San Diego is at the end of the pipeline when it comes to importing water from the Colorado River and the Sacramento Bay Delta. So it’s no surprise its costs have exceeded those of Los Angeles and other parts of Southern California.
However, a recent report from a leading expert finds there’s more behind the skyrocketing price of water in the San Diego region, which over the last decade has seen wholesale rates increasingly outpace neighbors to the north.
Plummeting demand coupled with a bevy of costly projects — from raising dams to a desalination plant in Carlsbad — created a perfect storm that sent water rates soaring over the last decade, according to a recent analysis by longtime environmental economist Michael Hanemann of Arizona State University.
Hanemann doesn’t fault the San Diego County Water Authority for its investments. He said the strategy of the wholesaler, which serves 24 retail agencies, would look more prudent today had demand not unexpectedly fallen by 40% since 2010.
Over the last decade, multiple droughts in California have triggered mandatory conservation coupled with a widely successful turf-rebate program. Demand across the state has decreased dramatically. Most agencies didn’t see it coming.
As a result of selling less water, the water authority has had to hike rates to cover its annual expenses — nearly 90% of which are fixed costs, including payments on $21 billion in debt, according to the report.
“This infrastructure will get used,” Hanemann said. “Maybe it won’t get used as much as expected this decade, but three decades from now, it will be used. The problem is timing.”
The water authority — which declined an interview request for this story — has maintained that its investments were wise and ensure the region isn’t faced with crippling shortages during drought.
Critics have countered that the agency has, to its own detriment, ignored the plight of farmers and cash-strapped residents who are…