Publications

- June 1, 2017: Vol. 4, Number 6

Like Oil and Water: It’s a case of environmental concerns clashing with infrastructure needs

by Burl East

The United States is facing a long-term problem when it comes to our water. The development of properly updated infrastructure to both deliver and store clean water is a basic — and now critical — need that has been neglected for the past 40 years.

To say our current state of infrastructure is lacking is an understatement. Consider Southern California, an arid and desert-like environment that has little to no domestic water supply. Meanwhile, about 20 million people inhabit the region and the population continues to grow. Providing water to an area such as this presents a huge challenge, for which there are currently no practical solutions.

Despite the clear need for improved infrastructure, the primary reason for this neglect is largely regulatory. Large infrastructure projects, such as water pipelines and reservoirs, require various levels of approval from a state governor, state legislature, the Department of the Interior and various federal agencies like the Bureau of Land Management (BLM), the Environmental Protection Agency (EPA) and the Army Corp of Engineers, to name a few. The approval process allows for multiple points of protest and litigation, and almost all large infrastructure projects face environmental controversy and legal action involving the building process. This litigation can add three to five years to all projects, and millions in costs. The uncertainty of the litigation also scares away equity contributors. The result is a political climate in which most projects are nearly impossible to move forward.

This past winter, California experienced a much-needed wet year, and most of the rainwater just ran off into the Pacific Ocean; the state has not built a reservoir since 1994. While common sense solutions abound, environmental litigation is halting the building process. The irony of the situation is that while the intentions of the environmental protest are likely in line with preserving our environment, the long-term effects of drought conditions will inevitably damage all living things: humans, animals and plants.

If water pipelines and reservoirs are off the table, desalination could remain a viable solution. The United States is surrounded on three sides by plentiful ocean water and desalination is a proven method of producing safe and clean water. Furthermore, though desalination is used widely around the world, the United States has been reluctant to adopt it due to the litigation process stalemate. Again, desalination projects are massive in scale and cross multiple legal entities — counties, cities and water districts — which creates expensive opportunities for horse-trading and political infighting.

The combination of complex political unrest and conflicting environmental concerns has reached a boiling point. As a nation, we are faced with two options: continue to passively deny Americans efficient access to clean water, or follow through with the development of desperately needed water infrastructures. The former is simply impractical and the latter will require time and work.

At some point, the need for basic water access will have to be prioritized — it’s just a matter of at what cost.

Burl East (beast@aacadvisors.com) is CEO of American Assets Capital Advisers.

Glossary, videos, podcasts, research in the Resource Center

Forgot your username or password?