An Argument for Centralized Regulation

Lessons from Israel’s water infrastructure strategy

By Elias Stahl

Policy analysts and political observers are predicting that water will be to the 21st century what oil was to the 20th – a strategically invaluable resource. What they are missing is that water has always been invaluable. The Syrian drought that preceded the country’s collapse was likely the worst in the past nine centuries, causing 75 percent of Syria’s farms to fail, and killing 85 percent of livestock. The U.S. Intelligence Community Assessment of Global Water Scarcity finds that by 2030 global water needs will exceed sustainable supplies by 40 percent.

American water and waste management infrastructure is facing similar strain. Across the country, declining groundwater supplies, increased frequency of water scarcity and drought, and the severity of climate change are putting pressure on already overtaxed infrastructure that has outlived its lifespan. These problems are well known to most utilities and regional planners, and cities are often the first to suffer from serious strain on our water infrastructure, as seen clearly in Flint, Mich.

The gap between investment needs and capabilities is equally well known, as California’s Water Plan 2013 update puts it, “given the current global financial problems, strapped government budgets (local, state, and federal), and the state’s high indebtedness and reduced ability to pay, it is unlikely that California can afford all necessary system improvements. Prioritization that reflects our values will be the key to making investments.” Despite water resources constituting the majority of statewide investments in California ($18 out of $22 billion a year), the state is forced to prioritize essential investments.

But there is a better way. California Governor Jerry Brown announced a historic collaboration between California and Israel in 2014, laying down the foundation for what has since become the Israel-California Green-Tech Partnership. Israel faced grave water scarcity just a decade ago. Today it has become a water exporter to its neighbors, producing 20 percent more than it needs. This change did not result from investing in one solution, but rather a basket of several policies, including usage taxes, water rationing, the creation of a centralized water authority, and government partnerships with the private sector and technology firms.

Israel invested in highly-efficient desalination plants, of which California has been an eager customer, with the state’s first plant opening in December 2015 in Carlsbad. The plant is America’s largest, producing 50 million gallons a day. But desalination alone cannot solve water scarcity, costly and reliant on coastline as it is. The key to Israel’s success lay in reducing consumption and decreasing costs and waste, all while increasing supply.

California experiences a 10-15 percent annual loss through infrastructure deterioration, while the state’s water sector consumes over 20 percent of the state’s electricity. Californians are estimated to be over-drafting their groundwater basins by 1-2 million acre feet a year (AFY).

Efficiency comes with uniformity at scale, but unlike Israel, 90 percent of California’s water is managed by 430 public agencies. There are 1200 separate water systems in California alone.

Israel nationalized and centrally regulated all water, while also investing in wastewater recycling. The country now recycles 85 percent of its wastewater for agricultural uses, satisfying 23 percent of agricultural water demand. Since agriculture requires about 60-70 percent of water usage globally, this was an essential tactic to reducing fresh water demand. Encouraging recycled wastewater, however, is only feasible if freshwater is priced higher.

While Israeli farmers use smart-drip irrigation meters for farming, California farmers continue the wasteful practice of field flooding. If an Israeli were to drive through the Central Valley and see farmers spraying gallons of freshwater a minute over crops in the mid-day heat, the act seems criminal. An intensive program of public education encouraging conservation, as well as usage taxes applied to farmers, helped mold perception more appropriately to contemporary realities.

For municipal and regional planners, the importance of reliable and renewable water supplies cannot be understated. Underinvesting is not an option, nor should financing be an obstacle. Israel had to make the difficult decision to start charging farmers the actual price of the water they were using. Farmers in California continue to use water practically for free. Pricing incentivizes smart investments like micro-drip irrigation, which raises yields and drastically reduces water consumption. It also encourages greater wastewater recycling.

The Milken Innovation Center’s report on financial models for water sustainability estimates that a 6 percent increase in water efficiency across California would translate into annual savings of $552 million on water and associated energy costs, at the one-time capital cost of $1.16 billion. Of this sum, $55.3 million a year in funding is already available through current state financial programs, while utilizing performance contracting could help finance the rest. Such a small increase in efficiency is easily attainable at negligible cost. Drip irrigation alone can reach close to total water utilization, doubling efficiency.

A centralized state plan can help harmonize the many policies needed to work together to rebuild our water infrastructure along sustainable lines. Only by working with regional and state planners and committing to serious reform through the adoption of incentivizing reduced usage can municipal utilities keep the tap running. Our nation’s cities deserve nothing less.

Elias Stahl is a research assistant at the National League of Cities, Center for City Solutions and Applied Research. His research portfolio includes urban innovation, technology, and infrastructure, focusing on the challenges and opportunities that emerging economic, technological, and regulatory trends represent for cities. He may be reached at www.nlc.org.

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