The Metropolitan Water District staff recommended Wednesday that the district's board indefinitely defer the controversial Cadiz water storage program in the Mojave Desert because environmental concerns and a drought on the Colorado River have dramatically reduced the chances it will provide useful quantities of water to Southern California.
The recommendation, which was transmitted to the board over the signature of MWD Chief Executive Ronald R. Gastelum, said the MWD staff is also concerned about rising cost estimates of the project and about the financial condition of its principal backer, Cadiz Inc.
Gastelum's recommendation could mean the demise of the project that has undergone five years of federal and state review but has remained an environmental and political lightning rod.
Among its opponents is U.S. Sen. Dianne Feinstein (D-Calif.), who has asked the MWD to reject it on grounds that it could do irreparable damage to the Mojave Desert ecosystem. The 37-member board will take up the issue at its next scheduled meeting Oct. 8.
Even a temporary deferral of the project would represent a severe financial blow to Cadiz Inc., which has never turned an annual profit and has borrowed heavily against expectations that the project would go forward.
The Cadiz project envisions the storage of as much as 1.5 million acre-feet of surplus Colorado River water in a Mojave Desert aquifer for extraction in dry years.
It was conceived by Cadiz, a Santa Monica company led by Keith Brackpool, a major financial backer of Gov. Gray Davis and one of the governor's closest advisors on water resource issues.
Cadiz Inc. stands to earn $500 million to $1 billion over the 50-year life of the program, some of it by selling as much as 1.5 million acre-feet of ground water already present in the natural aquifer under its land.
Critics have contended, however, that extraction of ground water on that scale would dramatically exceed the natural rate of replenishment, damaging the fragile desert environment.
Under tentative contract terms reached in April 2001, the project's estimated cost of $150 million was to be shared equally by Cadiz and the MWD, which would pay for its share by issuing bonds.
But district sources said cost estimates have risen, requiring further negotiations with the company.
Most of the expense covers construction of a 35-mile pipeline between the MWD's Colorado River aqueduct and the storage site northeast of Palm Springs.
