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Morning photo of Lake Mead from Hoover Dam with water elevation of 1,106 feet.

90 percent of the supply for 2 million people was just flat out unacceptable.” Te advisory group called for a

comprehensive financing strategy phased over time so that the community would still be able to recover economically from the downturn and have time to plan for those increases in their rates. “I think that in a nutshell the lesson learned was, ratepayers like a long lead time; they want to have substantial community involvement in how those decisions are made,” Entsminger said. “If you give them that information and explain the necessity of the project, at least in our community, people are willing to pay for necessary water infra- structure.”

The Promise of Private Money

Completed in the depths of the Great Depression at a cost of $49 million, Hoover Dam would cost more than $700 million in today’s dollars. Such an enormous undertaking is something the federal government would be averse to in 2015, leaving public-private partnerships and strictly private capital as the main course of investment in water. “Over the last 10 years, we’ve seen a pretty significant entry of private capital

into water resource issues, particularly in the sort of agricultural land and water investments with a number of invest- ment firms that are now trying to hold positions in that,” Culp said. Te record of those investments is

mixed, however, because many have focused on a “buy low, sell high” approach that did not account for the complexities of water management or the types and scale of problems needing solutions, according to Culp. “Tere have not really been that many examples of investments that are addressing some of the other issues we have, for example, systemic issues around water risk, environmental problems, or the kinds of community economic im- pacts that can occur as a result of water transactions,” he said. “What we were attempting to do in putting together this report was to look at what could be a dif- ferent role for private capital, particularly with regard to the class of impact capital that is interested in a rate of return but also a quantifiable environmental or social benefit.” He noted that while “it’s not a huge class of capital” it is significant, and growing, representing a group of inves- tors “that have an interest in seeing an outcome changing in the world,” in addition to mere investment return.

6 • Colorado river ProjeCt • river rePort • Winter 2015-2016

“In thinking about where impact capital could be used most effectively, we started by looking at the places where financing was difficult to accomplish,” Culp said.

Te issue is getting investment to

where it’s needed. “In many cases, we’ve got water problems developing in small to mid-range growth communities,” he said. “Or in irrigation districts who do not have the same ability to pay as a big city does, as well as problems that are developing in what we call a ‘commons context’ where we have deterioration in landscape health – issues that cause impacts across the spectrum but that are very difficult to attribute to the specific user or finance with the help of a specific user. Tere could be real investment value in solving those issues.” A unique aspect of the problem is

conveying its complexity to the invest- ment community, something that goes beyond simply rectifying supply and demand imbalances.

“Tis is not necessarily a static sys-

tem,” Culp said. “While we may need reallocation, more fundamentally, we need to look at new institutions and new approaches that increase day-to-day, year-to-year and multi-annual flexibility and manage water risks that are cutting across sectors.”

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