Cadiz Project to Provide $8 Million in Annual Savings to Southern California Water Users

New report shows that purity of Cadiz water to save Southern California water users $395 million over life of the Cadiz Water Project

LOS ANGELES--()--Today Cadiz Inc. (NASDAQ:CDZI) (“Cadiz”, the “Company”) released a new report prepared by engineering consulting firm CH2M HILL detailing almost $8 million in annual cost savings to Southern California water users that can be realized through the introduction of high-quality Cadiz Valley Water Conservation, Recovery, and Supply Project (“Project”) water supplies into the region’s water transportation system. By applying an existing salinity assessment model developed by the U.S. Bureau of Reclamation (USBR) and the Metropolitan Water District of Southern California (Metropolitan), the analysis shows that introducing Cadiz water into the Colorado River Aqueduct (CRA), which is one of the main sources of water supply for Southern California, will realize nearly $400 million in savings to regional ratepayers over the 50-year life of the Project ($203 million in today’s dollars). This same model was recently used to evaluate water quality benefits associated with the twin tunnel solution now being pursued through the Bay-Delta Conservation Plan process.

“Among the numerous public benefits of the Cadiz Project, which will bring jobs and sustainable water supplies to thousands across Southern California, is our high-quality, pure water, which can save Southern California residents, businesses and water utilities hundreds of millions of dollars,” said Cadiz President Scott Slater.

Groundwater at the Company’s property in the Cadiz Valley is low in total dissolved solids (TDS), which is the measurement of salinity or the concentration of salts and minerals (such as sodium, calcium and chloride) within a water supply. For example, the TDS measurement for Cadiz groundwater averages approximately 300 milligrams per liter (mg/L), whereas water in the CRA has historically measured 550 to 800 mg/L in TDS and requires treatment or blending before reaching Southern California water users.

High salinity is known to cause deterioration of residential, commercial, and industrial appliances, pipe infrastructure and fixtures. It can also affect crop production, damage irrigation infrastructure and weaken the ability to produce and use recycled water to augment California’s water supplies. Water over 1,000 mg/L TDS is considered too saline for most potable uses. Metropolitan, the owner and operator of the CRA, adopted a salinity management policy in 1999 which established a goal of average annual TDS levels below 500 mg/L in its water supplies.

According to a March 2013 report from the Southern California Salinity Coalition, an association of some of Southern California’s largest water agencies dedicated to salinity management, "increased salinity is one of the most under-recognized water quality threats in the Southwest.” USBR has also estimated that high salinity causes more than $350 million a year in damage to the lower basin of the Colorado River.

Stephen Hatchett, Senior Economist at CH2M HILL, conducted the analysis using the model developed by USBR and Metropolitan. He stated, “Based on the information we have on the quantity and quality of water from the Cadiz Project, the model indicates that the Project would provide significant salinity benefits.”

To provide its salinity benefits assessment of the Cadiz water supply, CH2M HILL applied the Lower Colorado River Basin Water Quality Model (“Model”) developed to compare salinity-related damages for regions of Southern California receiving water from the CRA. The Model has been used in various salinity damages assessments since its introduction, including most recently in the state’s August 2013 Bay Delta Conservation Plan Draft Statewide Economic Impact Report.

In its application of the Model, CH2M HILL assumed average CRA deliveries of 957,000 acre-feet/year and TDS in the CRA of 687 mg/L, the long-term annual average values being used in other planning studies. CH2M HILL further assumed that 50,000 acre-feet of water at 300 mg/L TDS would be introduced into the CRA every year based upon the Cadiz Project’s approved July 2012 Environmental Impact Report.

Additional salinity benefits will be achieved if, after subsequent environmental review, an imported storage phase of the Project is also implemented. The Model demonstrated that importing supplemental water acquired from Northern California sources via an existing 96 mile idle natural gas pipeline from Barstow to Cadiz may result in an additional $5.8 million annual salinity benefit when the banked water is delivered to the CRA. To add this value, it was assumed 30,000 acre-feet of water from California’s State Water Project at an average TDS of 240 mg/L would be banked at Cadiz.

Any introduction of Cadiz water supplies into the CRA in Phase 1 or Phase 2 will be subject to the review and approval of Metropolitan. To view the CH2M HILL Salinity study, visit: www.cadizinc.com.

About Cadiz

Founded in 1983, Cadiz Inc. is a publicly-held renewable resources company that owns 70 square miles of property with significant water resources in Southern California. The Company is engaged in a combination of organic farming and water supply and storage projects at its properties and abides by a wide-ranging “Green Compact” focused on environmental conservation and sustainable practices to manage its land, water and agricultural resources. For more information about Cadiz, visit http://www.cadizinc.com/.

FORWARD LOOKING STATEMENT: This release contains forward-looking statements that are subject to significant risks and uncertainties, including statements related to the future operating and financial performance of the Company and the financing activities of the Company. Although the Company believes that the expectations reflected in our forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Factors that could cause actual results or events to differ materially from those reflected in the Company’s forward-looking statements include the Company’s ability to maximize value for Cadiz land and water resources, the Company’s ability to obtain new financing as needed, the receipt of additional permits for the water project and other factors and considerations detailed in the Company’s Securities and Exchange Commission filings.

Contacts

Cadiz Inc.
Courtney Degener, 213-271-1600

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Contacts

Cadiz Inc.
Courtney Degener, 213-271-1600