In Focus: Private capital for new water supplies

Twenty-first century water resources management will be best served by engaging the power of private sector capital and respecting viable project economics. For the Columbia-Snake River Irrigators Association (CSRIA), this means acting on sound technical and financial information, and conveying honesty by not attempting to deceive others, or worse, deceive yourself.

Two water projects affecting Eastern Washington’s future wellbeing bear witness to CSRIA’s call to advance private sector capital and economic prudence.

First, a recent attempt to legislate new, statewide taxes to pay for the Yakima Basin Integrated Water Supply Plan lacked targeted focus and ignored the plan’s multi-billion dollar costs — nor did legislators place adequate responsibility on those who receive the benefits versus those paying the costs.

Two parts of the integrated plan that adhere to economic reality — district-specific water efficiency improvements and gaining access to Upper-Basin reservoir “dead” storage — are doable via private capital funding.

The CSRIA submitted a substitute bill requiring 50 percent of the plan component costs to be paid by the direct beneficiaries (irrigators), and the remainder funded through permit charges by issuing new Columbia-Snake River water rights. Combined, both funding mechanisms could access about $600 million in private sector capital, relying on direct private lending and market-value payments for new water permits. The private capital streams would create two new sources of water supply.

To date, the CSRIA bill has been ignored by the “new tax” priests — trained before the public funding altar that blessed 20th century water projects.

Second, in the water-starved Odessa Subarea, the engineering and water management expertise and financial horsepower of private irrigators is being shunned by the U.S. Bureau of Reclamation (USBR) and the East Columbia Basin Irrigation District. Working with CSRIA, the irrigators have prepared the engineering and economic studies to proceed with building three water distribution systems, accessing the East Low Canal, where scarce USBR-state funding for canal modifications has already been allocated.

The irrigators have secured $42 million for immediate construction of the first water distribution system — pumps and mainline from the canal — and have commercial lenders ready to issue about $100 million for completion of several systems. The irrigators would pay their own direct system costs and do so with private sector lending; and the irrigators would adopt water management practices superior to that used by the USBR. The irrigators’ systems would be “turn-key” projects, built by the irrigators, with operational control and operation/maintenance turned over to the district upon construction completion. Private sector capital and experience at work.

But the private sector construction is being delayed by the USBR’s refusal to release new water service contracts to the irrigators. This denial is vested in the USBR’s cultural inability to work directly with private irrigators and capital, preferring the 20th century “relationship” of working with an irrigation district, even though the district’s “plan” is illusionary, lacks irrigator support, and possesses no financial backing. The Odessa Subarea wells are running dry, while the USBR and district fiddle away time and other people’s resources.

The above water projects are complicated, but the dominant factor impeding both is a 20th century mindset cursed by a zombie-like approach to sucking the financial life blood from a frail public sector body.

New water projects call for an infusion of 21st century private capital and require high-efficiency water management practices. It is time for a culture change.