CAN CALIFORNIA STILL BUILD BIG STUFF? By Dave Puglia, President and CEO
This may be unfair to former Gov. Jerry Brown, but I want to reflect on a comment he made years ago that haunts me as we consider the increasingly tenuous fate of the Sites Reservoir project. Shortly after returning to Sacramento in 2011 for his third term as Governor, the WG Executive Committee met with Brown over dinner. He was intensely focused on advancing two big infrastructure projects. One of those – the Delta tunnels project – had our keen interest and support. (The other was the High-Speed Rail project.) Brown was highly informed and energetic, exuding confidence about his ability to drive both projects forward before his term(s) ended. As we talked about the roadblocks that would inevitably emerge – mostly involving litigation brought by environmental organizations that had mastered the use of lawsuits to block water infrastructure projects – the Governor turned dour and said, “I’m not sure California is capable of big projects anymore.” It was jarring coming from an ambitious governor whose father, Gov. Pat Brown, made several really big projects happen, including much of the State Water Project. Soon after, in 2014, Jerry Brown championed Prop. 1, a somewhat scaled down version of the 2009 water bond passed by the Legislature with former Gov. Arnold Schwarzenegger’s heavy push. With strong voter approval of a water bond with $2.7 billion targeted toward water storage projects – both above ground and below – it seemed that California might actually do big things, at least relative to water supply. Eleven years later, we can say that Sites Reservoir – well-positioned for Prop. 1 funding – is a lot closer to breaking ground. But we can also see cause for concern. After all, it’s been 11 years. When major infrastructure projects hit the initial planning stage, construction costs are pegged. But as we all know, especially in California, construction costs are sadly not static. This was one of the reasons another initially favored water storage project, expansion of the Los Vaqueros Reservoir in the East Bay, fell apart last year. Initially projected to cost about $915 million, the project cost increased to $1.6 billion by 2024. That pain was compounded by regulatory requirements added by state fish and wildlife regulators that reduced its projected water yield by up to 30 percent. A jump of 57 percent in cost for 30 percent less water. Predictably, the water
districts that would pay for all this bolted and the project has been abandoned. Could this be the path Sites is on? When it was first proposed for Prop. 1 funding, Sites was projected to cost $4.4 billion. Recently, the cost projection was increased to as much as $6.8 billion. Construction cost inflation, regulatory (i.e., environmental) requirements and design changes have combined to the chagrin of the water users responsible for paying for the water that would be provided. Helpfully, Gov. Newsom recently upped the state’s commitment by $219 million, on top of the $875 million previously awarded under Prop. 1. And that got me thinking about the “beneficiary pays” principle in water projects. Under the construct of Prop. 1 and previous state water bonds, taxpayer funds are to be used only for the public benefits of a water project. Environmental flows that support fish and wildlife downstream, for example. Water that is utilized for other purposes, like agriculture and municipal systems, is to be financed by those water users. In reality, this construct has forced water users, at least in the case of Los Vaqueros, to walk away as the price per acre foot of water reaches economically impractical heights. When the water users (again, think cities and farmers) walk away, and the storage project dies, the impacts go far beyond the narrow definition of “beneficiaries.” As the Sustainable Groundwater Management Act and constricted water supply via the Delta are demonstrating already, when farming scales back due to water cuts, the economic well-being of entire regions and millions of people is threatened. Sure, a canal delivers water to a farm, but that farm and thousands like it together form the foundation of a regional economy. The people who own and work in businesses that are ”ag-adjacent” are as much the beneficiaries of water delivered to farms as the farmers themselves. Call me crazy, but I think it’s time to revisit the “beneficiary pays” principle in water policy. California writ large is the beneficiary of a large and vibrant agriculture sector, thanks to the tax revenue it generates, and many millions of our fellow Californians are connected in myriad ways to the industry. Jerry Brown may or may not agree, but it just might be true: California will not build big water projects again unless we toss this outdated and narrow-minded policy out the window and think bigger.
4 Western Grower & Shipper | www.wga.com September | October 2025
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