Author Archives: Rodney T. Smith

About Rodney T. Smith

Rodney T. Smith, Ph.D., President of Stratecon Inc.—an economics and strategic planning consulting firm—advises public and private sector water users on the acquisition, sale and leasing of water rights and water supplies in the western U.S. He is routinely involved in economic valuation of water rights, water investments, and negotiation of water acquisition and transportation agreements and has served as an expert witness in the economic valuation of groundwater resources, disputes over the economic interpretation of water contracts, economics of water conservation and water use practices, and the socio-economic impacts of land fallowing. For more information, see www.stratwater.com.

Minute 319 Sets Pathway for Long-term Mexico-US Water Projects

Last November, CILA Commissioner Roberto Salmon and IBWC Commissioner Edward Drusina signed Minute 319 of the 1944 US-Mexico Treaty.   Reflecting over a decade of consultations, Minute 319 addresses interim international joint cooperative measures that improve water management in the Colorado River Basin (for copy of minute and press release, go to Water Strategist Community at www.waterchat.com and search site for “Minute 319”).  In this post, I discuss how the minute’s sections on international projects and water exchanges related to the 2010 Earthquake in the Mexicali Valley, Intentionally Created Mexican Allocation (“ICMA”) and water for the environment pilot program set the pathway for long-term Mexico-US cooperation in bi-national water projects. Continue reading →

Project Evaluation II: Thoughts about Interest Rates

Interest rates used in project evaluation should command the attention of anyone interested in water projects.  The lower (or higher) the interest rate used in project evaluation, the more (less) likely a given project will be judged economically viable.  The interest rate issue should NOT be viewed as an issue in the exclusive domain of economists and financiers.  Otherwise, project evaluation will be co-opted by “off-line” discussions among economists and financiers selecting the interest rate. Continue reading →

Market Mechanisms Address Controversy in Member Agency Decision-Making

Water agencies face decisions about significant investments in water resources.  Some projects enhance the reliability of existing service.  Others expand the ability to meet new demands.  Do project benefits justify project costs?  Member agencies with different goals or opportunities may come to different conclusions.  Investment decisions become controversial.  What can be done? Continue reading →

An Economist’s Perspective on San Diego’s Desalination Project

November 2012 was desalination month in California.  The San Diego County Water Authority approved a 30-year agreement with Poseidon Resources to buy up to 56,000 acre feet (AF) per year of desalinated seawater produced from the Carlsbad Desalination Plant.  With the annual price tag of water set at $2,041/AF to $2,295/AF (later reduced to $1,917/AF to $2,165/AF when San Diego secured project financing at unexpectedly favorable terms), there is buzz about what the deal says about the value of water.  As with any venture, the project also has critics about the cost of water, skeptics about risk allocation, and cynics about the role of a private party. Continue reading →