COPING WITH DROUGHTAND

WATER SCARCITY

Panel DiscussionJune 17, 2010

at the Center for Strategic and

International Studies

REPORT toU.S. ARMY CORPS OF ENGINEERS

by THE CHRONICLES GROUP, INC.

Historically, almost no country has effectively and comprehensively adapted to drought and managed its water resources or implemented lasting public policy regarding those resources profound interconnection to energy. public health, agriculture, food supply and national security. Under siege by drought, Australia has had no choice but to implement an historical national water policy. The country has instituted national water plans that ensure enough water for human and ecological use. Australia is at the forefront of establishing a disciplined national water agenda. Leading by example, the country transformed its management of water and concurrently implemented administrative and technical innovations which is becoming a model for the world. On Wednesday June 16th and Thursday the 17th the Chronicles group RUNNING DRY Project hosted two educational events in association with American Water, the Metropolitan Water District of Southern California, the Center for Strategic and International Studies (CSIS) and the Embassy of Australia. The June 16th event was held at the Capitol Visitor Center and the Chronicles Group presented its new 25 minute preview film, RUNNING DRY; BEYOND THE BRINK, which is a synopsis of the critical challenges facing the planet as it relates to drought, water scarcity and international security. The centerpiece of the film preview is the Australian model. The following day a panel discussion was held at CSIS and the central topic was COPING WITH DROUGHT AND WATER SCARCITY. The issue was divided into three specific panels. PANEL 1: Domestic and International Trends and Projections. PANEL 2: Domestic and International Public Policy and Strategies. PANEL 3: Funding and underwriting Considerations and Strategies. The following Report provides a transcription of the panel discussion, brief papers from event participants as well as conclusions and recommendations. Highlights of the two June events appear on the RUNNING DRY Projects website at www.runningdry.org. Sincerely

Jim Thebaut

800 S. Pacific Coast Highway #8, MS #328 Redondo Beach, CA 90277Tel: 310.521.0303 • Fax: 310.521.9360

 

 

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TABLE OF CONTENTS 

Contents 

THE CHALLENGE ...........................................................................................................................................3 

Articulation of the Problems ....................................................................................................................4 

Policy Integration .....................................................................................................................................5 

Australia’s Crisis........................................................................................................................................6 

Public Private Partnerships.......................................................................................................................7 

Systems View............................................................................................................................................8 

Systems Issues..........................................................................................................................................9 

    Solutions .................................................................................................................................................10 

PERSPECTIVES.............................................................................................................................................14 

Drought and Water Management – the Australian Experience .............................................................14 

Water: Trends and Solutions in the 21st Century ..................................................................................17 

Coping with Drought and Water Scarcity – Trends and Projections ......................................................20 

Brief reflections on selected domestic and international trends ...........................................................22 

Lessons Learned from Australia and the United States..........................................................................25 

Hungry for Answers: A Call for Critical Thinking on Water Scarcity and Food Security .........................26 

Drought in the U.S. and Abroad – Stormwater Issues............................................................................31 

Meeting the Water Financing Challenges ..............................................................................................33 

Coping with Water Scarcity and Drought – The Investor Role ...............................................................39 

TRANSCRIPT................................................................................................... Error! Bookmark not defined.  TRANSCRIPT .............................................................................................................................................. 45

Forward .................................................................................................................................................... 3

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Coping with Drought and Water Scarcity 

Panel Discussion 

June 17, 2010 

CSIS 

 

Report to the Army Corps of Engineers by the Chronicles Group, Inc.

 

Forward 

 

On June 17, 2010, The Center for Strategic and International Studies hosted a panel discussion to 

address international and domestic drought and water scarcity issues with a focus on identification of 

specific, implementable strategies.  The panel discussion followed a preview of the Chronicles Group 

Running Dry Projects documentary, Running Dry: Beyond the Brink, written produced and directed by 

Jim Thebaut and presented in the U.S. Capitol Visitor Center on June 16, 2010. 

 

The panel discussion event, hosted by Jim Thebaut, CEO & Executive Producer, Chronicles Group, and 

moderated by Erik Webb, Manager, Government Relations Office, Sandia National Laboratories, 

included 16 experts in water issues divided into three panel sessions addressing three key areas:  

“Trends and Projections,” “Public Policy and Management Strategies” and “Funding and Resources.”  

Panel participants included: 

 

 

• Katherine Bliss – Deputy Director, Senior Fellow, Global Health Policy Center, Senior Fellow, 

Americas Program, Center for Strategic and International Studies 

• David Winder ‐ Chief Executive Officer, WaterAid America 

• Mark Pisano – Senior Fellow, School of Policy Planning, University of Southern California 

• Holly Galavotti – Environmental Scientist, U.S. Environmental Protection Agency 

• Jerry Delli Priscolli – Senior Advisor, U.S. Army Corps of Engineers, Institute for Water 

Resources 

• Grame Barty – Regional Director, Americas, Australia Trade Commission Public Policy and 

Management Strategies 

• Kay Brothers – Former Deputy General Manager, Engineering and Operations, Southern 

Nevada Water Authority 

• Tanya Trujillo – Professional Counsel, Democratic Majority, Subcommittee on Water and 

Power, U.S. Senate Committee on Energy and Natural Resources 

• Robert Pietrowsky – Director, Institute for Water Resources, U.S. Army Corps of Engineers 

 

 

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• Malissa Hathaway McKeith – Partner, Chair of Real Estate and Land Use Department, Lewis 

Brisbois Bisgaard & Smith, LLP 

• Mark Bernstein – Managing Director, University of Southern California Energy Institute 

Funding and Resources 

• Tim Brick – Chairman of the Board, Metropolitan Water District of Southern California 

• Steve Gustafson – Vice President, Power/Water Banking Group 

• Floyd Wicks – Consultant to private water companies; Former President and CEO, American 

States Utility Services, Inc., Chaparral City Water Company 

• Francesca McCann – Managing Director, Water Consultants International 

• David Nahai – Senior Advisor, Clinton Climate Initiative; President, David Nahai Associates 

• Chris Frahm – Attorney/Legislative Advocate, Government Relations and Natural Resources, 

Brownstein Hyatt Faber Schreck, LLP 

 

The following report summarizes the dialog that occurred during the panel session augmented by a 

series of contributed short papers from a subset of the panelists with the objective to identify a series of 

implementable strategies for improving the U.S. domestic and international engagement in the reality of 

drought and water scarcity adaptation and management. 

STRATEGIES 

 

Jim Thebaut1, Erik Webb2, and Diana Rivenburgh3 

The Challenge 

 

Drought and water scarcity “will be one of the defining issues of the 21st century”.4  To put the global 

water situation in perspective, David Winder, CEO of WaterAid America told the June 17 audience that 

currently more than 800 million people globally lack access to clean water and 4,000 children under the 

age of 5 die daily from preventable water‐borne diseases.  That means that 300 children would have 

died during that session’s luncheon.   “But because most of us turn on the tap and enjoy access to water 

that is safe to drink, or use for watering our gardens, or cleaning our car, or any number of other 

                                                             1 Jim Thebaut is an environmental planner, president of the Chronicles Group and the writer, producer, director 

and Executive Producer of Running Dry, The American southwest are we running dry? and Running dry: Beyond the 

Brink. 2 Erik Webb is a manager in the Government Relations office of Sandia National Laboratories, served as an 

American Geophysical Union Congressional Fellow with the Senate Energy and Natural Resources Committee and 

as a Department of Energy Detailee with the Office of Senator Pete V. Domenici, and a research hydrogeologist.   3 Diana Rivenburgh is the CEO/President of Strategic Imperatives, Inc., a global sustainability consulting firm that 

focuses on leveraging the tremendous power of sustainability to help clients in both the private and public sectors 

to achieve economic, social and environmental prosperity.  Diana consults, speaks and writes on sustainability 

strategy, and how to develop the leadership and organizational capabilities needed for success.  She can be 

reached at drivenburgh@strategic‐imperatives.com or 1.770.667.2660. 4 Bradley Udall, Director, NOAA‐CU, Western Water University of Colorado, Running Dry:  Beyond the Brink 

Jim Thebaut1, Erik Webb2, and Diana Rivenburg3

 

 

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activities, we don’t always contemplate that we are facing, or will face, water challenges here at 

home.”5 

 

The United States has regional populations today that are included in these global figures including 

areas of the Navajo Nation in the four‐corners areas of the Southwest. In addition, the West, Southwest 

and Southeast United States have circumstances that could quickly approach crisis proportions.   

 

These facts are indicative but do not fully illustrate the wide array of stresses driving the crisis including 

population growth, urbanization, aging infrastructure, suburban sprawl, depletion of groundwater 

resources and climate change. The stresses have a commensurate wide array of negative impacts on 

both the quantity and quality of water including drought, poor distribution of water resources, pollution, 

lack of food supply, diminished ability to produce energy, and the ultimate impact on national security.    

 

The likelihood that both the stresses and the consequences appear to be worsening, lead us to believe 

that traditional mind‐sets and methods for managing water are no longer effective.   

Policy Integration 

 

A previous paper titled, “A Water Strategy for the United States”6 argued for the need to establish 

unified domestic and international water policies based on common goals and principles to which water 

management programs and policies progressively conform.  A set of principles, partially patterned after 

those outlined in the Paul Simon Water for the Poor Act of 2005 for U.S. engagement in international 

water aid were put forward as a baseline for consideration.  These principles included:  

• Understand the status and trends in water resources 

• Expand partnerships and coordination across Federal, State, local and Native American 

government organizations 

• Continued Federal investment in water infrastructure 

• Connection of water quantity, quality and environmental land use planning 

• Seeking sustainable development to bridge the gap between public good and private rights 

• Seeking to expand supplies 

• Providing a strong scientific basis for water management decisions 

• Valuing water resources appropriately 

• Value ecosystems and their human benefits 

 

Additionally, a cross‐agency coordination function potentially lead out of the White House similar to the 

now defunct National Water Council is necessary to pull individual programs and agencies toward an 

integrated whole. 

 

                                                             5 Katherine E. Bliss, Lessons Learned from Australia and the United States 

6 Jim Thebaut and Erik Webb, January 2009 

 

 

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Having established the basic tenant that integrated policy is essential, it is now clear that 

establishment of public policy is not enough.  We also must have strategies in order to 

implement public policy both domestically and internationally in order to confront the 

evolving drought and water scarcity crisis.  

 

Australia’s Crisis 

 

Australia is under siege by drought and has had no choice but to implement a historical national water 

policy. 

 

Brendhan Egan Australian Government Trade Commissioner indicates Australia is the driest inhabited 

continent on the planet and water scarcity has always had a profound impact on the countries growth.  

However, in recent years climate change (drought) has dramatically increased and a crisis has evolved.  

In the past decade rainfall fell to 30 percent of its historical average within its agriculture regions and 

has remained at this low level.  There has been a serious decrease in crop production and the 

consequence is that thousands of families and many individuals have been forced to give up farming.  

The country has had to face the likelihood it was running out of water and dramatic steps needed to be 

implemented. 

 

Australia has created a National Water Commission and National Water Initiatives in order to coordinate 

a country‐wide response to the crisis.  This includes national water plans which ensure enough water for 

human use but also for the ecological system. 

 

A central objective is to restore surface and groundwater systems to environmentally sustainable levels.  

In addition, Australia has improved and reformed its pricing for water and delivery which reflects the 

real cost of water planning and management.  Also, it has focused on meeting and managing urban 

water demands in order to ensure security of urban water resources.  This includes pricing, integrated 

water recycling programs, integration of water and energy planning, improving water efficiency and 

conservation, and the implementation of groundwater and aquifer recharging efforts etc. 

 

Clearly, Australia is at the forefront of establishing a disciplined national public policy initiative for water 

which features creative programs between the private and public sectors in order to confront the crisis. 

 

The country has transformed its management of water and concurrently confronted the major 

challenges by implementing administrative and technical innovations which are becoming a model for 

the world. 

 

 

 

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For many in the U.S. at least, there seems to be this “false divide” between international and domestic 

thinking and policy making on water issues.”7 The US should learn from the Australian example before 

we face the same stark reality.  

 

Australia is highlighted in the documentary preview, Running Dry:  Beyond the Brink as a case study on 

how this nation addressed the water crisis impacting every aspect of life for its citizens.  Through this 

preview, the viewer quickly comes to understand the magnitude of the crisis and how Australia applied 

an integrated approach to implement solutions.  Even with these tremendous efforts, the nation may 

have suffered “irreversible environmental damage” to its river banks and eco‐systems.      

 

Australia is a prime example of a nation that is learning to manage water well.  Unfortunately it took a 

crisis to bring on the system‐wide solutions needed to gain control of the water issues facing Australia.  

Described as the “global canary in the mineshaft,” the rest of the world needs to heed this call to action.   

Public Private Partnerships 

 

Due to the broad ranging nature of the threat drought and water scarcity and their consequences, 

neither public nor private entities can entirely resolve the issues alone.  Collaboration between public 

and private interests is essential.  

 

The public sector establishes policy and has a vested interest in protecting natural resources to promote 

health, safety, quality of life and economic prosperity of communities, states, regions and the nation.  

While changing the behavior of individual citizens can be particularly challenging, doing so also yields 

great benefits at little cost. 

 

At the same time, every industry requires water to survive and thrive.   For example, in Australia’s 

situation, power plants, recreation, mining and the agriculture sector were all deeply impacted by 

drought and water scarcity. The nation’s rice industry was severely damaged, resulting in a ripple effect 

that decimated entire communities and there’s been a serious reduction in food supply.  

 

Within threats we often find opportunities. Given this dependence, water intensive industries are 

aggressively seeking new ways to operate.  For example, PepsiCo and Coca‐Cola are among those 

leading the way. Examining every aspect of the value chain uncovers opportunities in adapting to 

drought and to lower water use and pollution and reduce cost by doing so.  Traceability of the entire 

value chain from the growth of raw materials through the manufacturing and distribution processes, 

consumption and disposal is important for all businesses to understand in order to make changes.  

Beyond the value chain, green building construction and renovation minimizes energy, pollutants, and 

water use. 

 

                                                             7. Grame Barty Regional Director Americas Australian Trade Commission. 

 

 

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Both the public and private sectors benefit from successful water management, an industry under stress 

is able to find and implement solutions. A prime example of a positive public and private partnership 

was the relationship between the U.S. Government and the private sector during the Cold War. 

Significantly profound historical strategic scientific and engineering achievements were accomplished 

during that dangerous era because of the close working public/private partnerships. In today’s new 

world the U.S. Government should learn from the Cold War model and implement a similar strategy 

between the public and private sectors in order to confront the global water challenge. 

Systems View 

 

As was stated above, there are a plethora of societal and physical changes occurring that result in an 

array of stresses on domestic and international water resources. No one of these stresses is 

insurmountable and the institution of government has organized the U.S. Federal system to address 

these stresses individually.  However, it is now clear that solving one problem can have both positive 

and negative impacts on other objectives.  For example, managing storm water runoff can minimize the 

need for increased flood control and reduce the contaminants that enter river systems.  At the same 

time, it can change the balance of available surface water in U.S. western waterways and thus affect 

diversion water rights. This illustration is intended to show that individual strategies are productive, but 

a systems view of the problem is needed to prioritize and coordinate strategies and minimize negative 

impacts of well‐intended plans and policies. This is also critical in assuring international security. 

 

A systems view in this case would look at the “enterprise” of water management across all its sources, 

uses and consumptions.  We must examine the supply as a whole – as it relates to drought and water 

scarcity, rainfall including augmentation, surface water whether flowing or in storage, groundwater and 

its interplay with surface water, the time delays in movement of water between the ground and surface 

and so forth.  We must look at all water’s uses  ‐ humanitarian, ecological and environmental 

requirements, aesthetic, recreation, transportation, and dilution of waste that don’t dramatically 

diminish the supply.  We must also look at all the consumptive uses of water including agriculture, 

energy, and other industrial and municipal uses.  For each of the potential supply – use – demand 

combinations, we must consider the framework of rules that either preserve the supply or advocate for 

the consumption.   

 

Such an approach is not easy.  In fact, a multi‐international comprehensive approach may be beyond our 

current knowledge and data resources.  However, we know the major supply, use and consumptive 

elements and we can actively look at public policies and implementation strategies for these major 

elements. 

 

The method by which we begin to examine our watersheds and systems as a cohesive and integrated 

whole have been developed and are actively being implemented but on a very limited basis.  For 

example, the systems tools underpinning the Army Corps of Engineer’s Shared Vision Planning8, the 

                                                             8 http://www.sharedvisionplanning.us/resCase.cfm 

 

 

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system dynamics tools used for State plans in New Mexico9 and other applications illustrate that the 

systems tools exist. 

 

Once these methods and tools are available, they can be used for overall planning to engage multiple 

stakeholders. Forcing change on others is far from the best strategy.  Engaging multiple stakeholders 

from both the private and public sectors can help generate creative ideas and build the buy‐in needed to 

achieve long‐term planning solutions.  Convening the right players taps into and builds on the collective 

capacity of those involved.  Engaging people from the very beginning helps to change mindsets and 

ultimately behaviors. 

   

Additionally, once the concept of stakeholder engagement has caught hold, the additional education 

and investments needed to empower “the most vulnerable sectors – women, children, the poor and 

elderly”10 can be implemented.  

Systems Issues 

 

Adapting to drought and water scarcity will require public policy and strategies. Having the concepts and 

tools necessary to approach domestic and international water resources management in a systematic or 

holistic way, there are a number of policy issues that can only be addressed systematically.   Each of 

these issues addresses a conflict between short‐term gains and long‐term solutions. The simplest way to 

identify these issues is list them as questions: 

‐ Should the U.S. involvement in international water resources management be focused primarily 

on humanitarian aid, which usually addresses minimal but immediate community needs but also 

concentrate on economic development with its commensurate focus on larger scale 

infrastructure? 

‐ Is there direct benefit to connecting the U.S. Government polices and agency programs for 

domestic and international water management? 

‐ For both domestic and international programs and projects, should planning and investment 

focus primarily in meeting basic service needs or expand to address the potential future 

conditions posed by drought and water scarcity (e.g., use wider range of future planning 

scenarios).  

 

While the acute needs will always have the loudest hue and cry, a strategic set of investments will 

incorporate some longer‐term investment. It’s important the strategies discussed as part of this panel 

session included elements of addressing short and long‐term, acute and chronic issues. 

 

In addition to systemic policy questions, institutional barriers exist that must be removed.   For example, 

Australia went from 180 agencies down to 80.  Australia established a national water initiative.  The 

mindset is that water is a geopolitical, global and national issue, not a regional one.  In the U.S., there 

                                                             9 Passell, H.D, V.C. Tidwell, S.H. Conrad, R.P. Thomas, and J. Roach, 2003, Cooperative Water Resources Modeling 

in the Middle Rio Grande Basin, Sandia National Laboratories, SAND 2003‐3653, 55 p. 10 Katherine Bliss 

 

 

10 

are arrays of similar efforts with varying degrees of success.  The Chesapeake Bay Commission, the 

Middle Rio Grande Endangered Species Collaborative Program, the Southern Nevada Water Authority 

are a few of examples where regional needs are coupled with national policies.   

 

Solutions 

 

The panel sessions presented on July 17th, at the center for strategic and international studies were 

designed to identify key strategies that could direct action by the United States to resolve domestic and 

international resources issues related to drought and water scarcity. Such a panel‐based approach 

cannot establish a comprehensive set of strategies, generate priorities or merge them into an integrated 

strategy. Instead the approach should be viewed as a brainstormed list, which requires further 

development and ultimately evolve into an integrated strategy. 

 

With this background we wish to identify significant suggested international and domestic strategies and 

solutions identified by each of the panelists. 

 

Panel 1: Trends and Projections 

 

The important suggested international and domestic strategies and solutions from panel 1 include: 

 

Katherine Bliss 

‐ Strengthen regional/international organizations or treaties along watersheds or water borders. 

With emphasis on underrepresented or disadvantaged groups. 

‐ Strengthen international networks of civil society organizations working on water issues. 

‐ Develop targeted educational packages for populations running from elementary school 

children to adult with key messages about the broad aspects of water related challenges. 

Mark Pisano 

‐ Promote integrated water management approaches and remove barriers that preclude regional 

and local integration. 

‐ Where Federal and state action is needed in these approaches, be willing participants and not 

hierarchical controllers. 

‐ Provide financial support that incentivizes the business plan approach and does not determine 

the capital project to be built.  The best financial support would be participation in debt or 

financing structures. 

‐ Condition the financial support requiring integrated approaches. 

Holly Galavotti 

‐ Recognize storm water as a resource rather than a waste product 

‐ Enhance groundwater recharge through green infrastructure and practices 

 

 

11 

‐ Change the way we manage storm water requiring cooperation and coordination between EPA 

and other Federal agencies, states, municipalities, developers, landscape architects and other 

storm water managers. 

David Winder 

‐ Promote the need to provide communities with tools, technologies and approaches that can 

help them adapt and cope with water stress 

‐  Promote a need for communities to be directly involved in the management and maintenance 

of systems 

‐ Promote the need to build the capacity of local government officials and communities to design 

and implement water and sanitation systems that are best suited to local needs and conditions 

‐ Promote a need for greater commitment by governments both bi‐lateral donors and developing 

country leadership to invest more in providing access to clean water, sanitation and hygiene and 

ensuring that these investment are managed effectively and transparently. 

Jerome Delli Priscoli 

‐ Water infrastructure must be seen as more than a humanitarian response and more as essential 

baseline investments in building the conditions for people to create, express and grow 

themselves out of poverty by managing uncertainties in environmental and discontinuous 

patters of human settlement and patterns of water distribution 

‐ How we make decisions about managing risks associated with projected water events are 

becoming more central to the health of democratic political culture and individual freedom. 

Grame Barty 

‐ Australia has learned that there will not be a return to abundance and thus all planning is 

contingent on future scarcity. 

‐ There is no single solution, but instead security comes through a diversity of supplies and 

approaches. 

‐ Reducing water consumption reduces energy consumption and visa versa. 

‐ Stormwater capture represents a major supply augmentation opportunity. 

‐ Agencies must be streamlined potentially through aggregation. 

Panel 2: Public Policy and Management Strategies 

 

Kay Brothers 

‐ There must be some other mechanism for resolving conflict other than standard court 

processes. 

‐ Regional consolidation helps communities learn to balance supplies and speak with a common 

voice and protect their supplies even though it requires some compromise and flexibility. 

Tanya Trujillo 

‐ There are several key changes either instigated by Congress and being implemented or still 

being developed and passed by Congress to address key water management issues. 

‐ The SECURE water act has started the collection of better information to understand climate 

change impacts water resources, adaptation and management strategies. 

 

 

12 

‐ Energy‐Water Nexus legislation is included in current Energy bills that would raise awareness of 

the inter‐relationship of water and energy and require policy decisions that affect one to 

consider impacts on the other. 

‐ The Navajo Water Settlement is currently being implemented and will resolve significant third‐

world like issues that still exist in the U.S. 

Robert Pietrowsky 

‐ Consolidation of authorities and responsibilities may be necessary to move forward for domestic 

water management. 

‐ Efforts to work within the existing agency framework are important and there is some progress 

through examples like the National Drought Policy Act of 1998 and the Interim Drought Council. 

‐ Water scarcity must deal with water resources as part of an integrated water management 

framework. 

Malissa Hathaway McKeith 

‐ Congress should designate a multi‐agency and multi‐disciplinary team comprised of 

representatives of the Department of Interior, Department of Agriculture and the Department 

of Homeland Security to study and report to Congress on long‐term food security needs of the 

United States taking into consideration reduced water availability. 

‐ That such a report evaluate the type and quantity of crops that must be grown and stored in 

order to ensure food security including the most appropriate regions for production, taking into 

consideration water availability. 

‐ That such a report identify what tax incentives would either promote or undermine production 

designed to ensure U.S. Food security. 

‐ The state and local governments identify prime farmland that should not be converted for urban 

use and adopt land use policies and financial incentives that promote food production for long‐

term security 

‐ That more effective economic models be developed to determine that true cost of agriculture to 

urban transfers with specific considerations of long‐term food security. 

Mark Bernstein 

‐ Promote the need to develop a national constituency for water. 

‐ The patterns of education and motivation used to implement energy efficiency should be used 

to motivate water efficiency. 

‐ Promote the need for a water information and analysis function similar to the Energy 

Information Agency. 

Panel 3: Funding and Resources 

 

Tim Brick 

‐ Determine how the water industry communicates to the public and why investments are 

necessary where the money is going and how it will benefit them 

‐ We need a comprehensive streamlining of the water industry to reduce costs and to improve 

efficiency, technical expertise and the quality of service to the public. 

 

 

13 

‐ Internationally, investments must generally be small in scale and more locally driven as these 

societies have limited ability to repay investments 

‐ In developing countries, a national water infrastructure bank or similar entity that provides 

funds for local agencies to develop wells, well head treatment, wastewater treatment strategies, 

etc., combined with funding from the IMF and other international agencies, would be an 

important strategic response to the financially shortfall.  

Steve Gustafson 

‐ There is a “structural” issue in the water purveyors in that most of them are too small to attract 

investment capital – consolidation is needed. 

Floyd Wicks 

‐ The goal in California is 20 percent reduction in water use by the year 2020. These reductions 

can be done by making policy decisions to use the best available technology in all new homes, or 

any time a home is sold, you put the best new technology in those homes. 

Francesca McCann 

‐ Investors and corporations will need to play a key role in contribution to solutions for water 

scarcity 

‐ Promote the need for tools and frameworks to guide / drive investors and corporations to 

assess and manage water resources and plan for scarcity and drought related issues. 

‐ Water scarcity and drought will drive innovation and investments. 

‐ There should be measures of efficiency applied to key industries that exposes those businesses 

with high and low use and/or dependence risk on water to help investors identify businesses 

with low risk. 

David Nahai 

‐ All forms of water capture and efficiency should be pursued including rainwater runoff capture, 

aquifer remediation, new building standards, and water storage programs. 

‐ Paying for efficiencies will require a strong education / outreach to ratepayers across all 

affiliated organizations. 

Chris Frahm 

‐ Much conflict derives from decisions that don’t include local buy in – focusing on local 

communities can lead to less conflict. 

‐ We need a culture change to more acceptance of private sector solutions to water problems. 

‐ The primary challenge to implementing solutions and having sufficient funding is to motivate 

the public to understand and support resolving the problems. 

Conclusions 

 

Ultimately, the solutions to our water management problems need to be as diverse as the challenges we 

are facing.  This isn’t about a silver bullet.  It is about education, conservation, land‐use planning and  

urban management, expanded supplies, policies to address scarcity and international security, 

monitoring and adaptation, and above all leadership and political will. 

 

 

 

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If we learn only one lesson it should be that we cannot wait for the already dire water‐related issues to 

reach crisis proportion.  “Wake up and make the tough decisions now…. If you allow complete collapse 

to occur, the impact to the community will be extremely bad.”11   Grame Barty of the Australian Trade 

Commission put it this way at the June 17th session: “Time is not on our side.”    

PERSPECTIVES 

 

The following perspectives were contributed by participants in the workshop to further expound on the 

main points discussed during the panel. 

 

Drought and Water Management – the Australian Experience 

 

Brendhan Egan, Australian Government Trade Commissioner. 

 

Water scarcity connected to climate change is one of the great emerging challenges of the 21st Century.  

In 2009 a World Bank and IFC commissioned report of the 2030 Water Resources Group concluded that 

without global action, demand for water in 2030 would outstrip supply by 40 per cent.  The same report 

highlighted Australia’s water reforms as a “path forward”12.    

 

Water resource management is implicit in key policy areas including energy, urban design and the 

environment.  It also has impact across societies and industries.  With manufacturing, agriculture, 

mining and energy industries all highly dependent on water, efficient and effective management of this 

vital resource will be critical for global growth and employment creation.  Water resource management 

in the face of growing scarcity is therefore a central concern of government. 

 

Changing policies and approaches to deal with water scarcity is however particularly difficult.  

Management of this vital resource is compounded by legacies of water rights that are sometimes several 

centuries old, entrenched patterns of inefficient water use, and also involves addressing jurisdictional 

issues between different governments and powerful private interests. 

 

Australia is the driest inhabited continent in the world and water scarcity has always had a profound 

impact on its history and development.  In recent decades, however, climate change has emerged to 

push what was an already difficult water management challenge towards a crisis. 

 

While Australia is a developed country, its vulnerability to water shortage was dramatically exposed by 

the events of the past decade when rainfall fell to 30 per cent of historic averages in key agricultural 

                                                             11 Hon.Karlene Maywald, Minister for the River Murray, Government of South Australia, Running Dry: Beyond the 

Brink 12 Charting our Water Future: Economic frameworks to inform decision‐making, 2030 Water Resources Group 

report to the IFC and World Bank, November 2009 

 

 

15 

regions and stayed at this level.  Towns and cities across Australia faced the real prospect of running out 

of water and agricultural production was severely depleted.  The response outlined below has been 

dictated by necessity, and this battle continues. 

 

The creation of the National Water Commission and signature by state and federal governments of the 

National Water Initiative (NWI) water reform blueprint have been central to an integrated national 

response to this crisis.  Key elements of Australia’s response are: 

 

Water plans which include provision for the environment; wise use and sustainable management of 

Australia's water resources not only ensures that there is enough water for human activities, but also 

that there is enough water for the environment. Historically the environment is often the last user of 

water to be considered when water from a system is allocated. 

 

All Australian governments have implemented management and institutional arrangements to achieve 

improved environmental outcomes for their water systems.  This improvement in environmental 

management practices will ensure adequate water for the environment and for other public benefit 

outcomes. 

 

Dealing with over‐allocated or stressed water systems; A fundamental aim of the NWI 

intergovernmental agreement is to restore surface and groundwater systems to environmentally 

sustainable levels. Effective water planning is providing certainty about the terms of access for 

consumptive and environmental water users within an evidence‐based, participatory and transparent 

process. 

 

Introducing registers of water rights and standards for water accounting; In many areas of Australia, 

water use is managed through the granting of secure, perpetual water access entitlements and annual 

water allocations which are dependent on seasonal conditions.   Ongoing water access entitlements 

(permanent) and seasonal water allocations (annual) form the basis of water trading, and are an 

important element of water reform in Australia.  

 

Water‐sharing plans establish the type of entitlement and the share of water for a given water resource 

system. Entitlements can be issued to commercial users (eg, irrigators, mining and industrial) and non‐

commercial users (eg, town supplies, recreation and environment). 

 

Expanding trade in water; Under the Australian NWI, water trade is the transfer of water access 

entitlements (permanent) and seasonal water allocations (temporary) between different entities, for 

example, irrigators, environmental water managers, and water authorities (water infrastructure 

operators). 

 

Water trading is important because it allows scarce water resources to be transferred to their most 

productive uses.  It involves willing buyers and sellers, thus avoiding arbitrary political or administrative 

decisions.   

 

 

16 

 

Water trading also allows access to water resources to be reallocated over time in response to: 

• changing commodity prices 

• changing environmental conditions (e.g. salinity levels, river health) 

• changes to the size of cities and towns 

• the changing availability of water. 

 

Creating an environment in which individual water access entitlement holders are able to trade water 

quickly and easily will contribute to a  more productive and efficient use of Australia's water over time. 

 

Improving pricing for water storage and delivery;   a key element of Australia’s NWI is best practice in 

water pricing, which aims to achieve consistency in pricing policies and in approaches to pricing and 

attributing costs of water planning and management.   

 

Pricing and institutional reforms are intended to promote economically efficient and sustainable use of: 

• water resources 

• water infrastructure assets 

• Government resources devoted to the management of water.  

 

These reforms aim to ensure enough revenue to allow efficient delivery of the required services, and to 

promote efficient water markets in both rural and urban settings.  

 

Water prices convey important signals to customers. Getting water charging and institutional 

arrangements right is deemed as critical in Australia to ensuring that water is used wisely and that new 

sources of water supply are brought on in a timely fashion. 

 

Meeting and managing urban water demands; Water resources in Australian cities are under increasing 

pressure from growing populations and high per capita water consumption. These growing demands 

come at a time when their supplies have been affected by years of drought, and as waterway health 

continues to decline.   

 

To ensure the security of urban water resources Australian cities are: 

• improving the reliability of water supply by using water from a range of supply options that 

are less rainfall reliant and environmentally sustainable 

• improving water efficiency and reduce water use to ease demand 

• improving integrated resource planning for water, including better integration of energy and 

environmental considerations 

• including Integrated Water Cycle Management and Water Sensitive Design in urban 

planning processes 

• encouraging markets and sophisticated pricing of water including clearer entitlements for 

new water supplies 

 

 

17 

• implementing Managed Aquifer Recharge (MAR) schemes where feasible. These have the 

potential to reduce demand on urban water supply systems as well as provide protection for 

some threatened groundwater resources. 

 

Driving what were historic changes in water management was the realisation amongst policy makers 

and critically in the wider community that water shortage had become a critical issue for the nation.  

Australia is fortunate in that its water crisis did not have an international aspect, but as a federation 

major jurisdictional issues had to be managed and this is an ongoing challenge. 

 

Australia’s South and the US South‐West share very similar climatic conditions and water shortage 

challenges – the main difference is that Australia has experienced the more severe effects of climate 

change earlier than the US.  This experience is also relevant to other regions of the US, and also more 

broadly in the region to Mexico and parts of South America. 

 

Australia’s experience has key lessons, important among these are seeking a bipartisan response 

politically, bringing all stakeholders together, ensuring community awareness and support, and having a 

framework based on markets and good science that drives the right policy outcomes. 

 

A water scarcity crisis forced Australia to develop unique approaches to water policy, management 

distribution and efficiency.  Australia is at the forefront of governance arrangements for water, featuring 

innovative water policy settings and unique and valuable collaborative arrangements between the 

private and public sectors.  To underpin good policy making significant investment has also been made 

by Australia in the science to measure and understand water scarcity including its ecological impacts.  

Dictated by necessity Australia has transformed its management of water and while still facing major 

challenges, has implemented a range of policy, administrative and technical innovations which have 

proven to be of international interest. 

 

 

Water: Trends and Solutions in the 21st Century 

 

Mark  Pisano ‐ Senior Fellow, University of Southern California, Bedrosian Center for Governance 

 

The reasons that we are running dry in the 21st century are real and well documented. The challenge 

will affect every aspect of life on this planet, our ability to grow, our ability to create a sustainable 

planet; and will pose security problems created by global spatial disparities that will will not only 

challenge the built and national environment but the international geo‐political system. 

 

 

 

 

 

 

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Trends 

 

Why.  The transformation and alteration of the natural systems have been explained at length in other 

papers and in the analysis of the “running dry” team.  This paper adds the observation that the country 

and the globe is experiencing a spatial transformation that is equally dramatic.  In very simple terms the 

population of the world is moving to town.  

 

The globe is experiencing the most dramatic migration of population from the rural to urban  space in 

the recorded history of the planet.  Only a century ago one percent of the world’s population lived in 

urban spaces.  Seventy years later that number had climbed to 27 percent and by the end of the century 

the almost half the population lived in large urban regions.  The World Bank and economic geographers 

predict that urban  dwellers will be 70 percent of the worlds population.  As the world becomes global 

the places that create global connections: ports, airports, communication, finance and distribution 

centers will be the places that will provide opportunities and create wealth. Interestingly this migration 

is occurring as fast in developing countries where low income migration is occurring in spite of extreme 

poverty and hardship.  

 

This urban migration to large megaregions is occurring on all continents. Important to the water issues is 

that many of these global gateway megaregions are places that have insufficient water resources or the 

water resources have been rendered unusable; e.g. , Southwest US, Southern Australia, Southern India, 

Eastern China. When you add the  forces of dramatic spatial change to those of the built environment 

the challenge becomes epic.   

 

Approaches and Solutions 

 

What do we do about these two trends and how do we approach the solution to this challenge? The first 

is that we have to think differently about water.  Instead of thinking of water as a commodity that is 

provided by a hierarchical set of organizations, primarily governmental, who  take responsibility for 

providing the world with the water based on historical consumption patterns, we should think of the 

services and uses that water provides to the consumer. The results‐the beneficial value, that water 

generates are the starting point of thinking differently about water. Additionally we should look at all 

the implications of “water as water” in its many uses: supply, quality, flood control, support of natural 

habitat, energy development, health and safety‐both ground and surface. In sum this outcomes /results 

approach to water focuses the discussion of water on the consumer’s use of the services of “water as 

water”. 

 

This view of water will open new strategies for how water is provided and managed, that will enable the 

globe to cope with the challenges of the 21st century, particularly in the populous megaregions. The 

same strategies also will be successful in rural areas.  Instead of the hierarchical organizations 

developing water for their individual purposes, water as water development will be integrated and 

provided in a horizontal approach for multiple uses.  Storm water runoff coupled with groundwater 

 

 

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recharge; water reuse  whether domestic, industrial or agricultural; alteration of development patterns 

and buildings that are less water intensive; desalinization of brackish or ocean water; behavioral 

changes of consumers  become elements of an integrated strategy for meeting needs and uses of water.  

The impediment to this approach is the institutional design or rules of the game of the organizations 

involved in providing water today. Each organization involved in the water as water world looks at their 

individual mission statement and goals and maximizes their effort for their purpose.  

 

Two large urban regions in the globe, Australia and Southern California have been confronted with 

drought conditions. They have begun the process of institutional redesign to meet the challenge of 

water in the 21st century.  The approach taken in these two large urban regions could be a model for 

other areas of the globe.  Australia, now in the tenth year of drought, has modified its federal 

constitution, placing responsibility for water at the federal level rather than the province. They have 

altered the number of retail organizations responsible for delivering water to users from 180 to 18 and 

developed a framework pricing based on the uses and services that water provides to consumers. 

 

I will describe in more detail the actions that are being developed in the Southern California 

megaregion. Over the past several decades there has been movement toward developing integrated 

water management plans and programs that has started the process of rethinking water.  The limitation 

of the approach taken today is that these plans have been output focused, how much water supply can 

be developed from each source and not outcome or results focused. They are also developed by 

individual organizations and there is no vehicle for pulling the individual organizations together.  But 

they are the building blocks which can be used to start the transformation from the hierarchical 

approach to a consumer based horizontal approach which is the starting point of the Metropolitan 

Water District of Southern California Blue Ribbon Committee, which is developing a 2060 strategy for 

water that considers the twin challenges described above. 

 

 The essence of the strategy is developing the rules of the game or framework that MWD and other 

water agencies, governmental agencies and private sector organization can follow to establish an 

integrated management strategy based on a business plan. The pricing structure of the business plan is 

based on the value of the services provided by water to users that allows the integrated organizations to 

cover their costs and at the same time sends signals to consumers to take ownership for providing water 

in these changing times. While water imports will continue they will not be the mainstay in the future.  

The water supply organizations will need to enter into joint programs of local actions such as storm 

water collection, reuse, etc., coupled with regional transportation and storage to deal with peak 

demand conditions.  Consumer actions could range from behavioral changes to consume less, to 

modifying their internal plumbing and landscaping, to drainage and collection of rain water.  The 

possibility for highly decentralized actions could be a significant portion of meeting the gap in the supply 

over the 50 year period.  

 

The primary question of this approach is who will own the gap between the known quantities of water 

and possible shortfalls given the twin challenges that the regions faces over the period?  The response is 

all the parties involved.  No one entity has either the capacity or the control over the collective actions 

 

 

20 

needed to assure water in the future.  This process of building the shared responsibility or ownership 

will build the heightened awareness needed to address all the issues associated with water as water. 

 

Conclusion and Policy Recommendations 

 

If we focus on consumers of water uses and services, deal with the institutional design that allow water  

as water organizations to act as an integrated management structure, create a pricing structure that 

incentivizes consumers and providers, the twin challenge of growth occurring where water is scarce and 

alteration of the natural water regime will be met. Whether the area is highly developed or developing, 

urban or rural  I would suggest that the approach will lead to success. 

 

The policies needed to be developed by international, national or state bodies in summary terms are: 

• Promote integrated water management approaches and remove barriers that preclude 

regional and local integration. 

• Where federal or state action is needed in these approaches, be willing participants and not 

hierarchical controllers.  

• Provide financial support that incentivizes the business plan approach and does not 

determine the capital projects to be built.  The best financial support would be participation 

in debt or financing structures .  

• Condition the financial support requiring integrated approaches. 

 

 

Coping with Drought and Water Scarcity – Trends and Projections 

 

David Winder, CEO, Water Aid, America 

 

The most critical issue we face with relation to water resource management in the world today is that an 

estimated 884 million of the world’s inhabitants still lack access to safe drinking water.  The burden this 

places on human health and welfare is enormous.  Over 4,000 children under the age of five die every 

day from water‐related diseases.   

 

The effects of climate change in sub‐Saharan Africa and South Asia are widespread and evidenced not 

only by water scarcity and desertification, but also by more frequent extreme weather events, like 

cyclones and flooding.  As a result, the challenge of providing the world’s population with safe drinking 

water is mounting.  Longer and often consecutive dry seasons reduce water supplies for an estimated 

one sixth of the world’s population.  In addition to increasing demands for water from agriculture and 

industry, longer periods of drought in large parts of sub‐Saharan Africa and South Asia, and 

consequently, falling water tables force women to walk miles to the nearest water point.  Changes to 

water quality, quantity and availability affect our ability of enabling the world's poorest people to gain 

access to safe water in the coming years. Melting glaciers will increase flood risk during the rainy season, 

 

 

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and strongly reduce dry‐season water supplies to the poorest of the poor, who are less able to cope and 

more vulnerable to the impacts of climate change.  

 

WaterAid is a leading international nonprofit organization (www.wateraidamerica.org) that has been 

working for almost 30 years to draw attention to the increasing problem of water scarcity in 

marginalized communities in the poorest countries in Africa and Asia and provide sustainable services to 

those communities in partnership with local governments and NGOs.   

 

Key lessons learned from our close involvement in the search for solutions on the ground to increasing 

access to water are as follows:   

 

The first is that there is an increasing need to provide communities with tools, technologies, and 

approaches that can help them adapt and cope with increasing water stress.  Techniques aimed at 

boosting community level water storage capacity includes construction of sand dams, rainwater 

harvesting and land management techniques. For example, sand dams in seasonal river beds in Ethiopia 

and gabion structures and check dams in India act as important water conservation measures in 

drought‐prone areas.  Rainwater harvesting systems are set up in schools and health posts to ensure 

that school children and those who are ill have access to safe water supplies. These actions need to be 

embedded within the policy framework of integrated water resource management strategies developed 

jointly by government and communities.  When these measures are implemented at catchment and 

sub‐catchment level, they can help to ensure that communities have year‐round water supplies and high 

run‐off caused by deforestation and erosion is minimized.   

 

Re‐forestation, erosion mitigation and water buffering through development of greater storage capacity 

can build resilience to existing climatic variability as well as the growing demand for water resources. 

Ensuring water is available for agriculture throughout the year means that communities have the 

opportunity to increase small scale agricultural production and thus boost household incomes.  Once 

subsistence level food security exists, higher value crops can be cultivated. There is an economic 

incentive to conserve water and thus ensure that water security is achieved all year round. 

  

A second learning is the need to build the capacity of local government officials and communities to 

design and implement water and sanitation systems that are best suited to local needs and conditions, 

can be easily maintained by the communities and are part of integrated water resource management 

strategies.  The latter need to be designed to ensure that watersheds are managed in the interests of all 

stakeholders.  . 

 

A third area of need is for communities to be directly involved in the management and maintenance of 

systems.  Community water users associations can play a critical role in conserving water and ensuring 

that systems are sustainable.  All projects should place heavy emphasis on community mobilization and 

involvement of women in decision making, construction and ownership.  In WaterAid’s experience, the 

participation of women community members within community self‐help groups has been paramount 

for success. Community self‐help groups are able to interface and voice their concerns and needs with 

 

 

22 

catchment management authorities who are ultimately responsible for regulating water resource use in 

many countries. 

 

At the national and international levels there is a need for greater commitment by governments, both 

bilateral donors and developing country leadership to invest more in providing access to clean water, 

sanitation and hygiene and ensuring that these investments are managed effectively and transparently.   

There is an opportunity for the US government to play a leadership role in the water sector by ensuring 

the effective implementation of the Senator Paul Simon Water for the Poor Act and the passage of the 

Water for the World Act.   

 

WaterAid, NRDC and CARE, as members of the WASH Working Group of Interaction, have made a 

number of recommendations to fully implement the Water for the Poor Act.  These include the 

development of a US WASH (Water, Sanitation and Hygiene) strategy that is couched within a wider 

water strategy including sustainable management of water resources and productive uses of water.  

Secondly, the group recommended that the Administration create an office in USAID headed by a high 

level official, to lead WASH development assistance and interagency coordination.  

 

Through a combination of direct service delivery approaches and policy and advocacy, WaterAid seeks 

to develop programmatic models to address water scarcity and leverage our impact by using those 

models to influence local, regional, and national governments to prioritize water for the world’s poorest.  

  

Brief reflections on selected domestic and international trends 

 

Dr. Jerome Delli Priscoli 

 

Rather than repeat another version of the often recited “gloomy arithmetic of water,” these brief 

reflections assume an awareness of such narratives. They cut across policy, technical and economic and 

environmental concerns.   

 

While water concerns grow worldwide funding for the tools and capacities to monitor and measure 

water’s behavior are reducing! For example, both rich and poor countries struggle to increase and 

maintain basic ground truthing and gauging devices. Actually, it is hard to determine whether water is 

truly scarce in the physical sense at a global scale; generally known as a supply problem. It is also hard to 

determine if water is available but that it should be used better; generally known as a demand problem.  

 

Most widely used indicators, such as the Falkenmark indicator, do not help to explain the true natures of 

water scarcity. The more complex indicators are not widely applied because data are lacking to apply 

them and the definitions are not intuitive. Scarcity at a national scale has as much to do with the 

 

 

23 

structure of the demand or mix of water uses, as to the availability of the supply. This structure in turn, 

has much to do with the levels of socio‐economic development13.  

 

At some point the seemingly self evident assumption that as we grow per capital water grows endlessly, 

has been broken. Recent water use trends in US (and other advanced countries) have delinked economic 

growth and per capita water use: they are not linear trends; per capita consumption is going down in 

the US while population, growth and GDP go up. 

 

The critical water issues for water security concerns are those at the cusp of social transitions in 

apportionment (and reapportionment) of water among its multiple uses, not in absolute scarcity. These 

situations often engender feelings of relative deprivation which are long recognized by social scientists 

as potential motivators toward violence; rather than with absolute deprivation. In the rich countries this 

usually means moving from subsidy based apportionment of uses to other apportionments based on 

new macro‐social priorities. In poorer countries it usually means moving from concerns over simply 

access to concerns over multiple uses to investing in water infrastructure to capture more water uses for 

economic development and for building a platform for socio economic growth. 

 

In most instances, our water issues are primarily of distribution rather than of absolute scarcity. Most 

people on this planet continue to live in places where the water comes only for a few months of the 

year; a trend that is increasing. This reality must be central to those concerned with providing access 

and mitigating water disasters for the poor. It means that water infrastructure must be seen more than 

humanitarian responses to situations and more as essential baseline investments in building the 

conditions for people to create, express and grow themselves out of poverty by managing uncertainties 

in environment and discontinuous patterns of human settlement and patterns of water distribution. 

Structures, storage, technology and engineering are thus central to creating social system resilience to 

help the poor especially with increasing uncertainty from new understandings of climate variability.  

 

Over one hundred years ago the now developed societies understood that investment in water and 

sanitation was the key to reducing plague, vulnerability to diseases, low life expectancy and to creating 

wide public health which in turn spawned socio‐economic growth. That has not changed. Unfortunately, 

we have seen good progress on increasing access to water but much less on access to sanitation.  

 

Humans are becoming more urban and are settling in larger groups nearer to the oceans and thus 

becoming more vulnerable to large scale natural disasters. Curiously, our climate‐water‐security debates 

seems to be raising public anxiety about potential ecological changes projected to be brought on mostly 

by water related events while inadvertently denying adaptive means to cope with these projected 

events. Most of the appeals, (found in speeches by the SG of the UN, the Director of IPCC and others) to 

take climate change seriously are based on projected water events. The debate is dominated by long 

term concerns with highly uncertain payoffs rather the on shorter term but more certain events where 

                                                             13    Concept from  Frank R. Rijsberman, International Water Management Institute. P.O. Box 2075, Colombo, Sri 

Lanka 

 

 

24 

investments will have high payoffs of reduced damages, reduced loss of life, increased growth and 

freedom to citizens. This raises important questions about the ethics of public policy debate. Shouldn’t 

we be talking more of direct and immediate investments in water management? If the uncertainties of 

projected climate change are so large and water managers in many parts of the world are already 

characterizing risk and return rates upwards of 500 years in engineering design, should we really be 

telling decision makers to change how they evaluate the most appropriate measures to deal with the 

most likely of events under new notions of variability? 

 

How we make decision about managing risks associated with projected water events are becoming 

more central to the health of democratic political culture and individual freedom. We are falling short of 

the increasing need for publics to actively define and to actively choose versus passively accept 

management levels risks of the hydrograph extremes of floods and droughts.  Defining these extremes, 

as baseline conditions, remains the essential basis for any rational system of probabilistic management 

for most what is projected to be the eco shocks we are told we should fear. How we do our civic 

infrastructure has much to say about what type of civic culture we create.  

 

All wealthy countries have managed to flatten the peaks and lows (floods and droughts) of hydrograph 

as necessary preconditions to macro socio‐economic growth through water investments. Water 

investments have not necessarily prevented the occurrence of water related natural disasters. Indeed, 

damages even increase around the world. However, such investments have reduced the damages as a 

percentage of GDP to about 5% in most of the rich world. This means that disasters are far less likely to 

crack the social fabric. In short, the water investments have increased resilience of the rich countries 

social systems; thus raising the question, do we invest in water infrastructure because we are rich or are 

we rich because we have invested in infrastructure? However, in the poor countries, which are most of 

the planet, this relationship is a socially and politically untenable trend at 25% ‐30%. The poor are 

victims of the vicissitudes of the hydrological extremes and lack means for managing their uncertainties. 

Lacking means to manage fundamental hydrological uncertainties means that little capital will flow, 

fatalism will continue to enslave the psychology of the poor, and sustainability aid (without such 

investment in managing uncertainty and risk) can become an exercise is sustaining poverty. 

We need a new dialog between rich and poor on water resources. There are growing perceptions among 

the world’s poor of a new ecological imperialism embedded in the rich world’s value laden (well 

meaning) prescriptions regarding water management. We ‐the rich‐ are tending to prescribe to the poor 

based on how we use water today rather than how we used water when we were poor; this has 

significant implications for effectiveness of our foreign aid and ultimately for meeting security interests.  

 

The ethical and moral basis that frames public policy on water and ecology is changing and we seem ill 

equipped to deal with the changes. We need new ideological and ethical consensus on water which 

focuses on the common ground of engineering means and environmental ends and which goes beyond 

equilibrium‐ status‐quo and preservation notions of ecology to  notions of co‐designing with nature and 

choosing desired future ecologies.  

 

 

 

25 

Water actions have been a major means to achieving macro societal goals; whether those goals are, 

creating wealth and regional development, breaking the grip of poverty, establishing public health, 

adapting and coping with uncertainties of their environment, and others. Water investment has been a 

prime means for humanity to achieve security, as defined by our English dictionaries as: “freedom from 

danger, from fear or anxiety, from want or deprivation.” To the degree our water investments bring us 

closer to such psychological and social states, we also enhance the larger sense of security we seek – 

reduced potential for large scale social violence.  

 

Throughout history, in the West and the East, good water management has been closely linked to 

political order. Indeed, humanities water debates have consistently mirrored debates of social ethics: 

water as a common good; water and human dignity; water as facilitator of well being; rights and 

responsibilities to access; water and social justice; wealth generation roles of water. Little wonder that 

water continually appears in all major faith traditions as symbol of reconciliation, healing, regeneration. 

 

Lessons Learned from Australia and the United States 

 

Katherine E. Bliss ‐ Center for Strategic and International Studies 

 

One challenge is that, in the United States, at least, there seems to be a sort of false divide between 

domestic and international thinking and policy making regarding water issues.  A Kaiser Family 

Foundation survey in 2008 showed that many Americans support greater U.S. investments for 

international water, sanitation and hygiene projects.  We know that Americans are willing to spend 

federal dollars on international WASH programs, to themselves volunteer on international water 

projects, and to get advanced graduate degrees on international water issues.  But because most of us 

turn on the tap and enjoy access to water that is safe to drink, or use for watering our gardens, or 

cleaning the car, or any number of other activities, we don’t always contemplate that we are facing, or 

will face, water challenges here at home.   

  A second challenge I would point out is that it would seem to be weakness on the part of some 

regional/international organizations to facilitate balanced or equitable negotiation among relevant 

parties so that upstream and downstream needs and concerns (whether in one district or involving 

many countries) are taken into account when water policy is being made.   

  A third challenge I would note is what seems to be a general failure of regional, national level 

or internationally organized social movements and advocacy groups to empower the sectors most 

vulnerable to water challenges to have their views taken into account.  Too often the discussions that 

take place – and the concerns that are voiced – at the community level do not filter up to the policy 

levels until there is a looming crisis.   

  And finally, I would say that there is sometimes the risk of placing too much hope in a magic 

bullet or technical fix for water scarcity issues.  We all know that the problems of water scarcity have 

social, cultural, political and economic dimensions ‐ as well as technical ones.  But we don’t always have 

a good understanding of the multiple factors that have led to policy decisions, including funding 

 

 

26 

decisions, and domestic, agricultural or industrial water management practices that are not sustainable 

in the long term.   We need better historical analysis of how water challenges have developed, and 

those analyses should incorporate the perspectives of all relevant sectors.   

As far as policy changes go, I have at least four suggestions:   

  First: strengthen regional/international organizations or treaties involving watersheds or water 

borders.  This should happen at the technical and policy levels.  What I mean is, yes, strengthen research 

projects, engineering approaches, technical advances to conserve and improve water quality.   

  But also strengthen work to understand the various social and political factors that lead to 

improved international cooperation and coordination on water issues, particularly scarcity and drought.  

  And then we need to improve approaches to water diplomacy, including training, education, 

and capacity building regarding the political dimension of international water issues so that all parties 

involved in negotiations can advocate from a position of strength and work toward consensus and 

common ground.  

  Second: strengthen international networks of civil society organizations working on water 

issues, whether focused on improving governance and transparency, enhancing access to water, or 

building links between water movements and other organizations focused on environmental change.   

  This will enable national or community level advocacy groups to share their experiences and 

learn from each other.  It can help them identify what works and what doesn’t in the area of advocacy 

around water and its sustainable management in a variety of contexts.   

  Third: Develop targeted educational packages for populations ranging from elementary 

schoolchildren to adults with key messages about the broad aspects of water‐related challenges, 

including water management, and identify the most effective techniques for convening how individual 

changes – and community approaches – can make a difference.  Work with a variety of sectors, including 

education, planning, the mass media, food service, etc. to develop and disseminate consistent messages 

regarding challenges, contributions, and solutions.   

  Finally: Empower the most vulnerable sectors – women, urban and rural poor, children, and the 

elderly, to participate in discussions around water use and management, so that they can share their 

memories, contribute their views, and have their voices heard.  Effectively listening to and incorporating 

community concerns well before a crisis is apparent will help improve policy‐making and capacity to 

address water challenges in the long term. 

 

 

Hungry for Answers: A Call for Critical Thinking on Water Scarcity and Food 

Security 

 

By: Malissa Hathaway McKeith and Nicole Wilson14 

                                                             14 Malissa McKeith is the President of Citizens United for Resources and the Environment, 

Inc. (“CURE”), an action oriented think tank focused on government accountability in resource 

management decisions. She also is a practicing land use attorney chairing the Resources & 

Development Group at Lewis Brisbois in Los Angeles, California. Nicole Wilson is a law clerk 

with the firm. 

 

 

27 

 

Water transfers from agricultural areas increasingly are considered a viable option for managing drought 

conditions. Viewed in isolation, water transfers may be a politically expedient option for urban water 

needs; however, the cumulative consequences have yet to be fully explored. This paper advocates 

taking a longer‐term, multi‐disciplinary view toward identifying cumulative consequences of transfers to 

identify and to mitigate impacts early rather than in a crisis. 

 

One issue that has received particularly little attention is how water transfers affect food security and 

how the loss of food production could combine with other market forces to potentially put the United 

States at risk of domestic food shortage. California provides a case in point since it is home to the most 

productive agricultural counties in the nation, is witnessing record declines in farmland, and is suffering 

from a prolonged drought used to justify more and more water deals. 

 

In 2003, California approved the largest ever agriculture‐to‐urban water transfer from the Imperial 

County to the coastal city of San Diego. The goal of the transfer was to reduce California’s overuse of the 

Colorado River. Reducing Imperial’s water consumption seemed like a sound option, because the 

transfer (about 300,000 acre‐feet yearly at full implementation) is roughly 10 percent of the Valley’s 

water use15. 

 

Although the IID‐San Diego Transfer involved endless negotiations and legal wrangling, no genuine 

critical thinking was given to whether this transfer ultimately was environmentally and economically 

more costly long‐term compared to other alternatives for water conservation such as desalination and 

recycling. In Imperial, tail water from the flooding of fields historically flowed into the Salton Sea, the 

largest inland water body in California. Under the IID‐San Diego Transfer, that tail water is now 

‘conserved’ so that less water flows into the Sea accelerating its decline. The Sea has no outlet, and it 

ultimately will become so saline as to destroy all sea life and the bird population dependent on it. The 

Sea’s shoreline also will shrink and newly exposed playa will alter micro‐climates that support high yield 

citrus farming and result in contaminated dust blowing back onto crops. How this contamination might 

affect food production or cause fallowing of otherwise fertile farmland was never considered. 

 

Water transfers admittedly are not the sole reason for reduction of productive farm land. First, the cost 

of local food production in a global market has driven down the value of undifferentiated commodities 

so that the profit margins of U.S. farmers are decreasing except for the most value added crops. Not all 

farmers can shift to value added crops, and therefore many are abandoning farms. Steven C. Blank, 

Commodities and the Profit Squeeze, 13‐15 (1998). Since Americans can buy imported foods at relatively 

low prices, they also are less interested in subsidizing farms and investors are more likely to look 

elsewhere as profits decrease. Id at 2. 

 

                                                             15 In February 2010, a court invalidated all of the IID‐San Diego Transfer on constitutional 

grounds due to the failure of the water agencies and State of California to fund restoration of the 

Salton Sea. 

 

 

28 

Second, the housing market in the western United States boomed due to the availability of subprime 

mortgages. High quality farmland – which is defined as farmland that has more fertile soils and more 

reliable water supplies with higher crop yields ‐‐ decreased by 28 percent in California from 2000 to 

2004. Projected urbanization of lands by 2050 show a 62 percent increase. Edward Thompson Jr., Paving 

Paradise: A New Perspective on California Farmland Conversion, American Farmland Trust, 12 

(November 2007). 

 

Third, recent court decisions have required the diversion of water from farms in California to ensure the 

survival of endangered species, the consequence of which has been the fallowing of many acres in the 

Central Valley of California. See Orff v. United States, 545 U.S. 596 (2005).  

 

How water management decisions affect long‐term food security is not well analyzed. A 1983 article 

predicting the affects of water scarcity on farm production concluded that minimal impacts would occur. 

Burton C. English, Water: Its Changing Role in U.S. Agriculture, CARD Series Paper (Dec. 8, 1983) at 15. 

Circumstances on the ground were vastly different a generation ago. For example, farm yields of 

commodity crops had increased faster than demand; climate change was not a perceived problem; and 

water resources were still relatively plentiful. Nevertheless, English acknowledged the possibility for 

future shortage, and recommended better on‐farm efficiencies; snow pack management; and the 

elimination of phryatiphides along water ways. Id at 16, 17. The technical advances English assumed 

have not kept up with demand. 

 

Importantly, English identified key problems that still impede the ability to objectively evaluate how 

water scarcity will affect food security. According to English, “In examining how critical water is in 

meeting national food demands, it would be useful if we could select specific future dates, set all of the 

exogenous and some of the endogenous variables, vary water supplies and predict the resulting 

expected increase in commodity prices. Statistical, econometric and other methods or models for these 

predictions do not exist, nor will they in the near future. Change in the variables and institutions that 

affect water supply may change dramatically. Meanwhile, these types of changes do not exist in 

historical data, so we cannot use the past to statistically predict the future impacts.” Id at 8. 

 

Even a cursory review of U.S increases in crop imports over the past 10 years highlights the growing 

dependence on foreign markets. Detailed statistics underscoring this point are found in the US Bureau 

of the Census Trade Data (2009) U.S. Imports of Agriculture, Fish & Forestry Products from World Total 

2003‐09. The past ten years have marked an alarming increase in the importation of crops according to 

the United States Department of Agriculture (“USDA”). These imports are paralleled by a sharp 

education of domestically produced stables, such as wheat. The USDA briefing room report on wheat 

states that  U.S. wheat harvested area has dropped off nearly 30 million acres, almost one third, from its 

peak in 1981, because of declining returns compared with other crops. Despite rising global wheat trade, 

the U.S.’ share of the world wheat market has eroded in the past two decades. USDA, Briefing Rooms on 

Wheat, March 31, 2010. 

 

 

 

29 

Another fundamental, unanswered question is how much food needs to be grown domestically for short 

and long‐term national security. The studies on food security and terrorism focus solely on direct 

sabotage of livestock or crops rather than disruption of imports. See Peter Chalk, Terrorism, 

Infrastructure Protection, and the U.S. Food and Agriculture Sector, RAND Series Paper (2001). And no 

comprehensive report has been developed that addresses how the U.S. would maintain civil order 

should such a disruption occur16. 

 

Though water scarcity is only one of the driving forces affecting food security, it will become a more and 

more important consideration given increasing urban and environmental demands for the resource. This 

paper recommends: 

• That Congress designate a multi‐agency and multi‐disciplinary team comprised of 

representatives of the Department of Interior, Department of Agriculture and The 

Department of Homeland Security to study and to report to Congress on the long‐term food 

security needs of the United States taking into consideration reduced water availability. 

• That such a report evaluate the type and quantity of crops that must be grown and stored in 

order to ensure food security including the most appropriate regions for production taking 

into consideration water availability 

• That such a report identify what tax incentives would either promote or undermine 

production designed to ensure U.S. food security 

• That state and local governments identify prime farmland that should not be converted for 

urban use and adopt land use policies and financial incentives that promote food production 

for long‐term security. 

• That more effective economic models be developed to determine the true cost of 

agriculture‐to‐urban transfers with specific consideration of long‐term food security. 

 

Bibliography 

 

Articles and Reports 

 

Mark W. Rosegrant et al., International Model for Policy Analysis of Agricultural Commodities 

and Trade (IMPACT) : Model Description, Int’l Food Policy Research Inst., June 2008. 

 

David Ziberman et al., Food Safety, the Environment, and Trade, Department of Agriculture and 

Resource Economics, Working Paper No. 67, July 2008). 

 

David Ziiberman, Keynote Address at the Alberta Ag Econ Ass’n. Conference: Water, the 

Environment, and California’s Agriculture (May 2, 2008). 

 

Lindsay Falvey, Preconceiving Food Security and Environmental Protection, Asian L. J. of 

Agric. and Dev., Vol. 1, No. 2 (2004). 

                                                             16 Attached is a bibliography of materials reviewed in connection with this article. 

 

 

30 

 

The Outsourcing of Organic Crop Production, Research Brief No 2 (Crop Prod. Research Inst.) 

January 2005. 

 

Steven C. Blank, The Economics of American Agriculture: Evolution and Global Development 

(2008). 

 

Edward Thompson Jr., Paving Paradise: A New Perspective on California Farmland 

Conversion, American Farmland Trust, November 2007. 

 

Sandra L. Postel, Entering an Era of Water Scarcity: The Challenges Ahead, 10(4) Ecological 

Applications, (2000) at 941. 

 

Jason Morrison et al., Water Scarcity & Climate Change: Growing Risks for Businesses & 

Investors, Ceres Report, Feb. 2009. 

 

Burton C. English, Water: Its Changing Role in U.S. Agriculture, CARD Series Paper (Dec. 8, 

1983). 

 

Peter Chalk, Terrorism, Infrastructure Protection, and the U.S. Food and Agriculture Sector, 

RAND Series Paper (2001). 

 

Data and Statistics 

 

US Imports of Agriculture, Fish & Forestry Products from World Total 2003‐2009, US Bureau 

of the Census Trade Data (2009). 

 

US Exports of Agriculture, Fish & Forestry Products from World Total 2003‐2009, US Bureau 

of the Census Trade Data (2009). 

 

USDA, Briefing Rooms on Wheat, March 31, 2010. 

California Agricultural Highlights 2008‐2009, California Department of Food and Agriculture 

(2009) 

 

California Agricultural Statistics, USDA (2008) 

 

Newspaper Pieces 

 

Mary Milliken, Water Scarcity Clouds California Farming’s Future, Fresno Examiner, March 

12, 2009. 

 

Bonnie Erbe, Vanishing Farmland: How it’s Destabilizing America’s Food Supply, Politics 

 

 

31 

Daily, June 3, 2010. 

 

Karri Hammerstrom, Lack of Water dries up California’s agriculture Prominence, Fresno 

Business Commentary Examiner, June 7, 2010. 

 

Drought in the U.S. and Abroad – Stormwater Issues 

 

Holly Galavotti 

 

In the United States and around the world, the public is increasingly recognizing water scarcity and 

water disasters as the most critical threats we are facing. 

 

Only 1% of the world’s water is available freshwater that is not in locked in snow or ice form. However, 

most of the freshwater is in aquifers which we are draining at rates faster than natural recharge. Much 

of the available water is used to irrigate crops (83%). The remaining is divided between drinking water, 

household uses, cooling power plants, and other uses. 

 

884 million people worldwide do not have access to safe drinking water and 2.6 billion do not have 

access to adequate sanitation. The U.S. is not an exception. A report by the Government Accountability 

Office in 2003 indicated that 36 states in the US will have projected water shortages by 2013. In the face 

of known shortages, water use has actually increased. A study by United States Geological Survey shows 

that water withdrawn for public supply increased by 7% from 1995 to 2000 an increase of 1 trillion 

gallons. Americans use about 100 gallons a day whereas millions of the world’s poor use less than 5 

gallons a day.  The demand for potable water will increase further as the U.S. population increases by 

30% by 2040 and the world population is projected to grow from 6 billion in 1999 to 9 billion by 2040. 

 

The increased competition for more water coupled with a decrease in the supply of water is 

compounded by the rapid rate of water pollution. Under the Clean Water Act, the U.S. has made 

tremendous strides in protecting and restoring water bodies from industrial point sources and waste 

water treatment plant discharges. However, today, pollution from runoff from agriculture and mining 

activities, and discharges from urban stormwater have become the largest sources of pollutant loading 

and stream erosion of our nation’s waters. As these sources of pollution contaminate our local water 

bodies and groundwater aquifers, the precious supply of good quality water is diminished.  

 

Not only is population increasing worldwide, so is the rate of urbanization. According to the UN State of 

the world Population 2007 report, the majority of people worldwide will be living in towns and cities. It 

is estimated 93% of urban growth will occur in developing nations, with 80% of urban growth occurring 

in Asia and Africa. Stormwater discharge from urban areas is a growing source of water contamination 

and stream erosion in the U.S. As land is developed and armored with parking lots, roads, rooftops and 

other impervious cover, water cannot infiltrate into the ground and recharge our aquifers and maintain 

base flow in streams. The hydrology of the natural landscape is significantly altered.  

 

 

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In the US, a quarter of a million U.S. acres are either paved or repaved every year.  Rainfall that would 

have that would have naturally recharged the groundwater is discharged to surface waters. This loss of 

water strains our drinking water supply and makes us more susceptible to drought. In addition, 

increased stormwater discharges carry accumulated pollutants such as oil and grease, chemicals, 

nutrients, metals, and bacteria into our waterways. Heavy precipitation can also cause sewer overflows 

which, in turn, may lead to contamination of water sources with untreated sewage in many areas, 

industrial waste and other toxic materials. These problems will only be compounded by climate change 

as communities face more intense and frequent floods and droughts.  

 

Traditionally rainwater has been managed by grey infrastructure designed to drain the rainwater in 

centralized storm sewers as quickly as possible and discharge it to the local water body or the ocean. For 

example, in the 1920s, approximately 5% of the precipitation in the Los Angeles region flowed to the 

sea. Today, extensive impervious cover and massive stormwater conveyance systems discharge 50% of 

the rainwater to the sea, even as more than 80% of the city’s water demand is met by costly imports 

from distant locations. The loss of rainfall volume, that would have naturally recharged our drinking 

water and irrigation supply, makes us more susceptible to drought.  

 

Although stormwater is a major source of pollution, it’s also potentially one of the largest parts of the 

solution of the water scarcity issue. It is clear that we must fundamentally change how we use and 

manage our water resources and the way we develop the landscape. We need to recognize stormwater 

as a resource rather than a waste product. New, innovative green infrastructure practices have been 

recognized as a cost effective approach to managing stormwater by mimicking natural processes which 

infiltrate, evapotranspirate, and reuse rainwater and restore the natural water balance. Some examples 

of these practices are green roofs, porous pavements, rain gardens, vegetated swales, rain barrels and 

cisterns.  

 

These practices have many other benefits as well, by providing more green space for recreation and 

wildlife habitat, improving public health by reducing urban heat island effect, reducing energy demand, 

reducing water imports, and revitalizing communities. In Los Angeles, enhancing groundwater recharge 

through green infrastructure practices could supply approximately $310 million worth of water per year.  

 

This mission of better stormwater management is critical at EPA. EPA has initiated a rulemaking process 

to strengthen its national stormwater program. One of the major considerations is the possibility is 

requiring that for new development and redevelopment projects of a certain size the post‐development 

hydrology of the site (including the volume that would flow over impervious surfaces) mimics the 

predevelopment hydrology by using practices that infiltrate, evapotransporate or reuse the rainwater. 

As development occurs, these practices can help to effectively minimize connected impervious surfaces, 

infiltrate and reuse more rainwater.  

 

One of the barriers to using green infrastructure practices in the arid and semi‐arid West include a 

complex legal landscape associated with water rights law. These laws have restricted rainwater 

 

 

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harvesting and infiltration in some states. However, we are seeing progress. Many states including 

Arizona, California, New Mexico, Oregon and Washington have recognized the vast gains in water 

efficiency that rainwater harvesting can provide, and are playing an active role in promoting, and in 

some cases, mandating this practice. As communities in the southwest and across the world struggle to 

allocate limited water resources among growing populations, better stormwater management can play 

an important role in preserving water quality while conserving water supply.  

 

Changing the way we manage stormwater requires cooperation and coordination between EPA, other 

federal agencies, states, municipalities, developers, landscape architects and other stormwater 

managers. Coordination with other federal agencies is critical to clear the road for these practices to be 

implemented. These agencies include the Environmental Protection Agency (water quality issues), the 

Army Corps of Engineers and the Bureau of Land Management (on water quantity and water rights 

issues), Dept of Transportation (as roads are a large source of pollution) and Dept of Interior to 

preserving more green spaces.  

 

I am excited that these first steps are being taken to change the way we manage stormwater, not as a 

waste product but as an important resource to reduce water scarcity. 

 

 

Meeting the Water Financing Challenges  

 

By Timothy F. Brick, Chairman, Metropolitan Water District of Southern California 

 

An Impending Crisis 

The current global recession combined with a series of unprecedented challenges has left crucial public 

works and utility services both domestically and internationally in impending crisis. While the need for 

water infrastructure funding has grown due to population growth, aging infrastructure, climate change 

and environmental crises, national funding has declined and the public’s appetite for necessary rate 

increases has diminished. 

 

The US Water Infrastructure Gap 

Water systems around the United States face a severe funding gap for investments in maintenance and 

new facilities necessary to provide reliable, healthy drinking water to all Americans.  The great recession, 

aging infrastructure and general governmental and public disinterest have created an infrastructure 

nightmare in countless cities and regions across the country. A 2008 report of the US Government 

Accounting Office estimated that US water infrastructure needs “range from $485 billion to nearly $1.2 

trillion over the next 20 years …. [Yet] the key federal programs supporting water infrastructure 

financing…suggest that they will have only a marginal impact in closing the long‐term water 

infrastructure funding gap.”  To put this gap in perspective, from 1991 through 2000, the GAO reported 

that nine federal agencies provided only about $44 billion for drinking water and wastewater capital 

improvements. 

 

 

34 

 

The United States Environmental Protection Agency (EPA) last year projected a funding deficit of a 

minimum of $534 billion or about $27 billion a year to meet both capital and operating needs for clean 

water infrastructure over the next 20 years. This gap assumes federal, state, and local sources continue 

to invest at past rates, which have averaged about $19 billion a year since 1970. This EPA study 

estimates that $335 billion would be needed simply to maintain the nation’s drinking water systems in 

coming decades.  

 

The 2009 American Society of Civil Engineers (ASCE) Infrastructure Report gave a D‐ to US drinking water 

systems.  It states “America’s drinking water systems face an annual shortfall of at least $11 billion to 

replace aging facilities that are near the end of their useful lives and to comply with existing and future 

federal water regulations. This does not account for growth in the demand for drinking water over the 

next 20 years. To illustrate the severity of the problem, the report notes that leaking pipes lose an 

estimated 7 billion gallons of clean drinking water a day. 

 

These estimates document a huge funding deficit that conventional funding mechanisms are not 

addressing. As water infrastructure systems continue to degrade and the funding deficit widens, new 

approaches are urgently needed to protect and maintain existing water treatment, conveyance, and 

delivery systems to avoid a systemic crisis and to prepare for the challenges of the future. While there 

has been much discussion and debate about the relative role and responsibility of federal, state, and 

local government, utilities, developers, and ratepayers to meet these future financial needs, it is clear 

that there is a need for additional funding sources and approaches to augment and supplement existing 

local and federal government spending. 

 

The Global Water Infrastructure Gap 

The global water infrastructure gap is immense and urgent.  About a billion people globally lack access 

to adequate drinking water supplies and an additional 2.4 billion lack access to sanitation facilities.  In 

2002 at the World Summit on Sustainable Development in South Africa, the developed nations of the 

world adopted the Millennium Development Goals (MDG), which include a goal “to reduce by 2015 the 

proportion of people without access to safe drinking water” and “to halve by 2015 the proportion of 

people who do not have access to basic sanitation.” 

 

Eight years later the world is on track to meet the drinking water target, although not the sanitation 

goal. Much work, however, remains to be done in some regions.  The United Nations 2010 assessment 

of progress in meeting the MDG goals reports that “If current trends continue, the world will meet or 

even exceed the MDG drinking water target by 2015. By that time, an estimated 86 per cent of the 

population in developing regions will have gained access to improved sources of drinking water. Four 

regions, Northern Africa, Latin America and the Caribbean, Eastern Asia and South‐Eastern Asia, have 

already met the target.”  Most of the progress has been achieved in rural areas of the developing world 

where drinking water coverage has improved from 60 percent in 1990 to 76 percent in 2008, while 

coverage in urban areas has remained essentially the same during that period of time at 94 percent. 

 

 

35 

The Millennium Development Goals address the needs of the world’s poorest citizens and require 

subsidization and international financial support.  But the water infrastructure needs of the world are 

immense and compounded by a series of factors that have no historic precedent, including rapid 

urbanization, dietary changes, aging infrastructure, contamination of water sources, and climate change.  

The cost of meeting those needs is considered to be $180 million a year or more. 

 

A series of international task forces and reports on water infrastructure and financing, beginning with 

“Financing Water For All” in 2003, have assessed the global gap and made recommendations to meet it.  

This report determined that water financing flows on a global level needed to double to meet the 

challenges of the future from a 2002 level of $80 billion to $180 billion or more annually.  Since then, 

while there have been significant increases in the attention of certain nations and international 

organizations as well as increases in water‐related development aid, funding has not risen sufficiently to 

meet the challenges we face. 

 

Financing Challenges 

In Southern California and throughout much of the United States, the financial issues related to water 

system funding are often really political issues.  Water agencies have the ability to issue tax‐exempt 

financing for future infrastructure, but there is serious resistance to rate increases to repay the debt.   

Other priorities, seen as more urgent, consume the attention and resources of both individual 

consumers and governmental agencies at all levels. 

 

The typical monthly residential bill in Metropolitan’s service area averages about $45.  This is lower than 

cable, cell phone, transportation and energy bills.  But raising water rates is a difficult political issue as 

local elected officials are influenced by immediate needs for police and fire services, economic 

development and other infrastructure needs and by constituents’ resistance to rate increases, which are 

often viewed as a form of taxation.   

 

Metropolitan estimates that investments in water infrastructure as well as in local resources like 

seawater desalination, recycled water and water efficiency, may increase the cost of water in Southern 

California by 1‐2% a year in real (above inflation) terms.  This will mean monthly increases due to water 

cost increases of less than a dollar a month (in real terms), which while not insignificant, are certainly 

affordable within a trillion dollar economy.  Both private and public capital is available; usually public 

resources are the least expensive route.  Given the essentiality of service, water rates and charges can 

(and have been) be increased to fund investments in sustainable water supplies. 

On a national level, federal funding program for water infrastructure have dried up in the last three 

decades.  Security and defense, energy and transportation are all in line far ahead of water 

infrastructure needs.  In addition varying regional needs have fostered a certain confusion and lack of 

cohesion about a national water strategy.   

 

As we have seen from the GAO, EPA and ASCE estimates, the required investments in water 

infrastructure, water use efficiency, and new water sources (e.g., recycled water, seawater desalination, 

etc.) needed to ensure a reliable water system are in the range of $30 billion annually over the next 

 

 

36 

thirty years.  This is less than a third of estimates to repair and expand transportation systems.  It is also 

significantly less than infrastructure investments required for wastewater and energy. 

So what is the biggest financial challenge?  It is really a communication issue – how does the water 

industry communicate to the public why investments are necessary, where the money is going, and how 

it will benefit them.  At this point, many in California do not believe that water investments are 

necessary as they continue to get high quality water every time they turn the tap.  At Metropolitan, we 

have been waging a decades‐long education campaign, utilizing schools, radio, television, print and 

electronic media to get the message out about the need to use water efficiently and to improve the 

import system.  But we rarely talk about how this need will inevitably result in higher water rates.  We 

need to change the tenor of the discussion so that the one monthly bill customers are glad is going up is 

the water bill because this means that the investments are finally being made to ensure a sustainable, 

high quality water supply. 

 

Another large challenge is that not all water systems in California are the same.  Metropolitan is a 

wholesale agency that provides water to three hundred retail operations throughout our service 

territory.  Most are public agencies, but some are private companies.  Some are large and sophisticated; 

others are small operations.  All are financially challenged in some way, but some systems cannot afford 

to make the necessary investments because they are too small and/or their customer base is too poor.  

We need a comprehensive streamlining of the water industry to reduce costs and to improve efficiency, 

technical expertise and the quality of service to the public.  The entities that lack sufficient financial and 

technical resources need to be absorbed by larger systems, with assistance from the state and federal 

government, providing grants to fund the necessary water system improvements for leak prevention, 

well head treatment, and other essential services.  

 

The same pattern exists throughout the United States. Nationally are there 52,000 community water 

systems and 21,400 not‐for‐profit non‐community water systems.  Many of these systems are struggling 

to provide basic service today and are not financially or technically prepared to meet the challenges of 

the twenty‐first century. 

 

The International Challenge 

These challenges are similar to those which face other water entities throughout the developed world as 

well as in developing nations.  The major dissimilarity, however, is the very large gap between the 

developed and developing world in terms of financial capabilities.  While financial resources are not yet 

a constraint in the developed world, they are in the developing world.  Capital will flow to projects in the 

developed world because investors understand they will be repaid.  In the developing world, this is a 

much riskier proposition.  Investments there must generally be smaller in scale and more locally driven, 

as these societies have a limited ability to repay large investments.  Simple things like unaccounted for 

water often cannot be easily resolved as solutions often end up taking water from the very people that 

can least afford it.  This has resulted in civil unrest in certain countries.   

 

In the developing world, in addition to international aid, a national financial response is critical, similar in 

intent and scope to that which occurred in the US when the Clean Water Act was first implemented in 

 

 

37 

the 1970s.  Then the US federal government provided funds for local communities and agencies to make 

the necessary investments to initially comply with the new requirements.  In developing countries, a 

national water infrastructure bank or similar entity that provides funds for local agencies to develop 

wells, well head treatment, wastewater treatment strategies, etc., combined with funding from the IMF 

and other international agencies, would be an important strategic response to the financing shortfall.  

Funding mechanisms could include loan guarantees as well as grants. For the poorest cities and 

countries, outside support and financial assistance, such as that utilized to achieve the Millennium 

Development Goals, will be needed for the foreseeable future. 

 

US Financing Approaches 

In the US tax‐exempt bond funding has worked well up to now to provide a solid base of support for 

water infrastructure. The debt component of a significant portion of U.S. infrastructure investment has 

been in the form of municipal bonds, which rely primarily on a state’s or local government’s ability to 

offer tax‐exempt securities to investors. More than 50,000 state and local issuers of municipal bonds 

have issued 2 million separate bonds totaling some $2.4 trillion, providing an effective method for 

financing municipal needs including water infrastructure.  

 

To meet the current funding gap and the new challenges facing water providers, new tools, including 

public/private partnerships, additional tax incentives and renewed federal support, will be needed for 

the future.   

 

The American Society of Civil Engineers recommends a series of steps to address the financing 

challenge: 

• Increase funding for water infrastructure system improvements and associated operations 

through a comprehensive federal program; 

• Create a Water Infrastructure Trust Fund to finance the national shortfall in funding of 

infrastructure systems under the Clean Water Act and the Safe Drinking Water Act, including 

storm‐water management and other projects designed to improve the nation’s water 

quality; 

• Employ a range of financing mechanisms, such as appropriations from general treasury 

funds, issuance of revenue bonds and tax exempt financing at state and local levels, public‐

private partnerships, state infrastructure banks, and user fees on certain consumer products 

as well as innovative financing mechanisms, including broad‐based environmental 

restoration taxes to address problems associated with water pollution, wastewater 

management and treatment, and storm‐water management. 

 

Legislative Approaches  

To combat the funding shortfall, Congressional leaders have proposed a number of innovative 

approaches.  

• Senator Benjamin Cardin of Maryland with bipartisan support introduced S. 1005, the Water 

Infrastructure Financing Act. This bill provides the foundation for our nation's drinking water 

and wastewater infrastructure. It makes important reforms and increases investment in the 

 

 

38 

Clean Water State Revolving fund, which has not been reauthorized in 22 years, and the 

Drinking Water State Revolving Fund, which has not been reauthorized since 1996. The bill 

also expands funding eligibility for projects including stormwater management, water 

conservation, or efficiency projects, reuse and recycling projects and expands expand EPA’s 

WaterSense Program to promote voluntary approaches to increase water efficiency in the 

United States to reduce the strain on water and wastewater infrastructure and conserve 

water resources for future generations. 

• H.R. 5320, the Assistance, Quality, and Affordability Act, a companion piece to Senator 

Cardin’s bill introduced by Rep. Henry Waxman of Los Angeles, would  reauthorize and 

amend the Safe Drinking Water Act to increase assistance for States, water systems, and 

disadvantaged communities; encourage good financial and environmental management of 

water systems; strengthen the EPA’s ability to enforce the requirements of the Act; reduce 

lead in drinking water and strengthens the endocrine disruptor screening program. 

• Congressman Xavier Becerra of Los Angeles takes a different approach to water funding. He 

has introduced H.R.4132, the Clean Renewable Water Supply Act of 2009, which amends the 

Internal Revenue Code to provide for the issuance until 2019 of tax‐exempt clean renewable 

water supply bonds to finance water recycling, desalination, and groundwater remediation 

projects that comply with requirements for minimization of environmental impact.  

• Congressman Earl Blumenauer of Portland, Oregon has initiated several different 

approaches to water funding both domestically and internationally. Last year he introduced 

H.R.3202, the Water Protection and Reinvestment Act of 2009. The Act amends the Internal 

Revenue Code to establish a Water Protection and Reinvestment Trust Fund (Trust Fund) to 

support investments in clean water and drinking water infrastructure. Funding for this trust 

fund will come from an excise tax on containers of water‐based beverages, water disposal 

products, and pharmaceutical products as well as a clean water tax on corporations. The bill 

would also increase energy efficiency, reduce greenhouse gas emissions, and mitigate the 

impacts of climate change; establish a national water infrastructure research, development, 

and demonstration program and regional university water research centers; and take back 

and dispose of prescription and over‐the‐counter drugs in an environmentally sound 

manner. 

• Congresswoman Grace Napolitano has forcefully advocated for an expansion of funding for 

the Bureau of Reclamation’s Title XVI Water Recycling Program. Last year she was able to 

secure the allocation of $135 million of American Recovery and Reinvestment Act funds, a 

dramatic increase from recent levels. She currently is pushing for an appropriation of $200 

million in FY 2011 for “shovel‐ready” recycling projects. 

 

Each of these measures is an interesting attempt to fill the domestic water infrastructure funding gap.  

On the international level there seems to be considerable bipartisan support for the Senator Paul Simon 

Water for the World Act of 2009, S624 and HR 2030.  This measure, introduced by Senator Dick Durbin 

and Congressman Blumenauer, would set a goal of providing safe drinking water to 100,000,000 of the 

world’s poorest citizens. Under the Act’s provisions the Administrator of the United States Agency for 

International Development (USAID) would establish the Office of Water within the Bureau for Economic 

 

 

39 

Growth, Agriculture, and Trade to give assistance and provide safe water and sanitation for people 

worldwide. The Act also requires the Secretary of State to increase the capacity of the Department of 

State to address international issues regarding safe water, sanitation, integrated river basin 

management, and other international water programs, and to establish a Special Coordinator for 

International Water.  The Paul Simon Water for the World Act would be a tremendous US contribution 

to the global effort to achieve the Millennium Development Goals. 

 

Conclusion 

The water infrastructure financing challenges that face the citizens of our planet from the poorest to 

most affluent are strikingly similar, but they vary greatly in scale and consequence.  These challenges are 

driving the water industry globally to better water management, more efficient enterprises and more 

accountable governance structures.   

 

New financing tools as well as tried and tested approaches and a sustained campaign to rally public 

support for water infrastructure funding will be needed to meet the funding gap and ensure reliable 

water supplies for future generations. 

 

 

Coping with Water Scarcity and Drought – The Investor Role 

 

Francesca McCann ‐ Managing Director, Global Water Consultants  

 

As we examine water scarcity, drought and sustainable water resource management from the political, 

social and environmental viewpoints, it is also critical to examine the issue from the investor 

perspective. Education and policy change are undeniable building blocks for sustainable water resource 

management, however corporations and investors will also play a key role in finding and supporting 

solutions to global water scarcity and drought.  

 

In this section, we briefly examine the following:  

 

• Investors and corporations will need to play a key role in contributing to solutions for water 

scarcity. 

• There is a need for tools and frameworks to guide investors and corporations to assess and 

manage water resources and plan for water scarcity and drought related‐issues. 

• Investment drives innovation and vice versa. Water scarcity drives both. 

 

Investors and corporations will need to play a key role in contributing to solutions for water scarcity  

 

There is tremendous opportunity to tap into huge pools of money and decision‐making power through 

corporate and investor buy‐in and commitment.  Moreover, both groups will have to become a part of 

finding solutions to water scarcity and drought.  Yet thus far, corporations are only beginning to grapple 

 

 

40 

with drought and water scarcity issues and investors have essentially not begun to anticipate the 

impacts of water scarcity on broad investment portfolios. There is a need to understand and capitalize 

on the critical link between investors, corporations, policymakers and the development community.  

 

Corporations are becoming increasingly aware of water risk, yet there are still only a handful of 

companies that are truly examining and accounting for water scarcity and drought‐related issues. 

Investors, overall, do not yet understand or know how to account for water risk. It is well known that 

water is absolutely critical to all industries and that certain industries including agriculture, mining, 

oil, power, food & beverage and pharmaceutical are huge users of water, yet the value and risk of 

water availability/scarcity are not yet factored into most investment portfolios. 

 

This disconnect of investor/corporate awareness and action in the face of looming water scarcity 

catastrophe is partly due to the fact that threats and fears of water scarcity in certain regions have been 

around for decades and have not yet manifested in a pressure to shift corporate and investor strategy. 

Also, many investors, even those with long‐term strategies, still have a short‐medium term view on what 

the future will hold from a water perspective. While this is slowly changing and we have seen a slight 

increase in interest for water‐safe investments and sectors, broad awareness and demand for water as 

an investment driver still has a long way to go.  

 

Need for tools and frameworks to guide/drive investors and corporations to assess and manage water 

resources and plan for scarcity and drought related‐issues 

 

The question arises of how to engage the financial sector in critical water‐related issues and policies. 

Understanding the drivers and incentives for investors and corporations is a key first step. Here we don’t 

strive to provide a solution to the question, but rather note its importance and comment on one step – a 

framework to understand and measure water risk and water usage – that will help bridge the gap. 

 

Tools that measure water risk are emerging, but are not widely used by investors. Moreover, most 

available tools measure only corporate water risk, which, while helpful, neglects an underlying layer of 

ambient (geographic, political, social, competitive use) water risk. World Resources Institute (WRI), in 

conjunction with GE and Goldman Sachs, is developing a Water Risk Index, a tool that aims to solve this 

disconnect by “contextualizing” a company’s water footprint to help investors and companies make 

operational, allocation and investment decisions.  

 

The WRI Water Risk Index is a framework to help companies map and management water‐risk. It also 

provides insight into future water risk areas for suppliers and operators. It provides investors with 

actionable information to guide capital into more water‐sustainable areas. The WRI Water Risk Index 

will be a critical tool to guide investors as they begin to factor in water‐impact of investments across all 

sectors.  Demand from investors will, in turn, encourage companies to develop sustainable water 

management strategies and report on water disclosure.  

 

 

 

 

41 

Water scarcity and drought will drive innovation and investment 

 

Innovation drives investment and vice versa. Scarcity and drought drive both innovation and 

investment. This has yet to play out on a global scale, but we see obvious examples in Australia, Israel, 

and other areas, where drought and scarcity have forced innovation and investment.  

 

Just as venture capital, private equity and institutional investors have flocked to energy‐efficient 

investments in the face of rising energy costs, in time, water‐efficient technologies are likely to be in 

high demand. Many corporations recognize the need for water conservation, reuse and recycling and 

investors are beginning to explore the options, but full‐blown demand for innovative technologies to 

help solve drought and water scarcity issues remains a trend of future.  

 

We have seen lofty multiples for treatment, recycling, reuse investments and acquisitions in the water 

sector, yet outside of the direct water‐sector investments, water’s broader impact is not yet fully 

appreciated. Innovation, such as improvements in water recycling and reuse technologies and energy‐

efficient desalination, will become vital as drought and water scarcity issues exacerbate. 

 

Transcript of Panel Discussion

45

CENTER FOR

STRATEGIC AND INTERNATIONAL STUDIES (CSIS)

COPING WITH DROUGHT AND WATER SCARCITY:

TRENDS AND PROJECTIONS

WELCOME:

KATHERINE BLISS,

DEPUTY DIRECTOR, SENIOR FELLOW,

GLOBAL HEALTH POLICY CENTER;

SENIOR FELLOW, AMERICAS PROGRAM, CSIS

MODERATOR:

ERIK WEBB,

MANAGER, GOV’T RELATIONS OFFICE, SANDIA NATIONAL LABS

SPEAKERS:

JIM THEBAUT,

CEO & EXECUTIVE PRODUCER, CHRONICLES GROUP, INC.

DAVID WINDER,

CHIEF EXECUTIVE OFFICER, WATERAID AMERICA

MARK PISANO,

SENIOR FELLOW, SCHOOL POLICY PLANNING DEPARTMENT,

UNIVERSITY OF SOUTHERN CALIFORNIA

HOLLY GALAVOTTI,

ENVIRONMENTAL SCIENTIST,

U.S. ENVIRONMENTAL PROTECTION AGENCY

JERRY DELLI PRISCOLI,

SENIOR ADVISOR, U.S. ARMY CORPS OF ENGINEERS,

INSTITUTE FOR WATER RESOURCES

GRAME BARTY,

REGIONAL DIRECTOR – AMERICAS,

AUSTRALIAN TRADE COMMISSION

THURSDAY, JUNE 17, 2010

12:00 P.M.

Transcript by

Federal News Service

Washington, D.C.

46

KATHERINE BLISS: (In progress) – very expert panelists and I know a lot of you will

have a lot of contributions and questions, so we want to get started. And Jim Thebaut and Erik Webb are really running the show here. So I want to turn things over to them very quickly to both offer some introductory remarks and to give us an overview of what we hope to accomplish over the next few hours.

But let me just reiterate how pleased we are to see so many people here today, not only

from Washington, but also the many of you who have come from around the country from California and the Southwest and also from other areas of the East Coast and the Midwest. If you haven’t had a chance to pick up some lunch, please do so. There is lunch and there are some coffee and other soft drinks in the back and some water. Please take a seat so we can get started on what promises to be a set of stimulating and provocative discussions.

And first, before we get the panel started, I want to invite Jim Thebaut up to say a few

words. And Jim is, as many of you know, the head of the Chronicles Group and also a filmmaker. And showed the film, which I think many of you were able to attend the screening of last night, “Running Dry: Beyond the Brink”. So Jim, please. (Applause.)

JIM THEBAUT: Thank you, Katherine. And I want to thank CSIS for being so gracious

to host this event. CSIS has a place in my heart. I mean, they’ve done some very powerful things over the year and kind of in the cutting edge of public policy in not only in our country, but throughout the world.

Last night’s event was – this is really all part of one event. Last night’s – the great

speakers we had and the presentation of the film kind of established – set the stage for the topic of this whole kind of two-day thing. The whole idea in the film and in what we talked about last night was the water scarcity, drought and its connection to public health, energy, agriculture, food supply and ultimately, international security. I think I tried to portray in the film that, you know, by the year 2050, this planet is going to be in serious trouble if we don’t put together public policy and specific strategies in order to deal with this incredible crisis.

I am not going to take much time. I think we want to get right to the panel discussion.

My very good friend, Erik Webb, is the moderator. And I think that this should be something really important. We are filming it as you can see. And we are transcribing it. And at the end of the day, a couple of months from now, we are going to have a report that is going to be available to everybody in relationship to this hopefully valuable two-and-a-half hour endeavor and hopefully that you all participate in this thing. I think we can perhaps maybe move things forward as a result of these two days. So thank you very much. I appreciate you being here. And I am going to turn it over to Erik. (Applause.)

ERIK WEBB: It is a great privilege for me to be here. Thank you, Jim. Katherine,

thank you for including me in this process. Because it is being transcribed, because this is being

47

recorded, I wanted to let you understand my perspective on transcription. I worked for Sen. Pete Domenici for about five years. And one of the lessons I learned was that as soon as he finished a floor speech, we were to rush to the transcription office and make sure all the ums and uhs and tangents were sort of removed from the transcript so that the message was clear. And I have volunteered to be on the transcription committee, so I am going to remove any of my own mistakes from the thing when we go to the formal program.

Thank you all for being here. We will have an opportunity today to hear from three

panels. These are experts. They are widely known. They have a spectrum of experience. They have addressed water resources management issues in international and domestic activities from many different perspectives. And that was part of the purpose of this particular set of groups.

What we are hoping we are able to do through their presentation, their material and your

questions is to identify both policy principles and more importantly, some strategies, some action items that we can pursue in order to help our nation both reach sustainable water resources management domestically and have our nation take a true leadership role in helping the world do the same.

Rather than sort of making remarks myself, I know that I have an opportunity towards the

end to help in the summarization of the comments today. So what I would like to do is move forward to our first panel. This first panel consists of six individuals. We have approached them to provide for us, as we have for each panel, a short statement on their perspectives. We have asked them to look at both domestic and international water resources management, trends and to help identify both those policy and strategy elements.

This is an open topic area in some ways. We are hoping that we can have from this group

comments that relate to both technology, governance, organization, ways of collaborating and ways of taking political leadership and so forth. Let me introduce our panelists. There have been documents – so they are on the tables; they are also available at the back – that have a much more elaborate biography for each of these panelists, so I am not going to go into their backgrounds.

But let me just list them by title and then we will move forward in this same order for

having each of them make some opening comments. After their opening comments, we will open it to the floor until about 1 for your questions. And we will have microphones that will be distributed so that we can hear your question, we can hear the response. So I would ask you to respectfully wait till the microphone arrives when you have a question.

Our first panelist who actually opened the session is Katherine Bliss. She is the director

of Global Water Futures Project and the deputy director and senior fellow of the Global Healthy Policy Center here at the Center for Strategic and International Studies. Our second panelist in David Winder. He is the chief executive officer for WaterAid America. Our third panelist is Mark Pisano, senior fellow, School for Policy Planning Development at the University of Southern California.

48

Next we have Holly Galavotti who is an environmental scientist in the Office of Water with the U.S. Environmental Protection Agency. Next to her, we have Jerry Delli Priscoli who is a senior advisor with the U.S. Army Corps of Engineers in the Institute for Water Resources. And finally we have Grame Barty who is the regional director for the Americas, the Australian Trade Commission. I hope you will join me in welcoming this first panel. And we will go forward with their comments.

I have invited them to either make their comments sitting or to come to the podium,

whichever they feel more comfortable. So thank you very much. Katherine? MS. BLISS: Erik, thank you. Let me preface my remarks by saying that since I am at

the Center for Strategic and International Studies, even though the question focuses on domestic and international things, I will focus largely on some of the challenges I see and some of the reforms I suggest to deal with the international aspects of this issue or these questions.

I should also say that, you know, from the outset, I am not a technical person. And in

line with what one of my former students said, you know, I am one of those doctors who doesn’t help anyone. So that is, I am a social scientist, actually a historian to be precise. So my remarks will therefore focus on the political, social and to some extent, the historical dimensions of the sustainable water challenge.

So let me articulate several challenges I see just very quickly. You know, one is that, at

least in the United States, there seems to be some kind of weird or false divide between domestic and international thinking and policymaking regarding water issues. And there was a Kaiser Family Foundation survey that I think came out in 2008 – it may have been late 2008, 2009 – showing that many Americans support greater investments, greater U.S. investments on international water projects. And we know that Americans are willing to spend federal dollars on international water programs, to themselves volunteer on international projects and to get advanced degrees in international water issues.

But because most of us turn on the tap and enjoy access to water that is safe to drink or

use for watering or cleaning the car or any number of other activities, we don’t always contemplate that we are facing or will face challenges here at home. And we don’t always link those two things together.

A second challenge I would point out is that it would seem to be weakness on the part of

some regional or international organizations to facilitate balanced or, I guess, equitable negotiation among relevant parties. And maybe this is a weakness inherent in treaties on water or international agreements or water or maybe it is a weakness in diplomatic capacities around negotiating regarding water issues. But, you know, improving or strengthening some of these issues around negotiating capacities and diplomacy I think would help ensure that upstream and downstream needs and concerns, whether in one district, a watershed or involving many countries, are taken into account when policy is being made.

A third challenge I would note is what seems to be a general difficulty on the part of

regional, national level or international organized social movements and advocacy groups to

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empower the sector’s most vulnerable to water challenges to have their views taken into account. And too often the discussions that take place and the concerns that are voiced at the community level don’t always filter up to the policy levels until there is a crisis.

And finally, I would say that there is sometimes the risk of placing too much hope in a

magic bullet or a technical fix for water scarcity issues. And we all know the problems have social, political and cultural dimensions and economic dimensions, as well as technical ones. But we don’t always have a good understanding of the multiple factors that have led to policy decisions. And so in this sense, I think we need a better historical analysis of how water challenges have developed and how they can incorporate the perspectives of all relevant sectors.

As far as changes go, I have four suggestions. First, strengthen regional and international

organizations and treaties involving watersheds or water border. Strengthen work to understand the various social and political factors that lead to improved international cooperation and improve approaches to water diplomacy including training, education and capacity building regarding the political dimension of the water issue.

Second, strengthen international networks of civil society organizations working on water

issues and ensure that national- and community-level advocacy groups have networks and are able to share their experiences and learn from one another.

Third, develop targeted educational packages for populations ranging from elementary

school children to adults. And finally, empower the most vulnerable sectors, women, urban and rural poor, children and the elderly to participate in discussions around water use and management to ensure that community concerns are apparent and incorporated well before a crisis appears.

I have to say it is nerve-wracking to have the red flag shown up here. (Laughter.) So

fellow panelists, beware. DAVID WINDER: Thank you. It is a great pleasure to be with you all this afternoon. I

represent WaterAid. My organization works in 26 of the world’s poorest countries to improve access to safe water, hygiene and sanitation. So you won’t be surprised to hear what I think is the major issue, which is that there are still over 800 million people in the world who don’t have access to safe water.

As you can image, the cost in human suffering is enormous. Every year, 3 million people

die from waterborne diseases. Every day, 4,000 children under the age of five die from drinking polluted water. This means that while we are sitting here for these two hours this afternoon, 300 children – in that time span, 300 children will die of diseases that could be prevented.

So it is critically important in my mind to convince the governments of developing

countries to allocate a larger percentage of their budgets to providing safe water to their populations. It is equally important to convince our government and those of other wealthy countries to allocate a greater percentage of their aid budgets to water and sanitation programs as part of their global health initiatives.

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I am pleased to say that I think we are making some progress. Just two months ago here

in Washington, piggybacking on the World Bank meeting, a group called Sanitation and Water for All – I think they call it an initiative – they brought together finance ministers of water and leaders of donor countries. They came together. And out of that came some commitments to increase the allocation of funds to water and sanitation. We are happy that the MGD-plus-10 Summit in New York in September will also further strengthen the commitment of government to increase their efforts to reach the MGD goals for water and sanitation.

So another important challenge, I think, is to raise people’s awareness, public awareness

of the challenges we face around the world and providing safe water to the population. And Jim, you do an enormously great job in doing this. I think it is absolutely critical to reach out to the population. They in turn can talk to their congressmen and convince them to pass the water for the world bill, which is currently being debated. And that has, as you know, a target to reach 100 million people – to provide 100 million people with safe water for the first time. So if we can get that bill passed and through, that would really have an enormous impact.

I just wanted to say a few words about what we as an organization do at the country level.

I have talked about the policy level. I think it is critical for us to help countries develop their own integrated water resource management strategies. We are doing that in Burkina Faso. We are doing it in Mali. We are also at the same time working directly with communities to help them conserve their scarce water resources, developing new technologies for rainwater harvesting, putting in ponds that collect water in the brief rainy seasons and helping them survive. If you develop or adopt these strategies, you are increasing the effects – offsetting the effects of climate change, which are leading to increased drought.

So I see – I have been shown the yellow card, so I will have to wind up with that point.

But thank you very much. MARK PISANO: In three minutes, trends and recommendations. That was our

assignment, so let me quickly go to the trends. For the last 30 years, I had the opportunity to plan and manage Southern California as the director of its regional planning organization. And I would like to share the growth and development trends that are occurring both in the United States and the globe.

In 1980 – in 1800, 1 percent of the world’s population lived in metropolitan areas. Fast

forward, 1900, 3 percent, 2000, 46 percent, 2010, 50 percent. Based on World Bank and the colleague of professionals of regional organizations that I have participated in, the year 2030, 70 percent. The world is moving to the – the population of the world is moving to the town into what we call mega-regions, a concept that those – my colleague and I have evolved over the last five years.

Same time period, water as a resource is constantly dwindling. And when we – you

know, we will hear much today about what climate, what use and abuse has done to water over time. How do these two trends basically come together? I am going to suggest that the fundamental issue on water is how do we undertake not just urban management, but mega-region

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management of water? Water in context of how we grow and develop is how we, in fact, are going to address the problems that David and others here spoke about. And the challenge is how does that occur?

How do we deal with the issues of conservation, reuse, stormwater capture, et cetera?

And furthermore, how do we take the dimensions of urban development, which if done correctly can considerably reduce the need and use of water? In our region alone, anecdotal studies have shown that through correct urban development, 15 to 25 percent less water is demanded. And these same observations about urban water management are true from Australia; they are true in the United States. And from the third world countries that are now participating in urban management, we can see that if we can put the institutions together and you can incentivize the institutions and remove barriers, we are going to address the issues of water.

So in summary, the recommendations are water should not be viewed as a commodity,

but the uses of water. Secondly, the consumer needs to be the primary actor on how we are going to manage this issue. And governmental assistance, financial and otherwise, needs to incentivize how consumers use water, how institutions put themselves together, so that we, in fact, can undertake urban management.

I am going to suggest that the issues of water are not the issues of a commodity, but

rather the institutional design and the way we use financial incentives to modify the way we put ourselves together to solve the water problem. So in summary, water as water integrated in integrated water management plans is the key. And I am going to just close with one of the efforts that I direct, America 2050, is putting together an investment strategy for the U.S.

The framework that I spoke about is spelled out in detailed recommendations that we

hope not only Congress, but equally, if not more important, our local institutions implement and implement globally.

HOLLY GALAVOTTI: I also want to talk a little bit about stormwater and give some

specifics about some things that – about urban development that Mark was talking about. We know that we are facing a decrease in supply and an increase in demand with excessive water usage and increase in population. But that issue is further compounded by the rapid rate of water pollution and urbanization.

Stormwater discharge from the urban landscape is one of the fastest growing sources of

water contamination and stream erosion in the U.S. As land is developed and armored with impervious services, parking lots and roads, the water cannot infiltrate down and recharge our groundwater and maintain base flow in streams.

Traditionally, stormwater has been managed by gray infrastructure and that we collect the

rainwater as fast as possible in centralized piping and we discharge it to the stream as fast as possible. One example in the Los Angeles area in the 1920s, 5 percent of the rainwater that fell to the land was discharged to the sea. And today with excessive impervious cover and massive stormwater conveyance system, 50 percent now of the rainwater is discharged to the sea.

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So this loss of rainwater volume, it makes us more susceptible to drought and it is even more further compounded by climate change issues. And urban stormwater pollution is not just a U.S. issue, but an international issue. And as was mentioned, stormwater is not just a source of pollution. It is also one of the potential parts of the water scarcity issue. And we just need to fundamentally change the way that we manage stormwater and the way that we develop our landscape.

New innovative green infrastructure practices have been recognized as a cost-effective

approach to manage stormwater by mimicking natural processes to infiltrate, evapotranspirate and reuse water onsite or at least in the same watershed. And some of these practices include green roofs, porous pavements, rain gardens, vegetated swales, rain barrels and cisterns. These practices provide many benefits, in addition to an available water source to provide green space, reduce urban heat island effect, reduce energy demand and revitalize communities.

I am here today as an employee of EPA. Just to describe some things that we are doing

to solve this issue, EPA has embarked on a new rulemaking process to try to promote some of these practices. One of the major initiatives that we are working on for the rulemaking is that setting standards for the way that land is developed today. So setting standards for any new development or redevelopment of a certain size that post-development hydrology of that site such as how much rainwater runs off that site would be mimicked to the predevelopment hydrology state using practices that infiltrate, retain and reuse some of this rainwater.

We have seen many such support for this issue. And some of the barriers that we face

and solutions we can talk about today, we are facing some of the water rights issues in the Southwest. We see this as a good solution to some of these urban development issues, but it is going to take coordination between the EPA and other federal agencies and also close coordination with the states, municipalities, developers, landscape architects and all stormwater managers. Thank you.

JERRY DELLI PRISCOLI: Thank you. Erik, should I go? Okay. Thank you very

much. I have actually 12 sound bites, four minutes or three minutes that combine challenges and things we could do.

First, while we talk more about water worldwide, we are losing our capacity to monitor it

and measure it. Secondly, water use trends in the United States and other advanced countries have delinked economic growth and per-capita consumption. They are not linear. Very, very important.

Third, critical water issues for policy and security are really at the cusp of social

transition in the use patterns of water. That means they are not found in absolute scarcity as much as in situations of relative deprivation. Fourth, most people on this planet continue to live in places where the water comes only for a small percentage of the year, a few months of the year. And this means that most of the issues are about distribution of that water.

Fifth, we are becoming more urban. We are settling in larger groups nearer to oceans.

That means we are becoming really vulnerable to large-scale natural disasters. Sixth, we have

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made progress in increasing access to water. We can do a lot better, but we are making progress, but much, much less on access to sanitation.

Seventh, climate, water and security debates are raising public anxieties about change

while unintentionally denying the means to cope with these projected events about water. This raises some serious questions about the ethics of adaptation and mitigation. Eight, how we make decisions about risk in water are becoming essential to the health of our democratic political culture and individual freedom. We are falling short on the increasing need for the public to actually define and actively choose versus passively accept the management levels of risk as we try to deal with the hydrographs.

Nine, all wealthy countries have managed to flatten these peaks and lows. It is about 5

percent of damages as a percentage of GDP in the rich countries. And in the poor countries, it is 25 to 30 percent, which is politically unsustainable. Ten, the growing perceptions among the poor in the world of a new ecological imperialism, which is embedded in the rich world’s value-laden prescriptions sometimes regarding management. So we need a new dialogue between the rich and the poor on water resources.

Eleven, we are tending to prescribe to the poor based in how we use water today rather

than how we used water when we were poor. And this has really significant implications for the effectiveness of U.S. aid and meeting security interests around the world. Finally, 12, the ethical and moral basis that frames public policy on water and ecology is now changing. And we seem ill-equipped to deal with this change.

We need to find a new ideological and ethical consensus in water, one that focuses on the

common ground of engineering means and environmental ends. It goes beyond equilibrium and status quo and preservation notions of ecology to one of a co-design. And we should remember that throughout our history of civilizations, water has been a major means to reach other macro social goals. Thank you.

GRAME BARTY: Good afternoon. So the lessons I would like to give is just some key

points that have come from Australia’s adaptation to climate change since 1996. I thought they would be useful to pass on. First of all, time is not on our side. This catches up with you very quickly and you can’t provide a response quickly. The response is sizable when you do have to act. For example, Australia will have spent nearly $10 billion on new desalination, mostly salt water desalination plants between 2007 and 2030. We will also have spent $10 billion on environmental water and improving irrigation systems and infrastructure. So big commitments very quickly.

No one is planning on a return to abundance. All planning is based on continuing

scarcity. In the case of demand, it is clearly security through diversity. There is no one single solution. There actually has to be multiple solutions if you want security. The other key point in demand is that reduction in consumption is not catastrophic in itself. Annual consumption, per-capita consumption is roughly a third of most U.S. cities. That hasn’t changed a lot, so no one is jumping off of cliffs. You know, if it was food, we have got to get off, you know, the fast food and onto a better diet. That is basically it.

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So the community is educated. They are intelligent. If it is explained to them, they can

understand that there is a purpose for reduction in demand. Reducing consumption reduces energy was another big lesson we learned, plus it also inspires innovation. In the case of the environment, another big lesson we learned was it is not the environment or consumptive demand. It is both. You have to manage both. It is not one or the other. You have to deal with fish and fauna and farms as well as having to deal with urban human critical needs.

In some instances, we are reaching potentially irreversible environmental damage. In the

case of the major river system, if it does flood, there are actually concerns that the river banks will collapse. In other words, this is damage forever that has occurred, so we have to understand that some of the implications of these things are quite serious.

Perhaps not new to you, but new to us is that we understand that groundwater, service

water and environmental water are actually linked. And stormwater loss actually in almost every city equals urban consumption. So stormwater potentially is one of the great panaceas for us that we want to look at.

In water trading, we have separated water rights from land rights. Allocation is based on

a percentage of usage and not quantity. If your percentage is 18 percent, but there is zero water available, you get zero allocation. And trading itself will determine how water is moved around the country. And it has proved to be extremely effective. In technology, we need to reliably, accurately measure and predict water both catchment, aquifers and surface flows. There is a lot of research on efficiency and energy requirements, particularly in desalination. We like to refer to desal as new desalination. Precision agriculture and proper use of water in agriculture can actually improve crop productivity, so that was a major lesson we learned. And moving to reduce evaporation in conveyance system is extremely important.

In the case of governance, water supply is a national and not a regional or a local issue.

This requires national public policy response. And we established a national water initiative to help us do that. And agencies have to be aggregated. Agencies were reduced from 118 to 80 in Australia. Economies of scale and management of delivery systems can only be managed when agencies are aggregated. And, of course, providing and managing water rights and allocation in a proper and effective manner is one of the big changes that we have been able to achieve. Thank you.

MR. WEBB: I have a personal expression of my gratitude to the panelists who actually

stayed within their time limits. They actually allowed for time for questions. That is absolutely fantastic. So I guess what I would like to do at this point is as you are sort of considering the points that they have made, I would like to open the floor for questions. We have about 10 minutes for questions.

When you raise your hand, we have two microphones, I believe, in the back. One of

them will come to you. So I have one here in the front, please. And what I would like you to do is state your name and your affiliation, so that we can capture that for the transcript, and then your question. Thank you.

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Q: My name is Martin Apple with the Council of Scientific Society Presidents. Other

than one comment across all of you, agriculture was sort of skipped over. Across the world, I understand about two-thirds or three-quarters of all the water used by people that is consumptive is in agriculture. There is a maximum efficiency with which that can be improved. We may be reaching it in some places. We have some room to go in some places. If the world is urbanizing so much and that becomes the demand, the ability to feed all those people still requires the agricultural efficiencies to be maximum and available and use the best amount of water. If they are using most of it now and will continue to, how are we going to resolve this?

MR. WINDER: First of all, the farmers that are producing that crop – and there are

fewer people on agricultural land – need consumers. We never think of it in terms of interdependence, but the agricultural users, which are the majority and it is a majority of the water in California, in fact can consume less and still produce what is needed to supply not only our state, but the world and engage in trades with the urban area. That is beginning to happen in California. Grame can talk extensively of what is happening in Australia.

But the major point I just want to draw – and that is our interdependencies are becoming

clearer as we add to the world’s and to the globe’s population. And dealing with inter-area, intergenerational relationships, so that all parties can survive is going to be in the best interests of all parties. And I think we overlook that. And if we can deal with the institutional framework that allows us to deal with our interdependencies, then these anomalies, which we currently have, are going to go away. And the need is too great. From what I can see in both our state and I think what Grame says about how we manage water in Australia, how you manage water in the scarce areas, those management principles, I think, need to be developed and need to be replicated.

And furthermore, I think they are going to be the key for how resources are managed in

the third world because the third world populations are moving primarily to areas where water is scarce. I think several panelists mentioned that. So the key – and I just want to – I hope we don’t lose sight of the fact that this is an institutional design issue. It is not a water commodity issue. It is how we put ourselves together and establish the rules of the game.

MR. WEBB: Any other panelists want to address that question? MR. PRISCOLI: Thank you for mentioning agriculture. You sound a lot like the fights

we have in the world’s water forums. You know, why are you leaving out agriculture? Right behind it is groundwater, which is also linked to the agriculture because most of the world is using inexpensive ways of pumping groundwater.

The interdependency is critical. One point that should be mentioned about this is – and

you have already seen it in the fights in California about people not being able to have water in growing in the Central Valley. They are saying do you want other people to produce these goods that we can do as well or that these goods might not be as safe? So you can see the seeds even in this country of the argument of security in food and water and who grows and these interdependencies, which will have to be politically negotiated someway.

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MR. BARTY: It may well be crop choice. Environmental buyback in Australia was

cotton farmers upstream and the rice farmers midstream sold their water rights to the perennial wine growers downstream. That reduced their rice crop, as I mentioned yesterday, by 90 percent in a single year. But it was considered that the wine industry was too important, but there was a full-on impact. So that is a choice for governments and for communities and for producers to make.

Some producers prefer to sell their water than they do to grow a crop. That is a new

industry actually. MR. WEBB: Okay. I think we need to move to another question. Yes? Q: Hi, my name is Wendy Cornwell (ph). I have two different companies. One is eco-

conservation services. These are two different questions, but they solve – there is a solution. And I have been told by scientists that there actually isn’t a water scarcity issue. It is a water reuse. We have the same water since the dinosaur age is still here on the earth. How we are taking care of it is the problem. And I have a project at the University of South Florida right now that I was given because my husband and I are plumbers. It started off and they thought it was going to cost $90,000 to capture air conditioning condensation to gather with roof runoff and put it into a storage tank and then flush the toilets and the urinals.

This project is $500,000 now. And the Curran family are very wealthy doctors and they

went ahead with it because they have a building in management sustainability master’s program starting in the fall at USF. So it was very sad for us to think that if it was another just general management project that we would have had that go by the garbage. I mean, it was lots of work on my part and everybody who didn’t want to do the project came down to the plumber who did it.

And to be honest with you, I think that everything is going in the wrong direction because

when you come from the situation where there is already solutions and then we have to go back to get permission and then money, it seems like we need to rethink this. And there is genius. Grame, I introduced myself – and as my other company, actually both of his countrymen have two solutions, the Atlantis system, which actually takes the stormwater management and it is a bioproduct that actually – it looks like milk crates. It is very simple and we can do it to existing and building and maintenance. Very few people know about Atlantic system. They are geniuses in their technology, but their distribution is poor because they are geniuses and they need salespeople and to get the word out. It is very affordable management. We use it in several places in Florida at SeaWorld and Disney World.

But the problem is that the functionality and people who are willing to actually go for it,

there is only 17 projects. So again, it is private funding finance. MR. WEBB: So let me see if our panelists can respond a little bit to the challenges of

putting these kinds of new technologies into place. Okay. Do any of our panelists want to talk

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about that kind of a barrier – the barriers? And it sounded like they were both local barriers and sort of knowledge barriers. Let me leave them an opportunity to speak at that point. Thank you.

MS. GALAVOTTI: Maybe I can just start the discussion. When we are working at EPA

to promote some of these green infrastructure practices, when we have talked to developers and landscape architects and people that are trying to harvest rainwater onsite, we see in the beginning there could be a huge learning curve and a big initial cost. But as these practices become more familiar and more every day, then the cost is going to be diminished is what other scientists are telling us.

And to address your other comment about loss, whether we are in a water scarcity issue,

whether we are losing water, I would just bring that back to cost also. If we maintain our freshwater resources right now, then it is going to be less costly down the road to desalinate and do other issues.

And just to address your public versus private, we see some private entities are doing

some of these practices, but it is not mainstream. That is some of the things that we are trying to promote at EPA by making it a federal regulation that you must retain some of your stormwater onsite for new development.

MR. WEBB: Thank you. Mark? MR. PISANO: Briefly, local codes, ordinances and the way we have plumbed ourselves

in the past will not be the framework for how we plumb ourselves in the future. And again, it comes down to how do our public institutions who are our regulators, how do they develop the flexibility to one, allow for procurement of new products because if you can’t get yourself in a code, you can’t procure a new product. And how, in fact, does the world truly deal with innovation and technology? And I think this is one – the key to it is the private sector, which can bear more risks, that we find the instruments that allow that risk to be taken jointly with the public sector.

And I think we are just beginning to sort that out. And I think it is a major hurdle.

Again, it is the institutional barrier hurdle that is really the key to innovation, to the spreading of innovation.

MR. WEBB: Thank you. I am sorry. We don’t have enough time to continue the

questions with this panel. I do want to weigh in that our third panel will talk to some degree about the financial issues attached with these kinds of risks. I would like you to join with me in thanking our panel for their comments. (Applause.) And we will start a transition of panels. Thank you very much.

(END)

CENTER FOR

STRATEGIC AND INTERNATIONAL STUDIES (CSIS)

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COPING WITH DROUGHT AND WATER SCARCITY:

PUBLIC POLICY AND MANAGEMENT STRATEGIES

MODERATOR:

ERIK WEBB,

MANAGER, GOV’T RELATIONS OFFICE, SANDIA NATIONAL LABS

SPEAKERS:

KAY BROTHERS,

FORMER DEPUTY GENERAL MANAGER, ENGINEERING AND

OPERATIONS, SOUTHERN NEVADA WATER AUTHORITY

TANYA TRUJILLO,

PROFESSIONAL COUNSEL, DEMOCRATIC MAJORITY,

SUBCOMMITTEE ON WATER AND POWER,

U.S. SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES

BOB PIETROWSKY,

DIRECTOR,

INSTITUTE FOR WATER RESOURCES

MALISSA HATHAWAY MCKEITH,

PARTNER, CHAIR OF REAL ESTATE AND LAND USE DEPARTMENT,

LEWIS BRISBOIS BISGAARD & SMITH, LLP

MARK BERNSTEIN,

MANAGING DIRECTOR,

UNIVERSITY OF SOUTHERN CALIFORNIA ENERGY INSTITUTE

THURSDAY, JUNE 17, 2010

1:00 P.M.

WASHINGTON, D.C.

Transcript by

Federal News Service

Washington, D.C.

about that kind of a barrier – the barriers? And it sounded like they were both local barriers and sort of knowledge barriers. Let me leave them an opportunity to speak at that point. Thank you.

MS. GALAVOTTI: Maybe I can just start the discussion. When we are working at EPA

to promote some of these green infrastructure practices, when we have talked to developers and landscape architects and people that are trying to harvest rainwater onsite, we see in the beginning there could be a huge learning curve and a big initial cost. But as these practices become more familiar and more every day, then the cost is going to be diminished is what other scientists are telling us.

And to address your other comment about loss, whether we are in a water scarcity issue,

whether we are losing water, I would just bring that back to cost also. If we maintain our freshwater resources right now, then it is going to be less costly down the road to desalinate and do other issues.

And just to address your public versus private, we see some private entities are doing

some of these practices, but it is not mainstream. That is some of the things that we are trying to promote at EPA by making it a federal regulation that you must retain some of your stormwater onsite for new development.

MR. WEBB: Thank you. Mark? MR. PISANO: Briefly, local codes, ordinances and the way we have plumbed ourselves

in the past will not be the framework for how we plumb ourselves in the future. And again, it comes down to how do our public institutions who are our regulators, how do they develop the flexibility to one, allow for procurement of new products because if you can’t get yourself in a code, you can’t procure a new product. And how, in fact, does the world truly deal with innovation and technology? And I think this is one – the key to it is the private sector, which can bear more risks, that we find the instruments that allow that risk to be taken jointly with the public sector.

And I think we are just beginning to sort that out. And I think it is a major hurdle.

Again, it is the institutional barrier hurdle that is really the key to innovation, to the spreading of innovation.

MR. WEBB: Thank you. I am sorry. We don’t have enough time to continue the

questions with this panel. I do want to weigh in that our third panel will talk to some degree about the financial issues attached with these kinds of risks. I would like you to join with me in thanking our panel for their comments. (Applause.) And we will start a transition of panels. Thank you very much.

(END)

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ERIK WEBB: We’ll allow you to waylay the panelists up here. Apparently this is the waylay space. So we’ll cordon this off on the next panel. As we move into our second panel, I wanted to talk a little bit about what we’ve asked them to speak about.

The issues around public policy strategies, agency implementation apparently have

plagued our nation since its beginning. I have some anecdotal evidence that George Washington was embroiled in a Potomac River set of water issues and so these kinds of squabbles between intergovernmental agencies have predated our nation.

What we have asked this panel to do is to identify public policies, agency implementation

strategies and other kinds of concepts that could help us move towards sustainability with a particular interest on modes of cooperation that would span federal, state and other interest groups and other kinds of areas in this public policy regime.

Again, what we’re going to ask the panelists to do is to spend three or four minutes trying

to identify some key points for us. We’ll give each of them that opportunity and then we’ll take questions. We’ll try to wrap this up in about 35 minutes. Let me then sort of identify our panelists. To my left is Malissa McKeith. She’s a partner and chair of the real estate land use department at Lewis, Brisbois, Bisgaard & Smith, LLP.

Next to her is Kay Brothers, former deputy general manager of engineering operations for

the Southern Nevada Water Authority. By the way, I’m looking forward to eventually being referred to as former. It’s a good term. Next to her is Tanya Trujillo, who’s serving currently as professional counsel for the Democratic majority of the Senate Energy and Natural Resources Committee, Subcommittee on Water and Power.

Adjacent to her is Bob Pietrowsky. He is the director of the U.S. Army Corps of

Engineers’ Institute for Water Resources and then finally Mark Bernstein, who’s the managing director of the University of Southern California’s Energy Institute. Let me turn the time over to each of them for a few moments of comment. They can either remain seated or use the podium at their discretion.

MALISSA MCKEITH: Good afternoon. My first recommendation is that everybody

needs more than four minutes to solve the water problems. Just before I came to Washington, D.C., one of my dogs bit my nose and I had to walk around with a Band-Aid and it reminded me of “Chinatown” because remember Jack Nicholson and he was up against the mighty water agencies?

Well, I have spent the last 10 years of my life fighting with Metropolitan Water District,

San Diego and several of the people in this room – (inaudible) – the largest ever act to urban water transfer in the country and recently invalidated that deal. So you have to understand my perspective as I go through these issues. First, recommendation number two, nothing gets solved in courts. Lawyers make money. Nothing gets solved in courts.

How do you avoid that? Well, first of all we have no real critical thinking and analysis of

decisions regarding water that have irreversible regional impacts. There is not a mechanism in

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place. There is not a RAND or a CSIS or a forum by which you really critically think through the economic and the environmental consequences, what the true costs are over time and how to address those costs.

People are afraid to look and think about it because the task is so daunting and the issues

are so difficult that instead it’s easier for deals to get kind of jammed together by legislatures or other politicians and ultimately that doesn’t work.

Even whether I win or lose, ultimately there will be prices in these water transfers that

ought to be considered. It’s not unlike BP. They didn’t want to have to look closely enough at what it might really cost if they had a problem and here we sit today with these issues.

So the institutional barriers, if we can take anything from this room is I think there is

really truly a dire need for academic economic analysis of these large water deals instead of power and politics.

Now a number of people talked about food and since I have a very short period of time, I

like food. We all like food. I have, within the context of what I’ve done, looked for any true analysis of what long-term food sustainability is needed in the United States.

I hear a lot about Africa and other places. If we have disruption at our ports, if we have

other security issues, if we’re not able to – if we become a net importer of food, how food and water are tied together and try to tell a farmer what to grow.

The market tells a farmer what to grow by in large and I think that there’s a dearth of

studying and analysis on these issues and they’re going to become more and more critical for our country over time. If you come up with a plan for food security, how do you in fact impose that on a private market, or essentially a private market?

These are tough issues, but I’ll tell you, if we remember the potato famine, if you look at

history, if there’s a food shortage in our country, there will be change. It’s a kind of change we don’t really want to have to face and as we look at water and all of the solutions, I think we have to look at the most adverse dire of consequences because otherwise we don’t have a plan B, as BP didn’t according to The Washington Post this morning.

We don’t have any plan, really, and I think we need a plan and we need to think about

these issues and we certainly need to think about them outside of court. However, one thing I can say is when you have a temporary win, it’s a good opportunity for people to think about renegotiating and looking at these issues again 10 years later. Thank you.

KAY BROTHERS: Good afternoon. Is it on? Good afternoon. It’s a pleasure to be

here to talk to you a little bit about the West and maybe a little Southern Nevada. We’re talking public policies and management strategies.

Well, if you look at Western water, the law of prior appropriation, the allocations, the

water rights were all tied into when you got the water, how much you have and that is going to

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be the day we go to court to protect that and if we’re going to be managing things for sustainable water supply, if we really do have less than we’re going to have and less and less, then we’re going to have to have some other way than going to court to manage these water supplies.

I wanted to tell you a little story about the Southern Nevada Water Authority. Back in

the early – late 1980s, early 1990s, we were growing very rapidly, very much approaching our allocation of Colorado River water.

The various agencies that comprise the authority now, the authority did not exist in 1990,

were competing for water. In fact, they were turning taps on and using as much water as we possibly could to secure our allocation of more Colorado River water. It doesn’t make much sense, does it, but that’s what we were doing.

So what we had to do is say this is crazy. We’ve got to do something else and it’s not to

go to court or it’s not to fight one another. It’s the ban together and when you ban together, the biggest dog is going to have to give something up and that’s what happens. You can’t just go ahead and maintain all your water supply and manage it and solve other people’s problems in a region.

The Authority was created in 1991 and it puts actually seven agencies under one board

and the biggest dog was the Las Vegas Valley Water District. It had the largest allocation of water. Well, they didn’t get a weighted vote. They got one vote, just as the little city of Henderson and the city of Boulder City got one vote.

The management strategies are that we almost have to become equal, that you have to

have a say even if you’re the little guy in what happens in your region and this is what the authority has done and it’s been quite successful over the past 15, 20 years because we have negotiated for additional water because we’ve stood together as one community and one region, that we can actually talk as one voice.

When the drought did hit Southern Nevada, it became very, very important that we did

have a regional agency such as the authority. What happened is we all got together and decided what we needed to do for a drought plan.

Instead of having a draught plan that was just implemented, say, in the City of Las Vegas,

or unincorporated Clark County, where the Las Vegas Valley Water District was the primary entity, we had a drought plan that was consistent throughout Southern Nevada.

So you didn’t have one area watering differently than the other or putting in

implementations or controls that another didn’t have. So a regional approach to management is going to be key in actually managing our water resources.

Also, the Colorado River is something now that we’re looking at shortages. We had the

foresight in 1991 when we created the authority to have a shortage sharing plan in our cooperative agreement.

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Just as our growth plan was that no city got more water than the other, growth could go where growth was needed. The shortages – there’s not going to be one agency that’s shorted more. We’re going to have the whole shortage once we get into drought and that shortage is going to have to be managed throughout the whole region.

So that again, I think the key to the future is cooperation and realizing that somebody’s

going to have to give up something to keep the community whole, that we all can’t maintain exactly what we have walking into it, that you’ve got to have some flexibility, you’ve got to have some give and take and you have to do something for the common and greater good. Thank you.

TONYA TRUJILLO: Thank you. I also am pleased to be here. I work for Sen.

Bingaman on the Energy and Natural Resources Committee. I wanted to highlight a few of the pieces of legislation that are out there. The first thing I’d like to comment on is just the general work that our committee does.

Energy and Natural Resources Committee does work with the Bureau of Reclamation,

the USGS, the Department of Energy and the FERC. We are not the Environmental and Public Works Committee or the Foreign Affairs Committee, which also have a role with respect to the issues that are being discussed today.

But with respect to the energy committee’s work, I wanted to highlight one particular

piece of legislation that was passed last year, which is the Secure Water Act, which was sponsored by Sen. Bingaman and is actually a climate change-related piece of legislation. It is section 9501 of Public Law 111-11 and it provides for – it addresses many of the issues that are discussed today and will be discussed by other panelist members.

It provides for an assessment of climate change related impacts, primarily by the

Department of Interior but also engaging in that study with other agencies, and it allows for permanent authority for grants, water management grants, to be issues to deal with things like adaptation and water management strategies.

So that resource is currently available and also emphasizes the need for a greater data

availability and data collection system with respect to our water resources. That is primarily implemented by the USGS through their ongoing water census

evaluation. The most important thing we need to do now is make sure that the agencies are going forward in implementing the legislation that we have enacted and we have been receiving regular updates from them with respect to the status of the water census program and also with respect to Department of Interior’s other implementation strategies.

They have currently initiated what they call the WaterSMART program, which provides

for water management grants; also a program that consists of water basin studies. And the Colorado River is an example of where there is an ongoing evaluation of supply

and demand issues on a basin-wide basis and also they provide funding for water recycling and

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reuse program, which I think has been extremely popular and provides an amount of federal assistance to the local agencies which have really taken a lead on those issues.

The other current piece of legislation I wanted to highlight is in the energy bill and

wanted to make you all aware of the energy water nexus title that exists in the current energy bill and there’s a lot of discussion about energy bills.

I’m referring to the bill that was reported out of the Energy and Natural Resources

Committee last summer with support of Sen. Murkowski and Sen. Bingaman and the energy water nexus title of that bill really emphasis the interconnection between energy and water and there’s been an increasing amount of attention on that subject recently.

The bill really would require the agencies to continue that awareness and to make sure

that decisions relating to energy policy include an analysis of the water impacts of those issues. The final note that I wanted to make was just to put on my New Mexico hat and talk

briefly about the Navajo situation and the Navajo settlement in New Mexico. I know part of this – the focus of this group is to talk about international needs for water, in New Mexico and also in Arizona there are examples of folks who currently do not have access to drinking water and basic water supply needs.

We were successful last year in enacting legislation to authorize a settlement for a water

system on the Navajo Nation in New Mexico and are looking forward to implementing that. But the basic goal would be to provide some basic water infrastructure to citizens within our own country who currently don’t have those basic facilities. Thanks.

BOB PIETROWSKY: Red light is on. I guess you can hear me. I appreciate Jim’s

remark at the beginning that last night’s even and today is all part of the same event, although I think without Jane Seymour it doesn’t really quite seem the same today and we’re not as entertaining as the movie.

The movie actually did an excellent job of – especially internationally. It’s eye-opening

in terms of the severity of the problem and it highlights how different the challenge is in the U.S. domestically and the international challenge. Although I was going to highlight within that context there are some very common themes and you’re hearing them emerge today.

But I mean, internationally, we have a U.S. focus certainly framed and advanced by the

Sen. Paul Simon Water for the Poor Act that has at least focused in a coherent way the federal emphasis on international water resources and I appreciate that additional legislation may be emerging, water for the World Act that could even increase that level of commitment in the future.

In the U.S., working with the U.N. on the Millennium Development Goals, there’s not a

specific goal for water. There’s targets in terms of we’ve talked about them earlier on the first panel, about having the number of people who don’t have access to clean water by 2015.

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There’s been some progress made, but frankly almost all of the Millennium Development Goals, even the ones having to do with education due to the impact on young women, young girls around the world who really are prevented from being educated because of the household chores and the need to haul water and firewood and gender equity.

Health certainly, it’s a crosscutting issue that’s an imperative to the success of the MDGs

across the board, not just the environmental sustainability. In the U.S., you could argue that we’re suffering from maybe an abundance of legislation

because the fragmentation of the responsibilities, the institutional challenges are formidable, as exemplified, not by drought but by the response to Hurricane Katrina and what’s going on in the Gulf now with the oil spill. But certainly the Secure Water Act is an important first step.

The institute that I’m with is associated with the Corps of Engineers, not covered by the

Secure Water Act, other than our peripheral partnership with USGS and the Bureau. But it’s important because we largely have a domestic water infrastructure designed with

an assumption of a stationary climate, with limited records that we collected in the 19th to 20th century and with a lack of emphasis right now, frankly, on continuing the monitoring and data needed for adaptive management.

So the Secure Water Act is really bringing us into the recognition that we have projects

designed in the 20th century for those needs at that point and not always equipped for the challenges of the 21st century or even our values, what we recognize as important.

So within that context, the one thing I wanted to mention domestically also is there’s

been a lot of thinking on this and actually we’ve made a lot of progress in the ’90s. The National Drought Policy Act of 1998 made significant progress. It established a national drought policy commission to advice the Congress on a formulation of policy.

It actually in its report in 2000 it called for a national drought preparedness act to

formally establish the relationship between the federal government and the local and state players that is so important and to deal with the plethora of issues that really we have in common with the international problems.

Institutional fragmentation or lack of capacity, lack of sufficient resources and often a

lack of political will or an emphasis on making drought a priority, in particular because drought is not an event like floods that has a determined beginning and end; it sort of sneaks up on us very often without the continued focus.

And certainly the fourth thing that’s important was discussed in the first panel, is looking

at water scarcity from an integrated standpoint and dealing within the context of our WRM. MICHAEL BERNSTEIN: First I have a question for the ref down there. If I get a red

card, do we need to play a man down?

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MR. WEBB: Only in the workup. MR. BERNSTEIN: I was surprised nobody else brought that up but I’m glad that –

Malissa, we are really ready to do the studies for you if Tanya can get us the money so – and I’m going to try to follow on what other people said. In some sense there is no federal constituency for water and we really need to begin to develop that. The opportunity is there. But there is some key things I believe we really need to do.

Number one is we need to learn from many years of history in the energy system,

particularly on energy efficiency. There’s been a lot of successes and a lot of failures and water is not that different and there’s a lot of stuff we can take from the energy side and apply it to the water side. So we really need to ramp up water efficiency strategies, codes and rebates and things, learn from our other mistakes, learn from the stuff that really worked and put them in play.

We know that water is one of the most energy-intensive industries in the country, more

than pulp and paper, more than some of the others. Well, let’s have a program on efficiency in water – energy efficiency in water out of the Department of Energy that matches some of the other programs they have on energy-intensive industries. We need to collect information and data. There is no data to do the types of analyses we can do in energy.

There is no Energy Information Administration for water. There is lots of great data on

energy. There is no good data on water. So we can’t do the types of analyses that we really need to do to make solutions and we also need to engage the public. But really where I want to see engaging the public is with kids.

We’ve done a really good job on the energy side of getting energy into curriculum in

schools, particularly elementary schools and middle schools. There are great energy programs, getting energy efficiency. Much of the change-out of light bulbs that people have done is because the kids have brought the information home.

We really need to create a water set of skills to get down into the elementary schools, into

the middle schools, teach our kids about water, get them to bring that information home and work through the process that way. That will make a big difference. That will create the next degeneration of water leaders that we need to make a big difference.

It is happening in other areas. It needs to engage in water and I went and did something

in my son’s science class in middle school and they had no tools – plenty of tools they could find for other things but not on water. So we did a whole thing on water. Oceans they can do. I live in Santa Monica. They go down to the ocean all the time.

But not drinking water, not fresh water, not that type of stuff that we need to have

happen. So I think there are lots of little pieces that need to be brought together. We need to use efficiency to solve the problem and there’s lots of opportunities to learn from the past to make a difference in the future. Thanks, and I didn’t get the red card.

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MR. WEBB: We have time for questions. Let’s start here in the back with the green tie. Okay, and let me go ahead and queue one more up. A hand? You had a shot. I’ll let you have another one in a sec. In the back please, okay, go ahead.

Q: Okay, thanks to all of you. Moving beyond the domestic – excuse me, first of all I’m

Michael Dziuban. I work upstairs in the Middle East program here at CSIS. Zooming out from the domestic context and looking internationally, where so much of

the water governance and water management problems still exist, how do we account for the fact that a lot of countries with some of the worst water problems don’t have the broad coalition building processes and political consistency building processes that the united States has.

How do we convince heads of state and heads of government who often have all the

power in their countries, or at least most of it, that water is something they should pay attention to?

MR. WEBB: Let me – Bob first. MR. PIETROWSKY: I mean, I agree with you and that’s a huge problem and I’m not

sure – there’s no magic bullet for that. But I would have to admit that I think the current administration, starting with Secretary Clinton’s speech on World Water Day, really elevated the focus of the U.S. on international water resources and is trying to really reenergize our focus internationally, globally.

Water, not just for development, but really for diplomatic means and I think that’s one

context that could help in terms of encouraging that grassroots growth and response within the context of dealing with the other nations.

MR. WEBB: Malissa? MS. MCKEITH: There was a comment – sorry, there was a comment on the first panel

about how water has become increasingly tied to democracy and the development of democracy. And when we were litigating over the aligning of the All-American Canal, which cuts off

water to Mexico, it was interesting to see how over time Mexican citizens became far more active on environmental and water-related issues as it affected their economic well-being and put pressure on their government so that we saw a level of pluralism you wouldn’t have seen in Mexico 20 years ago.

So it is an evolution of thinking and I would imagine in Israel and in Palestine. I think

the Oslo Accords and there was quite a bit of discussion on water and environmental issues. As countries become more sophisticated and a little bit more prosperous, so does the environmental awareness and the ability to influence the governments, which may be one reason governments don’t like people to get educated.

MR. WEBB: Okay, we’ve got another question in the back.

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Q: Hi, my name is Reema Hibrawi and my question is a little bit similar to his. It talks

about how when water crosses – water resources cross boundaries and there’s political tensions arise because of it, how do these different countries or states find solutions to distribute the resources without damaging the environment and maintaining good relations?

MS. MCKEITH: Could you repeat the question? MR. WEBB: The question that I heard was how do these various states – I mean nations

– balance their needs to both do the environment and manage their water resources. Did we capture that? Mark?

MR. BERNSTEIN: I don’t think anybody knows that one. A lot of times it’s going to

come down to fighting. But again, I think it comes down to information and helping countries find technology solutions to their problems. So if you’ve got a country downstream that is short of water because they’re using too much upstream, then maybe the country upstream needs to help them build a desal plant if they want to keep using it.

Somehow creating these international cooperation elements, we know for other things is

really hard. It’s going to be even dramatically more hard for water until real on the ground crises continue to exist for a very long time. I hate to be pessimistic about that, but I just think it’s going to come down to a real, real crisis forcing people to get together to come up with solutions or a war.

MS. MCKEITH: I hate to dominate but I’ve got something to say on this issue too and

that is for a long time, environment is looked at as kind of a left-wing green issue versus economics and in our country, I can’t speak as well internationally, but in our country, that’s been the battle.

And I think with the British Petroleum disaster, one thing people have to start realizing is

that not looking at the environmental consequences, having NEPA categorical exemptions, allowing things to be done quickly can have tremendous long-term economic consequences.

And I think that once it is that people tie the environment and water management more to

a healthy economy and a good standard of living, we’ll be able to get parties on both sides of the political spectrum to really think about these issues because all of a sudden all those oil republican guys, they’re not that upset about a stricter permitting process all of a sudden because they’re begging to see how this is going to affect their economy and their backyard.

So they’re hard to tie together and I think that at least our country, because we are more

mature in our development of laws and our implementation of laws, can serve as an example. I don’t think we’ve been a great example though. I mean, that’s been my experience. Again, I’m hopeful that maybe that will change because of forums like this. But we have a way to go.

MR. WEBB: Thank you. Let’s move to another question.

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Q: Hi. My name is John McDonald. I’m founder and chairman of an NGO called Global Water in 1982. I want to share some information with the group this afternoon about a major policy decision that was taken by the Millennium Water Alliance, an NGO created 10 years ago, which affects what we’re talking about today.

Millennium Water Alliance is made up of the major NGOs in the United States working

internationally: CARE, Catholic Relief Service, Church World Service, World Vision, Mercy Corps, a dozen NGOs and Global Water. It was a board meeting last Thursday, just a week ago, in which I proposed to this esteemed group that they refocus their energies on sanitation in schools in the Third World.

Most people in this country do not realize that 4th and 5th and 6th grade girls drop out of

school because there are no sanitary facilities. They don’t want to go off in the bushes and get beat up or get raped and so what we have found in Global Water, we have done this in 20 schools in Guatemala, when you put sanitation facilities in the schools, the girls come back to school.

Now, education is the foundation for development and so I proposed that the Millennium

Water Alliance, as a major policy decision, dedicate its future efforts to bringing water and particularly sanitation to the schools in the third world so girls would go back to school. That proposal was adopted unanimously. Thank you.

MR. WEBB: Thank you. We have time for one more question. I’d like to – excuse me, can I have the microphone here in the front? Thank you.

Q: Martin Apple, Council of Scientific Society Presidents. The problem – I’m going to

stick to local, the United States. The question is, how can we ever have a water policy? We have, I believe, 16 subcommittees in the House and the Senate overseeing water with absolute control.

We have, as far as I can roughly guess, five different systems of water laws, starting with

New England coming from English water law, all the way to California which had Spanish water law and all of the things in between because of how we were settled.

We do not have a capability that I can see of integrating a national plain in water. But

you are proposing that we should try. So how should we try? MR. BERNSTEIN: Piece by piece. I mean, we don’t have an energy policy either and

we’re not going to get a comprehensive energy policy. Sorry, I would love to have one but it’s not going to- maybe we’ll get some things but we

can build sets of building blocks piece by piece by tackling specific issues that can pass and built them up until eventually you get a national water policy and you’ve got to find the key things that have to happen fast to make the biggest impact and get them done now, not wait for the bigger pie to happen.

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MR. WEBB: Tanya? MS. TRUJILLO: I don’t disagree with that. I think we have many tools available now

that are being implemented and there is quite a bit of interagency dialogue and we can just from a congressional perspective continue to stay on top of what they’re doing.

MR. WEBB: That’s a loaded question. It was a great question but none of you want to

touch it. MS. MCKEITH: One thing is fortunately we have one judicial system still and one thing

that’s starting to happen is that the powerful water agencies and other interests don’t want courts reviewing their decisions and that I think infringes on everybody’s constitutional rights and I think you have to at least one mechanism by which some of these things can be questioned.

But I think all you can do is hit the low hanging fruit an hope because if there is ever a

disaster, then we tend to fix things because it focuses our attention and one thing that would help is if men of good faith, whatever the means, or women, got together without regard to the government or their own interests and came up with plans for how to address these issues and then we would have something to give political cover to Bingaman and to other people in Congress to try to pass.

MR. BERNSTEIN: We do not need a big comprehensive policy. We need to attack the

pieces and get them done. MS. MCKEITH: I agree. MR. BERNSTEIN: And there are really big pieces that we need to do and they’re not

going to be easy. We need to get them done. Eventually they may bring themselves back into a – bring themselves into a national policy. But anytime we try to do a comprehensive national policy, to get it passed, it has to – it gets watered down and all the special interests get their little pieces and then you don’t have anything really useful.

So I really think we – there are critical things we need to do. We need to fun technology

development. We need to put emphasis on using less water. We need to create curriculum for kids those are things I said before. Let’s do them. They can be done now and then we can stat building stuff later.

MR. WEBB: I’ll call you back to order in just a moment. (END)

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CENTER FOR

STRATEGIC AND INTERNATIONAL STUDIES (CSIS)

COPING WITH DROUGHT AND WATER SCARCITY:

FUNDING AND RESOURCES

MODERATOR:

ERIK WEBB,

MANAGER, GOV’T RELATIONS OFFICE, SANDIA NATIONAL LABS

SPEAKERS:

TIM BRICK,

CHAIRMAN OF THE BOARD,

METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA

STEVE GUSTAFSON,

VICE PRESIDENT,

POWER/WATER BANKING GROUP,

COBANK

FLOYD WICKS,

CONSULTANT TO PRIVATE WATER COMPANIES;

FORMER PRESIDENT AND CEO, AMERICAN STATES UTILITY

SERVICES, INC., CHAPARRAL CITY WATER COMPANY

FRANCESCA MCCANN,

MANAGING DIRECTOR,

WATER CONSULTANTS INTERNATIONAL

DAVID NAHAI,

SENIOR ADVISOR, CLINTON CLIMATE INITIATIVE;

PRESIDENT, DAVID NAHAI ASSOCIATES

CHRIS FRAHM,

ATTORNEY/LEGISLATIVE ADVOCATE,

GOVERNMENTAL RELATIONS AND NATURAL RESOURCES,

BROWNSTEIN HYATT FARBER SCHRECK, LLP

THURSDAY, JUNE 17, 2010

2:00 P.M.

WASHINGTON, D.C.

Transcript by

Federal News Service

Washington, D.C.

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ERIK WEBB: Thank you very much. As we move into our third panel, I want to go

ahead and begin our introductions. But this particular panel, while they have a large array of experience and activities that they’ve undertaken, one of the things that we’ve tried to do with this particular group is put together individuals who’ve had an experience that revolve around some of the financial or fiscal problems associated with water-resources management, both domestically and internationally.

And we’ve asked them to, again, identify policy issues and/or strategy concepts that

would help us address some of the financial elements. It certainly won’t limit them to that area of space, but that’s one of the things we were hoping that we could talk about in this third panel.

In this panel, we have Tim Brick, who’s the chairman of the board of the Metropolitan

Water District of Southern California; Steven Gustafson, who’s the vice president of water and power banking group at CoBank; Floyd Wicks, who has a consulting firm at this point, H2Options, but he’s the former president and chief executive officer of American States Utility Services; Francesca McCann, who’s a senior analyst, Stanford Financial Group, David Nahai, the senior advisor to the Clinton climate initiative and the president of David Nahai, Associates; and Chris Frahm, an attorney and legislative advocate who does government relations, natural resources departments at Brownstein, Hyatt, Farber & Schreck.

As we have with the other panels, I’m going to ask each of them to make introductory

comments for three or four minutes and then we will take questions. Please join me in welcoming our panel, thank you. (Applause.)

TIM BRICK: Hi, I’m Tim Brick and I am the chairman of the Metropolitan Water

District of Southern California. I’m also on the board of the Alliance for Water Efficiency, which is a national organization that is building a coalition and organizational strength in order to implement water efficiency at every level, and trying to learn a lot from the energy industry and the kind of work that has been done there in order to improve energy efficiency.

We’re supposed to talk about funding and resources, and it’s a curious thing because

there’s a lot of – there’s so much difference, and yet, there’s so many similarities. I’m a great student of water around the world, and I have benefited greatly from a trip last year to Australia, in which we looked at the conditions of how they’ve responded to drought and water scarcity.

And in Southern California, of course, we’re the victims of a 10-year drought in the

Southwest and very severe dry conditions in Southern California for the last three years until this year, where we had, basically, a normal year. But we’ve still had to impose upon our customers, who are 19 million Southern Californians from Ventura to the Mexican border in Southern California a second year of shortage. So we’re cutting back 10 percent on supplies, which is the second time that we’ve had to do that in our 80-year history.

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We’ve moved from a situation, we believe, that because of environmental problems that have been created by water importation schemes, and such, as well as increasing population and expanding – and the problems related to climate change – that we once planned for looking at the water cycle, basically seven years in which we would store water to be able to withstand three dry years. And that was kind of the old planning paradigm.

We’re now looking at it, and we believe, basically, we might have three years out of 10 in

which we can store water and seven years in 10 in which we’re going to have some sort of a deficit situation. And indeed, on the Colorado River, the scientists are projecting that there’s likely to be a 10 to 20 percent reduction in flow on the Colorado River. Other systems are going to be stressed, as well. So the challenges of drought and scarcity are much more real in our region, which as always been very proactive in its approach to dealing with drought and scarcity because we have very dry conditions.

Southern California is basically either a desert or a semi-arid region. And we provide

water to that region. Now, the context of, you know, how do we provide funding and resources for that – well, looking at the global situation, I’m fairly convinced that, really, the problems we have are basically the same. The solutions we have are basically the same. The difference is that we have far greater financial and political resources to be able to deal with it.

In Southern California, the average water bill is $45. The challenge, really, is convincing

people, politically, that it is worth making an investment in the future and convincing them that they’re going to have to pay more in order to have reliable water supplies in the future. Compare that $45, say, to your cell phone bill or to your electric bill, which is likely to be three to four times higher, or to other basic services that you have. We need to convince people that, that investment and that higher rates, first of all, are inevitable, and secondly, are desirable. Thanks very much.

STEVE GUSTAFSON: Hi, I’m Steve Gustafson. I’m with CoBank out of Denver,

Colorado. I’m a farm-boy from Nebraska, been in the banking business for firm credit for about 36 years and have been financing infrastructure, primarily in the water area, for about the last 21 years. The size of my portfolio has entities that are the largest water systems in the United States, down to some of the smallest systems, too. So I’ve had a chance to look at this industry from top to bottom.

One of the things I want to talk about is that we have some structural issues that need to

be dealt with in the water purveyors in the United States. We have 54,000 water systems today. There’s only about 4,000 of them that serve more than 1,000 connections. And so where you have issues of attracting capital, you’re going to have a harder time if you’re in that bottom 50,000 group to be able to attract capital. So then where does that capital come from?

Because these gentlemen sitting on both sides of me – they have no problem getting

money out of the capital markets because of their sheer size of where they’re at. And so the investment community loves the water arena. And Francesca will probably talk about that, but this is a very solid place to park money. The problem is, is these small entities that need to be

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dealt with – the federal government and the state governments – state revolving loan funds – have had to put money in there.

And if I could just say policy-wise, I would suggest this: that the money that the federal

government puts back into these rural water systems or these small towns out there, there should be some kind of a connection back to the fact that these systems need to be merged. They need to be consolidated and to become larger units so that they can survive on their own and be able to attract the capital that they need.

And the government shouldn’t play the role of more than jumpstarting some of these

entities, and they should not be life support for them. Jumpstart them, not life support for a long time. And the top snippet I had is, water is too cheap in this country. Water is too cheap. And I think we’ve had policies in this government that have enabled those prices of that water to be too cheap with grants and aids.

FLOYD WICKS: Kind of crowded over there. (Laughter.) Oh, sorry. (Laughter.)

Anyway, I’d like to thank Jim Thebaut personally because I’ve worked with this fellow for the last – seems like 50 years. I know it hasn’t been quite that long, but I’ve had the distinct pleasure to work with Jim and, frankly, with Paul Simon, prior to his recent death.

And I was – it was my pleasure to have been on a water panel with Paul Simon several

years ago. And to be on that panel, you had to read his book, called “Tapped Out.” And in that book, I found a world of interesting factoids, one of which was, 70 percent of the world’s population happens to live within 50 miles of an ocean. I’ve never been able to do anything with that factoid, but it’s quite interesting, nonetheless.

And another one, very sad to say, is that a child dies every 15 seconds from either lack of

water or poor water quality. And I believe that a lot of people in this room have done a lot of things toward resolving that issue. I’ve been on the board of Water for People. I think that’s a great organization, as well as WaterAid. So we can all, in this room, further those causes. I’d really encourage you to do so.

A couple other factoids that weren’t in the book, but one being, the state of California has

a tremendous amount of water resources and can, frankly, serve the entire population of this country, if you could distribute the California water throughout the country – cannot – but the fact is, 85 percent of that water is used by agriculture. And without agriculture, California would not be able to serve 42 percent of this country’s needs in the food-source area.

But following up on Chairman Brick’s comment, as well as Steve’s comment about

cheap water, I’m going to prove water’s cheaper than dirt. This is my own factoid. The average consumer in California – the residential use – is about 550 gallons a day. That’s equal to more than 4,000 pounds of a natural resource. For $1.50 a day – that’s your $45-a-month figure – you deliver to a person’s tap 4,000 pounds of water.

And that’s two tons for less than $2, and it’s cheaper than dirt. You can’t get two tons of

dirt delivered to your home. (Laughter.) That’s probably the only thing you’re going to

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remember from what I said today – (laughter) – but people don’t know what they use in water. And the goal in California is 20 percent reduction by the year 2020. Those reductions can be done, frankly, by just simply making policy decisions to use best available technology in all new homes, or any time a home is sold, you put the best new technology in those homes.

And that best technology – one example is right in this room. The Niagara Corporation

just came out with a brand new toilet – eight-tenths of a gallon per flush. It’s phenomenal. Why can’t that be a policy change that this country really recognizes, that those technology changes are here today and they can be done far cheaply and quicker than year 2020. Thank you, I’m out of time. And now, I’m out of room.

FRANCESCA MCCANN: Gotcha. All right. So Jim, thank you for bringing all of us

together with your event last night and then the continuation at the event today. And everybody at CSIS, thank you for coordinating and, again, bringing this whole group together today.

So looking at kind of the financial issues in the sector, my background is covering the

water sector from a Wall Street perspective, which I did for about six years. And as Steve mentioned, the constant feedback that I heard from institutional investors was, I love the sector; tell me how to play it. You know, there’s a handful of publicly traded companies, limited market cap. All of those companies are expensive. Give me something else.

So there is this pretty tremendous gap between the money is there, the interest is there;

how can that be applied? After Wall Street, I started my own consulting practice about a year ago and have been able to tap into certain solutions, so to speak, or certain avenues through which to do that. And I’d say my key theme is this critical tie-in of the private sector the development world to – you know, as we look at policy changes and water scarcity and drought, critical water and sanitation issues, looking at it from an investor perspective, looking at it from the corporate perspective. And how do we find economic drivers to increase the interest and investment there?

So one critical component, as a solution, is creating this corporate water responsibility

from corporations, from investors. You know, there is a lot of money on Wall Street. There’s a lot of money in the private sector. Let’s tap into that, and kind of, how do we bring that into the picture?

The other piece, I would say, is calling on companies to develop sustainable water

practices and water-management practices, both in water use and what that means in terms of water reuse, water recycling technologies, and then water treatment. And the development of some framework or model to do that, you know from a corporate reporting standpoint, that, then, investors can look to and monitor.

We’re beginning to see this a little bit. You know, some of the mining companies we see

do that. But as we’re talking about, you know, the global water sector, mining, oil, pharmaceutical, agricultural – you know, the power industries – these are huge water users, a lot of which don’t necessarily practice sustainable water management, and there’s not necessarily any demand to do so.

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I’d say another key solution is looking at innovation in technology-sharing. Grame, on

the first panel, mentioned this. And Jim has done a pretty phenomenal job tying this together, you know, and starting that. So whether it’s bringing Australian and Israeli technology companies here to the U.S. to share those practices and looking at how, again, as Grame mentioned, decreasing water usage, decreasing energy and how that has really sparked innovation.

And then understanding water usage and risk. Right now – Jerry mentioned this in the

first panel – that we’re losing the capacity to manage and monitor water usage. So World Resources Institute, for example, is developing this water risk index to be used by corporations, by investors to look at water risk. What does that mean? What is the future of that? So just in conclusion, you know, as we’re driving the policy side and looking at policy initiatives and education, which is critical, and technology innovation, really including the corporate buy-in and the investor buy-in, both from a financial perspective and from demand. (Pause.) Didn’t even get the red card. (Laughter.)

DAVID NAHAI: Actually, I really liked where I was sitting, so the fact that I’m

standing up here has nothing to do with the company. (Laughter.) Well, good afternoon, ladies and gentlemen. It’s certainly a pleasure for me to be here to share the dais with such an esteemed group of panelists. Thank you, Jim, for doing this. Thanks to CAIS (sic).

My name is David Nahai. I serve as senior advisor to the Clinton climate initiative, but

before that, I headed the Los Angeles Department of Water and Power. And I spent 10 years on the Los Angeles/Ventura County Regional Water Board. And I do an awful lot of consulting on water issues now. So I come to this from a whole bunch of different angles. And I’m so happy to see a panel that is actually discussing the financial implications of all of this.

So often, experts stand up and they say what it is that we need to do without really telling

us how things need to get done. And at the end of the day, it all comes down to the ability to pay for the infrastructure, for the outreach campaigns, for the educational campaigns that need to be done.

I read an article recently in Bloomberg that said that water today is more valuable than

oil. And the reason for that was that oil investments apparently give off something like a 29 percent return, whereas water investments, especially in the Third World, apparently, these days, give a return of something like 35 percent. So it’s a matter of follow the money. And why is that?

It’s because in 1995, the world population was 5.7 billion; in 2006, 6.5 billion; by the

year 2050, it will be 9.5 billion. The comment was made earlier that we have the same amount of water circulating through the planetary system as we had in the days of the dinosaurs – maybe. But we didn’t have 9.5 billion people wanting to drink that water and then turn it into wastewater.

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In the developing world, talking of which, something like 90 percent of the wastewater is discharged into water bodies completely untreated. And all of this is going to get much worse as climate change starts to take hold. Now, these horrors may seem far away from us, here in the United States of America, but they’re not, really. And I was so – it was so instructive to listen to Grame talk about what happened in Australia and the fact that this creeps up on a society.

It’s estimated that California is going to have 75 million people by 2020 – Southern

California, 41 million people. Now in Los Angeles, I’m happy to report that during my tenure, we started to look forward, started to anticipate the water problems we were going to have, and came up with a water supply plan. It involves conservation, recycling of wastewater, both for potable and non-potable purposes, rainfall capture.

You heard earlier, I think, from the EPA representative that something like 50 to 60 percent of our rainfall is completely wasted. It hits impervious surfaces and washes out to the ocean completely untreated. That is the phenomenon of urban runoff pollution. Other strategies are aquifer remediation, new building standards and storage programs.

Now, the question becomes, how to pay for all of this? I understand that the capital

markets are there to serve us, but the fact is that at the end of the day that capital has to be repaid with interest, which means that we have to have – all of us – a conversation with the ratepayers.

And talking to the ratepayers is an art and a science all its own because it requires a

tremendous amount of education, especially when people don’t feel that there is a crisis because you have to convince them that this is an investment worth making. In order to do that, ratepayers have first of all to believe that they are being turned to last, not first. That means you have to convince them – I’ll be just a second. Don’t send me off yet.

So we have to convince them of internal efficiencies. We have to convince them that

we’re serious about polluter-pay principles. We have to convince them that we’ve looked at every single saving that we can have, that we’ve tapped other sources of income. And finally, we have to have a very, very wide-ranging education campaign – I mean, the ratepayers, the business community, the labor community, the environmental community, the faith-based community – anybody who will listen to us. We have to reach out to them to convince them of the justness of our cause.

Orange County in Southern California has done this with tremendous success. And as a

result, Orange County today is serving recycled waste water to its citizens and they’re drinking it and very happy. Thank you very much. (Laughter, applause.)

CHRIS FRAHM: I’m going to pick up in many respects where David left off. But first, I

had to kind of chuckle when Katherine said earlier that she was the kind of doctor that didn’t help anyone. And I thought, I’m a water lawyer. I think I may be the kind of lawyer that doesn’t help anyone. (Laughter.)

And picking up on some of Melissa’s comments, I really did want to say that I think a

good fight is often not only very worthwhile, but very necessary to try and achieve the kind of

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legal certainty that we are evolving to in our society. So I expect, frankly, that business is going to be very good for water lawyers over the next couple decades. And California, if you have kinds in college, or thinking about law school, definitely I would make that recommendation.

I’m going to talk primarily about where my expertise is, which is in California and

particularly in Southern California. And as far as the international issues go, there are many gurus in this room. And it’s not my area of expertise, but I do believe when we look internationally, solutions have to be as much local in that regard as they need to be when trying to resolve issues in California.

We hear a lot about regional planning and my good friend Mark Pisano is one of the

experts. But I think that there’s also a very important think called local buy-in. And when you don’t have local buy-in to a regional plan, what do you end up with? You end up with a lot more fight, a lot more battles.

And that’s not to say that that’s all wrong. The way that water has evolved historically is

it did start with local systems. It did start with local resources. We have cities and communities that are built up. The truth of the matter is that different regions have quite different water-supply realities that they have to work with. And if we’re not respectful of what those local perspectives and needs are, I think what we end up with is just a lot more battle than is, frankly, productive.

On the timeline of where we are in California – and I also noticed the comments that

were made about our friends from Australia, saying don’t wait until it’s too late – we’ll, we’re already there, in my opinion. In California, it’s too late. We were created – Southern California largely depends on large imported water-supply sources from both the Colorado River and from Northern California.

Melissa spoke earlier about some of the challenges that are working their way through on

the quantification settlement agreement, the settlement between the states. In my judgment, that will all be resolved. The battle’s important. Looking at the issues are important, whether it’s between and among the parties or working its way through the court system. That’s the system that we have and it’s an important part of the process.

I consider what we’ve done on the Colorado River collectively to be probably the single

most important transaction that has occurred in California in the past few decades. Has it been a challenge? Absolutely. But is it worth the effort? Absolutely.

Let me put one big placeholder in for the private sector. For those of you who don’t

know, that did start out as a transaction with the Bass brothers of Fort Worth, Texas. Someday I’ll write a book about that. It was a good thing. It evolved into an agency transaction and ultimately, all the parties on the Colorado River. But the private sector played a very important role in the genesis of that IID water-conservation and transfer agreement, which from my point of view is still very much a model for what can get done once you realize that something has to be done.

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I give a lot of credit to the San Diego County Water Authority for being the Met member agency that stood up early – and I think Tim, at this point, would agree – that stood up early and said, you know, we’re looking down the barrel of a gun and we need to get something done and we need to do it now. And it’s taken a lot of initiative and that’s what’s going to pay off.

And time’s going to be short. What do we need to do in order to get things done going

forward? First of all, let’s lay off the private sector a little bit. There’s a big culture in California water that says the public sector is better than the private sector. It’s not true. There’s good public agencies and projects and there are good private-sector projects as well. And I believe that we’re going to evolve past that because we’re going to be – not because we’re smart but because we’re desperate. (Laughter.)

We need more private-sector dollars on the table. I think in the future, better projects will

get done locally and on the merits because we’re not going to be able to afford the kind of political shenanigans. They’re expensive. You know, it’s religion. That’s expensive. And I think what’s going to happen – and David is completely right on, we’re not going to get anywhere without willing ratepayers, without ratepayers that believe that we’re making good investments, that it’s in their best interest.

Can we tell that story? Yes. Are we going to say water’s too cheap? No. Because that’s

not going to be a message that’s going to resonate with our ratepayers. So that whole evolution, that evolutionary process that we need to undertake as both public- and private-sector entities in California is really what I think the challenge is.

The challenge isn’t that our economy can’t sustain it. The challenge isn’t that we don’t

have enough money to do it. The challenge is the human challenge of getting our people to support the things that need to be done to have a reliable water supply, not only in California but elsewhere.

MR. WEBB: Thank you all very much for your initial comments. We now have time for

a few questions. We’ll take the first one here and the second one there. Can the microphones please come forward? That first one over here on the corner table.

Q: Hi, my name’s Don Kaufmann (sp) with a company called Koenig U.S. (ph). And

I’ve talked to a lot of people during this conference and they have different water problems and different things around the country. I’m from South Florida and one of our biggest water problems is – we have plenty of water. We’re a peninsula. We have plenty of water around us.

But our management district, when we get a big rainfall, they open the floodgates and

dump all our water into the ocean. We’re not allowed to water our lawns, yet they give a $1500 to a bottling water company that’s drying up our aquifers.

So I think a lot of those need to be addressed to, but I guess my question is, how eager –

are the bankers and the funders willing to invest in new technologies? Because there’s a lot of new technologies out there. There’s technologies where you can make water from the air.

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There’s several other technologies that I’ve heard that are good. But I guess my question is, how eager – is that industry willing to invest in the new technologies?

MS. MCCANN: I’ll start with an answer to that. And I’d say it’s a great question. And

on the industrial side, there is certainly more movement and greater will, greater interest in those investments. Oftentimes, on the municipal side, that is a slower process. And overall, looking at the water industry versus kind of other areas that we see in clean tech, water is a slower-moving sector.

You know, so the excitement may be there, the technology solutions may be there, even

investment may be there, but then adoption of those technologies are often slower than predicted. And then that, you know, kind of as a second round slows down investment to some extent.

I think we see that changing. If I look even five years ago – certainly, eight or 10 years

ago – there was much more reluctance. You know, now there is some ramp-up. I would see that trend continuing. That being said, it’s not exponential growth.

MR. GUSTAFSON: Maybe I’ll add to that. You know, the financial community’s had

its problems in the last couple of years, so we probably have a lot more conservative credit committees today making decisions. We’re taking a more conservative approach.

There comes a time with new technology – is it equity-driven, or can you leverage that

equity with debt? And it all depends on what kind of risk is associated with it and what kind of business plan that’s there and what’s the reasonableness of it being carried out and being successful. So I think it’s tough to have a new idea and to borrow against it and put debt against it in this particular period of time. There’s not as much venture capital out there to back parties to do this today, but as this economy starts to recover more and more, those funds will start to flow.

MR. NAHAI: Hopefully, we’re beginning to see more liquidity return to the markets and

therefore we’ll see more of a willingness to invest, but at the end of the day the investor – you know, whether it’s loan money or equity money – that money is looking for a return on that investment, which means, again, that there has to be support at the local level.

There have got to be ordinances that enable things like greywater assistance or cisterns.

There’ve got to be rebate programs that enable things like porous parking lots. There’ve got to be mandatory programs that mandate new appliances and new building standards, so that water conservation becomes an integral part of building design. And then there’s got to be ratepayer acceptance so that the bonds or the equity investment can indeed be returned, be repaid with a decent rate of investment.

But what you’re talking about, by the way, is not limited to Florida. I mean, I remember

at DWP, at LADWP, right at the same time as we’d imposed restrictions on outdoor watering to only two days a week, right at that time TV cameras were showing torrents of water flowing down the L.A. River – of rainfall flowing down the L.A. River to be dumped in the ocean.

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We’ve got these contradictions in our systems and we have to address them. But it requires, I think, a really serious talk with our ratepayers to make sure that they get behind the investments that need to be done. And then the capital markets will come and find us.

MS. MCCANN: And actually, just to add one other piece to that, you know – talking

mostly from the municipal side – I would add the regulatory environment on the industrial side. As we see regulations changing – again, be it in the mining industry, in the oil industry – that will then drive more investment in some of the technology solutions, particularly in – you know, we’re seeing that a lot in water reuse, water recycling, energy-efficient water recycling.

MR. BRICK: I think the level of investment, particularly by, say, the venture capital

community, has been very small in terms of real innovation in the area of water. But I think it’s growing. I think there’s an increasing focus on it and there’s a series of groups that are really doing a lot of work in order to create a greater sense of the need and the opportunity for smart investments in new – not just new infrastructure, but new technology.

I’d like to talk a little bit about the role of public agencies in terms of trying to foster

some of that. We recently did an event in Hemet at our Diamond Valley visitors’ center. Hemet is kind of a remote location in Southern California. We had 900 people there. It was all innovators and investors, people concerned about developing new technology.

And our role is really to service the catalyst in terms of bringing people together so that

they can make contacts and show some of their new technology and meet with investors and others in order to come up with the solutions for the future. We also have a program, our Innovative Conservation Program, in which we offer a special subsidy for new technologies. And through that program we’ve been able to facilitate the development of products like a water broom which uses a much more intensive kind of spray and reduces the amount that’s needed for special applications and spray devices.

And through the encouragement of – both subsidies and regulation – we’ve been able to

promote the dramatic improvements in toilet efficiency. So I think that the point you raise is very key. I’d like to call to your attention a group called Imagine H2O, which is out of northern California, which has done an international competition on innovation in water and is really focusing on trying to develop a lot of interest from the venture capital community and broader funding sources for new technology.

MS. FRAHM: Just to add one – Tim’s use of the word “subsidy” reminded me how

much I hate that word. (Laughter.) Mainly because I think, you know, we’re at a turning point in, at least in California, I think we’re at turning point where we are literally trying to evolve off of a subsidy-based water economy, which is what has created the water-is-too-cheap mindset, which is absolutely accurate.

We created that when we built the state water project and when we, you know, back in

the days when the economy of water was so much different than it is today. And we’re really struggling right now to kind of get off the subsidy bandwagon because what it really does is screw up the pricing signals that are out there.

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And it’s important right now, as every agency is looking at investing very substantial –

billions and billions of dollars that will be invested in California over the next couple of decades. And it’s important that those investments be in the most cost-effective projects and that we do the things that are smartest because we’re coming off – you know, we’re kind of right on the edge of, now, the old world as we know it coming to an end.

And it is over, but there’s a lot of people that just – including a lot of water managers

haven’t woke up to that idea yet. But the truth is, it’s over. And so the – what we do next has to be smart. And the more subsidies we have flying around, the harder it is to figure out what makes sense.

If you leave it to people to figure out – if you say to somebody, are you willing to buy

that? And they say, yes, I am willing to put my money on the table, it’s probably a pretty good, you know, that’s a pretty good sign that somebody thought it through. But when somebody says, do you want to buy it? And they say, well, you know, David, would you mind kicking in about half of – and David says, well, okay, you know, and he may have any set of agenda issues that would motivate him to do that, that might have absolutely nothing to do with it being a good water project.

Those – that’s what we need to bring an end to and I think we’re going to get there

because I think it’s hard to fight economic reality and I think that’s where we are now. But subsidies, I think, are going to be very much the subject of conversation going forward, really, from this point forward.

MR. NAHAI: Okay, well I just wanted to pick up on Chris’ point and just make sure,

though, that we draw a distinction between subsidies and incentives and rebate programs because we have to have incentives and rebate programs.

In L.A. for instance, we would – we had a rebate a buck a square foot for anybody who

would get rid of their lawn and put in, you know, drought-tolerant landscaping or 300 bucks for somebody who would go and get rid of their old water-inefficient clothes washer and buy a new one. Those kinds of programs are needed. At some point, we’ve got to get off of them being incentives and move to more mandatory programs. But to begin with, they’re necessary to pursue. One of the things I want to say is –

MS. FRAHM: Can I agree with you quickly? MR. NAHAI: Yes. MS. FRAHM: Consumer-level? Absolutely. Agency to agency? MR. NAHAI: Well, that’s something else. MS. FRAHM: Bad.

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MR. NAHAI: That’s something – (laughter) – but the other distinction that I think we have to arrive at is that there’s a difference between the rate and the bill. Now, this difference to the consumer between the rate of the water and the bill that they pay. If we can get the consumer to conserve water, then the rate can go up so the agency is able to meet its infrastructure needs, assuming that they’re efficient. But the consumer’s bill doesn’t have to go up terribly much.

And also, in grade-setting, we can deal with things in such a way so that those who truly

use the most pay the most and so that we don’t penalize those who are conserving already. So just because the rate goes up doesn’t mean that the bill, especially to those who are perhaps, you know, less able to fend for themselves, doesn’t mean that the bill for those people would necessarily have to go up.

MR. WICKS: Before I got the dreaded red card – (laughter) – I started talking about best

available technology and it goes to your point in southern Florida or anywhere in the country for that matter.

If you – in California, 550 gallons a day for a customer – if that usage has to drop by 20

percent, that’s 110 gallons – if that 110 gallons could be charged in the rate, literally, at five times what the current rate is, then you meet your goal a lot quicker and you can then get higher revenues coming in to support these new technologies. Have those dollars go toward those new best available technologies and see how they work on a real-time basis. Thank you for the red card. (Laughter.)

MR. WEBB: I had one more question that we’d started and I’m going to run out of time,

so I’m going to ask you to be short, but let’s go ahead and ask this last question. Q: Hello, my name is Diana Rivenburgh and my company is Strategic Imperatives. And

I’m one of the people that believes that for real change to occur, we are going to have to heavily involve business and industry. And while there are several corporations, I think, represented here in the room, most of the folks here are from NGOs, government agencies, regional water authorities, et cetera.

So how do we engage business and industry? How do I talk to my clients around their

sustainability strategies to say, this is why you need to be involved in water now? We’ve talked about it on a macro level. We’ve certainly talked about it with several specific industries like agriculture, for example. But how do we get that message across? What’s in it for them? What’s the clear and concise message for them to be involved now?

MS. FRAHM: Where are you located? Q: In Atlanta, another region that’s struggling with water issues. MR. WEBB: Let’s start on this, then, Tim? MR. BRICK: Well, it really needs to be an increased focus. I agree with you totally and

we’ve actually succeeded pretty well in California, largely by working with business associations

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to create a lot of sense about what the big issues are with regard to the California water picture and the critical importance of the bay-delta ecosystem and of water-system reliability coming through the bay-delta system.

We’ve been doing all sorts of outreach directly to trade associations, economic

development associations, chambers of commerce from throughout the state of California. And we’ve been doing a lot of tours as well. On another level, there’s a focused outreach going on to businesses with regard to conservation and conservation programs and how they can take advantage and on-site recycling and other kinds of steps like that.

And there is the whole corporate water footprinting movement that is going on that is

doing some very interesting work in terms of setting kind of best standards for how businesses use water and how they can reduce their water. And we find some outstanding leadership by some corporations which are announcing that they’re going to be water neutral, you know. Pepsi-Cola is going to be water neutral and other major corporations are really stepping up to the plate to taking on the challenge of being more responsible about their water use.

MR. GUSTAFSON: Last week, I was at Corporate Water Vision 2010 that was here and

there was a panel that had all of the – it had a number of major companies, including DuPont, IBM, also POET, which is the largest ethanol producer here in the United States. They all had a focus on reducing the amount of water.

They tried to identify which plants they had operating in the world that were going to

have water issues long term and they were trying to address that and drop the amount of the water consumption by 20 percent. But they had some goals there. It was kind of refreshing to hear that large community doing that, so –

MR. WICKS: I think you’ve hit a good point here regarding the impact companies or

private enterprise can have in this area. And I may be showing a little bias, but I think government shouldn’t be in business but, on this, more than a little biased – (laughter) – but I think the private sector can come to the table. And frankly, a lot of them are coming to the table, now, with solutions.

And it’s really a nice segue into really why Jim Thebaut is putting this documentary

together, to get the educational outreach in the right hands so things can be done. Now, I’d encourage every company in this room to line up and help Jim get this documentary completed. And I, of course, have been saying that for a number of years now and lock the doors because I’ll take credit cards and checks and – (laughter). Thank you.

MS. MCCANN: Thank you. So from a couple of standpoints, one is certainly the kind

of P.R. perspective of it and I think some companies are looking at their corporate water, you know their water footprinting from that perspective, which is fantastic. If that’s the driver, great. I think also a direct economic driver.

So if you put in, you know, water-recycling technologies, you will reduce your water and

energy costs by 22 percent over the next two years. I mean, so making a distinct, you know,

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economic incentive and kind of mapping that out. A lot of times, that is what drives, you know, the investment in both the interest and then the investment in new technologies there.

MR. NAHAI: I would add that apart from giving Jim money, which everybody should

do, but in addition to that, you should find out for your clients what rebates and incentive programs are available at the local level, at the state level and at the federal level. They – you know, or they should do some research into what’s available to them.

What’s going to happen and I was just in Atlanta and saw first-hand that the economic

ravages that that city and the state have suffered and the water problems. What’s going to happen is that the cost of water is going to rise and therefore, investments in water conservation technologies today are really investments worth making. But there may be lots of free things that they can get at the present time.

The office building in L.A. where my consulting company is replaced all of the water

urinals in two office towers and it didn’t cost them a penny because there was a rebate program offered by the city. And as a result, they’ve slashed their water bills dramatically. So there may be lots of things that they can take advantage of that, in any event, it’s an investment for them in the future.

MS. FRAHM: I think what I would suggest is having someone in your organization

become a dedicated water person. I think people will discover on their own that water is important either because they run out of it or because they notice that it’s costing a lot more than it used to. So they’re probably going to discover that on their own.

But I think as far as getting involved in finding the solutions, I think Las Vegas is a good

example of where the business community has been a very strong player. I know that that is the case in San Diego, played a very big role in the origin of the IID water transfer. It was very much driven by the business community.

Sunne McPeak up in Northern California, I think, a very similar type of situation. And

Tim’s right. I think that Metropolitan – particularly Gilbert Ivey there, has done an outstanding job of outreaching to that business community. So business absolutely needs to be a big part of the voice and the movement, if you will.

But it’s a job and nothing’s worse than if you’ve got issues with your – we didn’t have

too much time to talk about governance and all the problems that the overlapping governance creates in the water business, but a lot of times, it’s hard to figure out what the smart thing to do is. And so it’s good to have somebody that’s dedicated, has got the time to do it.

Most business people aren’t going to be in that category and nothing is worse than having

your chamber become a rubberstamp for some bad plan that some water agency did just because it put together that way. So that’d be my recommendation.

MR. WEBB: Based on the time, I’m going to conclude the panel. Please join with me in

thanking this panel and our previous panels for their participation. (Applause.) One of the

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things that’s come up throughout the day has been, really, urgency. And I use that term because we’ve had great examples from Australia. And I want to thank Grame for being with us to show what happens when the urgency of the matter is faced, the changes that can occur.

What we’ve had in our examples from the United States are varying degrees of urgency

on our problems, whether or not we’re looking in the distance or whether it’s immediate for us and how we can change when it’s urgent. What I want to do at this point is to turn the time over to Jim Thebaut, who has a few comments about what happens next so that you can understand the rest of our program. Jim, the time is yours.

MR. THEBAUT: I actually want to take the opportunity to thank a bunch of people. I

want to thank CSIS for hosting this event today and I particularly want to thank Katherine Bliss and Katryn Bowe. You know, you guys are great, terrific to work with. I want to thank the host of the last two days. Overall, American Water, the Metropolitan Water District of Southern California and the Australian Embassy. They’ve all been great and I really appreciate it.

I’d like to thank all the panelists today. You guys were terrific. I know this was kind of

like a, you know, a little different type of situation. But again, as I discussed at the beginning, there’s going to be a report put together and it’s going to have a lot of input, a lot of conclusions and that sort of things and hopefully will be a great tool for the future.

The report will not only be in a written report. We’ll try to get it online, probably on my

website, www.runningdry.org. So if you ever want to – you know, in fact, I would encourage you to go and take a look at it now. There’s a lot of good stuff on there.

And I want to thank all the – you know, the whole list of companies, nongovernmental

organizations and governmental agencies who helped underwrite these last two days. So listen, thanks a lot. I’ve got to run. I’ve got to catch a plane going to New York. (Laughter.) So – (applause). So thanks a lot. We’ll see you soon. We’ll do something again, pretty quick.

(END)

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