The Economics of Bulk Water Transport in Southern California

Abstract

Municipalities often face increasing demand for limited water supplies with few available alternative sources. Under some circumstances, bulk water transport may offer a viable alternative. This case study documents a hypothetical transfer between a water utility district in northern California and urban communities located on the coast of central and southern California. We compare bulk water transport costs to those of constructing a new desalination facility, which is the current plan of many communities for increasing supplies. We find that using water bags to transport fresh water between northern and southern California is in some instances a low-cost alternative to desalination. The choice is constrained, however, by concerns about reliability and, thus, risk. Case-study results demonstrate the challenges of water supply augmentation in water-constrained regions.

Keywords

• water transfers
• bulk water transport
• transaction costs
• California