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.

Why Is the Salton Sea Over There?

Hydrowonk gratefully received an invitation to attend the Salton Sea Tour sponsored by the Water Education Foundation on March 16th, the day the Natural Resources Agency released a 10-Year Plan for habitat and dust suppression projects in the Salton Sea.  The tour was hosted by Assemblyman Eduardo Garcia, State Senator Ben Hueso and Resources Secretary John Laird.  After assembling at the Imperial County Airport, the entourage went to two venues.

Why Field Visits are Always a Good Idea

The first stop was the Red Hill Marina.  Presentations included the observation that, in 2004, the Salton Sea shoreline was where tents were installed for a brown bag lunch.  I looked west to find the Salton Sea shoreline miles away.  I was stunned at the decline in the Salton Sea elevation with the attendant increase in the amount of exposed playa laced with residues of toxic/unhealthful chemicals and organics.

Continue reading →

Eminent Domain and the BDCP

Rick’s Café Californian

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California’s water world is abuzz with the revelation that the BDCP involves acquisition of land parcels for the project’s diversion facilities and 30-mile twin tunnels, either by acquisition or by Eminent Domain.   As Rick Blaine (aka Humphrey Bogart) stated in Casablanca, “I’m shocked.  Shocked to find that gambling is going on in here.” Continue reading →

Thinking About the Availability of Wheeling Capacity on the Colorado River Aqueduct

With the implementation of the Quantification Settlement Agreement in 2003, the amount of Colorado River water available to the Metropolitan Water District of Southern California has been less than the capacity of the Colorado River Aqueduct (“CRA”).  For example, the Bureau of Reclamation currently forecasts that Metropolitan’s use of Colorado River water will be 861,616 AF in 2015 http://www.usbr.gov/lc/region/g4000/hourly/forecast15.pdf.  This is 438,834 AF less than the historical maximum annual amount of 1.3 million AF of Colorado River water conveyed through the CRA. Continue reading →

Thoughts on the Financial Structure of Water Projects

Two recent transactions in western water (San Diego County Water Authority’s Carlsbad Desalination Plant and San Antonio Water System’s Vista Ridge Project) provide an opportunity to discuss the economics of the structure of debt and equity payments to project developers.  For long-lived projects, a finance plan that matches the term of debt structure to the project’s life, makes both debt and equity payments subject to inflationary adjustments and deferred payments at the end of the payment period provides the best economic incentives for:

  • customers to conserve water
  • project operators to fulfill their contractual obligations

Plans that don’t incorporate these features will shift the economic burden of project costs to future current customers relative to current future customers, erode the economic incentives for customers to conserve water long-term and dilute the economic cost of project operators defaulting on contractual obligations. Continue reading →