projects for the state’s leading global agriculture production centers.

Promoting public-private partnership opportunities. Bridging the state’s water infrastructure funding gap will require public and private sector collaboration to accelerate infrastructure financing, prioritization of a pipeline of next-generation infrastructure investments and incentives for private investment in shovel-ready projects.

While the start of a wet winter is reason to celebrate, it does not mean we should sit back and move on to other priorities. Building a sustainable and equitable economy while supporting California’s critical agricultural production will require streamlining, coordination, and ultimately sharing the costs of water infrastructure investments. I encourage the Legislature and Governor to work collaboratively with key partners to identify and prioritize important projects and think creatively on ways to help secure funding so we can build for our future.

We must invest in our infrastructure, for when the water is everywhere, we’ll have plenty to drink, work and farm.

Matt Horton is the Director a director at the Milken Institute’s Center for Regional Economics and California Center.

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