at the Sea Ranch Forum, March 16, 2002
And Davidge’s answers
Ric Davidge and Ed Anton were invited speakers at the Sea Ranch Forum on Saturday, March 16, 2002.
Mr. Davidge is president of Alaska Water Exports, the company which has applied to the State Water Resources Control Board (SWRCB) to extract bulk fresh water from the Gualala and Albion Rivers. Mr. Anton is Chief of the Division of Water Rights of the SWRCB.
The audience had many more questions than the speakers were able to address during the Forum. Mr. Davidge agreed to answer all of the questions submitted. He sent his reply to the Forum committee on May 24th.
Questions Directed to Mr. Davidge
- Project Morality
- Do you think taking this water for free and making a profit on it is moral?
Answer: The harvest of the water will not be free. It will cost a significant amount of money to develop and convey this water from source to market. But, yes, I believe it is moral and consistent with all local, state, and federal laws and precedents. It is also consistent with international laws as they apply to water development in most of the world. You should ask any private water utility this same question or farmers who are now selling their water to urban markets?
- Concerning World Water SA and Alaska Water Exports: How many employees do you have, what other active projects do you have, and how much revenue do you have?
Answer: World Water, SA was formed just two and a half years ago. It is a consortium of companies focused on solving water problems around the world. Projects are identified and developed using a wide range of subcontractors including support staff from the member companies and others. We are designed to be highly mobile, flexible, thin, and dynamic in response to markets.
I suggest you read the book, “it’s not the BIG that eat the SMALL … it’s the FAST that eat the SLOW” by Jason Jennings & Laurence Haughton. This is the model our group wishes to achieve.
Individually each member of the consortium has in some cases 20,000 employees. But we are formed by project and then select the members/partners appropriate for each project within the legal and custom constraints in each market. Once underway, each project usually functions under a separate corporation in part owned by the consortium.
- Who pays you now?
Answer: I am paid in part by the members of the consortium. I also make an income based on other projects within my own company, Alaska Water Exports, a Division of Arctic Ice and Water Exports, Inc. I am an owner in the World Water, SA consortium.
- Who are the consultants, lobbyists, or specialists in California water rights who are assisting you in gaining the rights and State and Federal permits you need for this project?
- Are your companies affiliated with Enron or Cadiz in any way?
- Are you and your consortium collaborating in any way with other water export companies?
Answer: In California? NO. In other parts of the world? Yes.
- What is the role of the Abdul Latif Jameel Group in this project?
Answer: They are a part owner of the consortium.
- What is the role of Nippon Yesen Kaisha Line in this project?
Answer: They are a part owner of the consortium.
- If you are granted the water rights, will you sell them to any other company?
Answer: That is not our plan.
- Are you engaged in trading water rights? Do you have any plans to do so?
- Have you any plans to export California’s water to destinations outside the United States?
- Please compare and contrast the Gualala/San Diego project with the Turkey/Cyprus project under the following headings:
- Source of Water
- Method of Extraction
- Interim Storage
- Size of Bags
- Typical sea state and weather during transport
Answer: The source of water in Turkey was developed by the Government of Turkey and the water offered for negotiated sale. The water is conveyed in a pipeline from a dam to tidewater. There are onshore storage facilities in Cyprus that accept and store the water conveyed. The current size bag being used is 35,000 cubic meters/tons. The sea in this area is relatively calm but can get rough with high seas due to winds.
Direct comparisons with our potential San Diego project are not correct. Each project is designed and developed consistent with the contract, economic, environmental, and physical constraints of that project. Bags used in the Pacific will not be the same as bags currently being used in the Mediterranean. Tug size and design may also be different. Other than the water harvest mechanism, the basic concept will remain the same.
- How many trips will it take to haul 30,000 acre-feet from the two rivers to San Diego?
Answer: We will not be hauling 30,000 acre-feet from these two rivers to San Diego.
- What is your time line for completing this project?
Answer: It is our plan to be in operation in 2004.
- How do you know that the water you seek to harvest actually exists in harvestable quantities?
Answer: According to our hydrological studies, using USGS reporting of seasonal flows, we believe sufficient water, during high flow seasons (winter) will provide adequate flows to responsibly harvest the water we need. We are not limiting our water sources only to the Gualala and Albion Rivers. We have other sources of water in development and discussion for this market, but these two rivers are ecologically and economically viable to develop with our water harvest design in a manner that should not cause any measurable harm during the high flow season.
- How will you meet contractual delivery requirements if droughts restrict the amount you can take from the Gualala and Albion Rivers?
Answer: We have designed into this project source redundancies to ensure market deliveries.
- How will you spread water sales into the dry seasons when you are taking water only during short rainy periods?
Answer: By using a number of water sources. Also, the market will continue to build is storage back up to historical levels so that in the dry season it has an over supply.
Project Site Selection
- Why did you choose California as the State for your first U.S. operations?
Answer: Because that is where the market is mature and San Diego has asked for the water.
- Why not take water from the larger flows in Alaska and British Columbia?
Answer: It is too far away given existing price and conveyance costs.
- What are the three California sources noted in your presentation?
Answer: In addition to the Albion and Gualala rivers we are negotiation with a number of coastal water utilities interested in selling excess water during their winter season. We also continue to study and develop other sources along the Pacific coast in California.
- Why did you select the Albion and Gualala Rivers?
Answer: Because USGS flow records, onsite analysis including engineering and environmental assessments showed that they were viable under the project parameters outlined.
- Why don’t you take your water from a major river system?
Answer: Which would you suggest? Most that we studied would be too costly or there were other concerns.
- Why are you pursuing a project in an area where you have predicted a return to severe drought conditions?
Answer: Drought cycles are cyclical. By developing a number of water sources along the Pacific we believe we can provide water to communities in need. There are a host of other variables in the water market and utility management that will play into the viability of this and other projects. Drought is only one of these variables.
- Have you applied for any permits or allocations other than the ones before the SWRCB?
Answer: In California? No.
- Why don’t you work on cleaning up the water in less developed countries?
Answer: That is not our area of expertise but other companies are doing just that.
- What is your estimated cost to put this project in place?
Answer: That depends. You will find in this industry that such direct cost questions will always be answered with “That depends.” There are so many variables in each market and in each project. That is why each project is developed and designed specifically for the economies of that project. The size, structure, delivery rate, of bags and tugs is vastly variable. That is one of the values of this type of system.
Once our sources are confirmed and the market is ready, price is the last thing negotiated. We do have a target price for the San Diego market based on what the City has requested. If we cannot meet that price target, and the city is unwilling to consider the price we need, the project will go on hold until we can or it will be abandoned.
- What is the price that water must have in order to make this a profitable venture?
Answer: Again, that depends on a number of variables we yet do not have nailed down.
- What do you expect the acre-foot cost and price of your water will be when delivered to San Diego?
Answer: That depends. The price is fixed by the City’s willingness to pay within its other alternatives. We anticipate that price being around $500 per acre foot beginning in 2004. That target will most likely change in the next 12 to 18 months as other alternatives to the city are foreclosed. With each lost alternative the price will go up.
- Does San Diego have an adequate supply of drinking water now?
Answer: That is really a question for City officials, but with the readjudication of the lower Colorado River southern California lost almost 1 million acre feet of water upon which it has become dependent over the past 50 years. Replacing that amount of water in the time frame allowed within the agreement will be very difficult. We offer only a small portion, but it is important due to its broadening of water sources and conveyance systems.
- How much money do you expect to get from this project?
Answer: That depends on cost, price, and market developments.
- When do you expect to break even?
Answer: That depends on cost, price, and market developments.
- Given the money-losing record of NWS, how do you expect to make money with this proposal?
Answer: We do, and NWS also expects to make money in its endeavors. You cannot measure the success or failure of a large natural resource development project of any significant scale within the first five years. You can measure performance targets, but you must amortize the capital investment to bring the project into production over the first years of the project. Your profits come in the later years.
- Are there any places where the water bag technology is being used profitably?
- What are the financial benefits of your proposal to the State, to Mendocino County, to Sonoma County, and to San Diego County?
Answer: The financial benefits of our project to the State of California and the City of San Diego are the shoring up of water supplies recently lost in the fifth largest economy in the world. The economic and social consequences of any significant shrinkage of this economy would be very serious to a wide range of economies and industries around the world, including northern California. The benefits to Mendocino and Sonoma Counties are that there will be another employer in these communities.
- When will you come to a meeting in Albion similar to this Forum?
Answer: When I am invited or when the State holds its public meetings.
- Are you suggesting that bagged water be used to substitute for water from ecologically harmful dams and diversions?
Answer: In some specific cases, yes. By harvesting the water as it leaves the river into the ocean, the river’s watershed has realized its full use of that water. No dam or upstream diversion can claim this. And, yet the same water can be more responsibly [ecologically] shared with more living organisms with our harvest and conveyance strategies.
- Given the flaws in your proposal, what is your hidden agenda?
Answer: We have no hidden agenda. We have made a proposal that is an outside-of-the-box effort to address the loss of water in San Diego and potentially other coastal markets. The development and application of new and developing technologies is never perfect. There are a wide range of variables in this proposal that we will examine and attempt to define/quantify over the coming two years.
- Why did you include so much irrelevant material in your presentation?
Answer: The presentation was not specifically crafted for the Sea Ranch meeting. It is generally used in markets I am assessing and working with. I have other presentations for other purposes, but this one was the most appropriate for this group at this time. My presentations are constantly being modified as new information is developed.
- Why do you introduce the water needs of poor countries when you are trying to take water to the “fifth largest economy in the world”?
Answer: We are a global consortium focusing on a wide range of markets. We cannot provide water for free or at a loss. We are trying to work with a number of coastal communities around the world who need water. In most cases we find that they have water but the cost is far too high often requiring government subsidies. Our harvest and conveyance systems are the most efficient yet designed allowing us to, in some markets, dramatically lower the cost of water for people, communities, and economies.
In most parts of the world, on a per unit basis, the poor pay more for water then do the rich. The rich have the general taxpayers subsidize their water. So the poor pay twice, once for their water and again through their taxes so that the rich can have cheap water.
One of the greatest problems in the water markets in California are the public subsidies that contribute to waste and environmental losses as the true value of water is not realized in open markets. Many counties in the world have realized this, including China, and are phasing out public subsidies in their allocation of water. Remember, a ten percent water savings through conservation in only one industry, agriculture, could solve the water problems of California for the next one to two decades.
- Please compare and contrast, with respect especially to reliability and cost effectiveness, your project with the desalination technologies that will be feasible in the same timeframe as your project’s completion.
Answer: Our cost are dramatically less then desal especially if you include all costs such as environmental costs. We have learned, as a people, to start looking much more honestly at the whole costs of a project. Desal generates a large amount of waste that must be disposed of. It also consumes the largest amount of energy per cubic meter of water delivered of any alternative in the water business. It also consumes very valuable coastal property. It generates air emissions. It generates solid and liquid wastes for both onshore and offshore disposal. It is a fixed facility subject to earthquake, fire, flood, and terrorist attack.
Our system is quickly replaced if damaged, desal is not. To my knowledge, there is no desal plant operating in the world that is not subsidized. The MWD of Southern California is offering a $250 per acre-foot subsidy for new desal plants in their market area. This subsidy is not offered to transoceanic conveyance – why not?
Desalinization is considered a mature technology. Although there will continue to be marginal savings in energy recovery, most other areas will not see any significant reductions in cost.
But the greatest comparable is the comparison of ecological costs of desal vs. bag/tug. We are extraordinarily benign compared to the ecological costs of desal, upstream diversions, or dams.
- What is the scientific basis for your assertion that the Albion and Gualala Rivers are the best rivers in the West for your purposes?
Answer: Historical seasonal flow rates, distance to upstream saltwater intrusion, riverbed material depth, distance to market, engineering costs, etc.
- How will your project change the total hydraulic horsepower of the river system and the end-velocities and velocity patterns at the ocean/river interphase?
Answer: By leaving the water within the river’s hydrologic system (surface and ground water interface) we will not spatially displace the water until it reaches the ocean. The riverbed’s alluvial material is permeated with river water. By placing the cistern and pipeline in the bed, we remain within the river’s hydrology. All we have done is segregate the water so that it is not contaminated with salt water as it enters the sea especially at high tide. There will be no significant harm to the river system while the harvest system is working during our limited high-flow seasonal harvest.
The installation of the harvest system will take place at very low flow periods and should allow us to complete development within one season with no significant impact. In contrast, the loading of the river during high flows causes far more siltation then our instillation could ever cause.
- What precisely is your definition of the “mouth” of the river?
Answer: The mouth of the river is that point where the river enters the ocean.
- Do you agree that if the water in the pipe plus the water in the stream does not have the same effects on fish, sediment, etc., in the reach between the intake and the outflow point of the stream to the ocean as does the water when the water is not in the pipe, then the water is “taken” at the intake and not at the ocean.
Answer: No. The water we harvest is a displacement of water in the alluvial material in the river’s bed. That water (in the alluvial material) is not “available” to fish. That is not to say that this water does not mix with the surface water in its natural state, but “displacement” is the key to understanding this system. Look at it this way. Is the water under the riverbed available to fish? No. But it is still part of the river’s hydrology even though a river’s flow calculation does not include it. EPA considers it surface water too.
- Why should you be given the right to disturb the riverbeds when all other commercial disturbances are banned?
Answer: What other commercial disturbances are banned? Sea Ranch is harvesting water from this river through a well system that captures surface/ground water. The use of a cistern and pipeline is a well-established method of harvesting water. The only significant difference is that we don’t take the water out of the river’s hydrology until it enters the sea.
- Why do you think the water taken from the alluvium is not replenished by surface water?
Answer: It is. The water in the alluvium is surface water according to EPA, it is not calculated as river flow traditionally by hydrologists, but it is part of the river’s hydrology.
- How will you protect the structure of the riverbeds from damage from building and maintaining the infrastructure you need?
Answer: The riverbed will be dug up (about 30 inches wide) and the pipe placed under the alluvial material in a single operation. This will be done at low low flows. The “damage” as you call it is far less then the loading of the river during high flow. But our system does not remove the water from the river’s hydrology until the river drops into the sea.
- What river sediment transport model are you using? Have you evaluated the worst case conditions?
Answer: We are using standard river loading models. We are still gathering information on these two rivers that will help us further characterize seasonal loading and flushing. We believe the worst case conditions are the 50 and 100 year models.
- What species will be affected by the turbidity and sediment related to your infrastructure?
Answer: We do not believe any will be affected based on time of instillation and natural loading.
- How will you mitigate the effects of turbidity and sediment related to your infrastructure?
Answer: It will be within natural seasonal fluctuations already existing in the river.
- How can you be sure that there will be no filling of the estuary with sediment?
Answer: Because our system’s installation will not exceed natural loading.
- Will it be necessary to drain all or part of the lagoon when you build your infrastructure?
- What will be the effect of taking water on the timing and nature of the opening and the lagoon and on flushing it?
- How do you plan to protect the Eel Grass beds of the Albion River if you take water 4-5 miles upstream to avoid salt water intrusion?
Answer: Eel grass moves and grows in the environment that it has selected. We do not believe our system will cause any harm to the Eel Grass – beyond normal river loading during flood stage.
- Are you willing to provide the funds needed to extend the existing short term Estuary Study being conducted by the Gualala River Watershed Council for the long-term evaluation required to determine the possible effects of your project?
Answer: We have already made an offer to work with the fishery restoration group in their efforts. We also anticipate the state requiring that we provide an ongoing monitoring and reporting program on the impacts, if any, of our operations.
Continue with Questions & Answers (part 2)….