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SNWA, in particular, has spent more than $800 million for a third intake into Lake Mead. Known as “intake No. 3,” it began carrying water to SNWA’s water treatment facilities in September 2015. Te Bureau of Reclamation’s (Rec- lamation) 2012 Colorado River Basin Water Supply and Demand Study pre- dicted reduced flows in the river, adding challenges and complexity to water providers who have been living with what seems to be perpetual drought. Te Basin Study found that between $2 billion and $4 billion of additional investment will be needed annually to shore up some of the vulnerabilities that were identified.


A cash-strapped and conflicted


federal government cannot be counted on for billions of dollars in new invest- ment. Panelist Armin Munévar, senior water resources technologist with CH2M Hill, told audience members at the Symposium that how Colorado Riv- er stakeholders proceed will be crucial. “I think there really need to be goals and objectives for the long-term sustainability of the Basin together with criteria and metrics, how we measure performance of those investments,” he said. “Some of the key issues that need to be addressed are whether we go from a Basin sustainability fund concept or are just trying to stoke more investment. Right now we have a lack of well-defined sustainability goals for the Basin.” He cautioned that a reactive response “is likely to be a very disjointed ap- proach … probably delayed and likely cost more in the long run than if we do the investments proactively.” Te panelists touched upon “impact


investments” – a relatively new develop- ment in which private capital is put to


“Right now we have a lack of well-defined sustainability goals for the Basin.”


– Armin Munévar, CH2M Hill


work to generate profit specifically in a manner that also improves the environ- ment. “Many of these investments are designed within a particular impact context,” said Peter Culp, a partner with Squire Patton Boggs in Phoenix. “In some cases, the investment is designed to undertake a purely private-sector, for-profit activity, but to create a specific environmental result. In other cases, the investment is designed to work in cooperation with the public sector; for example, advancing money to do some- thing that the public would otherwise be doing in a sort of reactive fashion later, with investors sharing in the resulting savings in the event that they can be demonstrated.” According to Forbes magazine, the


Walton Family Foundation of Walmart fame last year gave $17.4 million in grants to boost the ecological health of the Colorado River and to enhance recreational opportunities. According to the Walton Foundation, the grants are aimed to design “structures such as dams and levees in a manner that both serves communities of people and minimizes impacts to rivers and wildlife.” Culp, who has been working with the


Walton Family Foundation on the devel- opment of impact investment approach- es, said “one thing that’s important to recognize is that private investment


has always been a major feature of the development of water in the West, and certainly in the Colorado River Basin.” Squire Patton Boggs recently teamed with the asset management firm Encour- age Capital on a report, Liquid Assets: Investing for Impact in the Colorado River Basin, detailing nine investment blueprints that could generate environ- mental and other water management benefits in the Colorado River Basin, while generating financial returns for impact investors. “Our investigation has found that


there are now substantial opportunities for investment that could help address these systemic problems, while still pro- ducing interesting financial returns,” said Ricardo Bayon, partner and co-founder of Encourage Capital, in a statement. “In many cases, these opportunities exist within existing regulatory frameworks. Yes, policy change is needed in the Basin, but these investments don’t rely on that change and may even help to drive that change.” According to the Liquid Assets report,


“although physical unavailability of water will clearly be a defining element of the future of economic develop- ment and ecosystem protection in the Colorado River Basin, the most pressing issue in many cases will not necessarily relate to the unavailability of water re- sources, but rather will be about how to pay for the infrastructure, water rights, and institutions needed to manage and distribute scarce supplies.” Te infrastructure needs of urban and agricultural areas, combined with constrained governmental financial re- sources point to the potential for “more expansive, flexible, direct, and creative types of private investment in water resource management in the future,” the report said.


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Winter 2015-2016 • River Report • Colorado River Project • 3


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