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Wednesday, October 17, 2018

Water in the Desert

Lower Colorado River Basin Water and LHC

Lake Mead and Lake Powell - The Balancing Act

Both are increasingly functioning as one reservoir system whereby elevations have been managed to maintain Lower Colorado River water users in a “non-shortage” position. Due to years of drought conditions reducing inflows, the system now suffers from substantial drawdowns imposed by the expanding structural deficit, currently about 770,000 acre-feet per year. The Metropolitan Water District of Southern California, which has priority one water rights, plans an additional use of 200,000 acre-feet in the coming year.

Without any offsetting cutbacks, we are approaching a shortage mark of a million acre-feet per year. That would be, roughly estimated, about 325 billion gallons of water or enough for about 4.46 million people to use around 200 gallons of water per day for one year. That’s our structural deficit in the Lower Colorado River Basin. When we combine that with the naturally declining shape of the reservoir system, we can deduce that elevation levels will erode faster and faster assuming all other conditions remain equal or on trend lines; conditions like weather and rainfall. Finally, some emerging research has shown indicators there could be more sedimentation in the system than previously thought. That, of course, would be yet another detraction from system storage capacity.

The U.S. Department of the Interior Bureau of Reclamation operates the hydropower output of the Western United States. Hydropower plants currently account for about 7% of the U.S. energy mixture. In Arizona, most of our electricity is generated by natural gas and nuclear energy. Hoover Dam produces about 4 billion kilowatt-hours per year (Reclamation U. B., 2018), enough for about 1.3 million people. Arizona uses about 18.9% while Nevada gets 23.3%, the Metropolitan Water District of Southern California gets 28.5%, Los Angeles gets 15.4%, and there are numerous smaller allocations.

It is important to keep in mind that should the lake fall to an elevation below the required level for generating electricity, we would be pulling those kilowatt hours out of the regional distribution system. That would create a requirement to import power. The long-term compensatory mechanism is filling in the capacity by building power generation infrastructure. If hydro-generated electricity from the Colorado River Dam system is compromised, some estimates would suggest consumers could be hit with 25% (or more) additional cost per kilowatt hour. Water shortages that reduce electricity generation capacity will translate to higher power costs.

The elevation in Lake Mead that triggers a federally declared shortage is 1,075 feet. A recent study (AMWUA, 2018) from the Bureau of Reclamation Boulder Canyon Operations Office shows that projecting 8.23 million acre-feet released from Powell in 2018 would leave Powell’s elevation above 3,575 feet and Lake Mead would be below 1,075 feet, this would be a trigger point and is projected to transpire in May of 2019, one month after a shortage declaration point in April, thereby postponing an actual shortage declaration until 2020, unless inflows more than offset expected losses.

2018 water year hydrology summary shows the unregulated inflow to Lake Powell was 4.76 maf, or about 44% of the average year based on a 30-year data set. Cumulative precipitation in the Upper Colorado River Basin was about 44% of average with snowpack at about 73% of average. Tributary inflow to Lake Mead was 27% of average from the Little Colorado River and about 51% of average from the Virgin river. The Colorado River total system experienced a net decrease of 4.51 maf (Reclamation U. D., 2018) during the water year to date.

Careful management of water release while balancing the requirements of electricity generation mean the Bureau of Land Management (BLM) is engaged in strategic shifting or balancing of the lakes that allow them to operate within the scope of their requirements and hopefully, engage in a profile of operations that maximize electricity generation potential while mitigating and postponing a federally declared shortage.

A shortage declaration is governed by a set of Bureau of Reclamation (BOR) regulations known as the 2007 interim guidelines. The guidelines include key factors used when determining the declaration of shortage. The 2007 interim guidelines are part of a record of decision (ROD) concerning Colorado River interim guidelines for lower basin shortages and coordinated operations for Lake Powell and Lake Mead. (Department of the Interior, 2018)

Lake Havasu City Ramifications 

It seems probable, all else equal, that a shortage declaration is likely to take place in 2020 unless inflows into the overall system are well above normal. BOR publishes 24-month studies, these are studies done each month and rolled up to create a 2-year view. Recent 24-month studies show the structural deficit being stressed by continued drought conditions. If drought conditions remain like those we have seen in the last 24-month period, a federally declared shortage could be declared for 2020. If that transpires, there will be cutbacks to priority 4 water in Arizona.

Precipitation models continue to disappoint, and while there is some hope for El Niño to bring higher than normal precipitation, the impacts of climate change may more than offset any potential El Niño impact due to an extended growth season for deciduous plant life throughout the Upper Colorado River Basin. While it is possible precipitation may increase somewhat, predictive models show the extended season and higher temperatures impact upon vegetation use of moisture would more than offset increased precipitation. Warmer temperatures and a longer warm season will exacerbate drought conditions whenever precipitation levels fall below normal; all of which is consistent with recent trends. All which compounds to create a growing water deficit.

Lake Havasu secures 100% of its drinking water from the Colorado River by way of surface allocation. Currently, the City of Lake Havasu has rights to approximately 29,000 acre-feet of water per year, we are using less than half that amount or somewhere between 13,000 and 14,000 acre-feet. Our current allocation of water should provide adequate water use for a population roughly twice our size. This is an amazing position to be in because even if there were, for instance, a cut back of deliveries based on entitlements, our excess easily absorbs any intermediate range cutbacks.

Lake Havasu City Water Profile 

Drinking water is drawn from a Ranney well that has a production capacity of about 26 million gallons per day (mgd). The Ranney well is essentially a large diameter vertical well with numerous horizontal arms extending into a porous formation immediately under the floor of the lake. This creates a natural filtration system for the water as it is drawn into the Ranney well, and from there it is delivered to the water plant for processing.

The city maintains some 483 miles of water distribution lines that range from 36” down to 4” and serves over 31,000 residential and commercial water service points. The city maintains twenty-six tanks throughout seven pressure zones ranging from the highest elevations in the city down towards the lowest areas leveraging gravity to assist in managing pressure zones in optimal states and using lift stations where gravity is insufficient for operational requirements.

The city’s water infrastructure requires ongoing maintenance and water quality testing. The two capital intensive items to consider in forward budgeting are a secondary water supply, meaning a second Ranney well or the consideration of drilling horizontal wells under the lake, in a similar fashion to the current Ranney well. There may be some existing vertical wells where modifications may be leveraged to create horizontal access and/or new wells. I expect the cost (and risk) would be spread out across several vertical to horizontal wells enough to extend capacity during a complete shut-in event of the primary Ranney well.

The city does need a robust backup system, so we can have full cutover capability in order to take the Ranney well completely offline should that be required for maintenance needs. The cost to set up parallel production capacity that approximates our current system is going to be significant, this is part of our budget planning for water infrastructure. Accurate budget holders will depend on project timelines, capacity, abandonment costs, and the myriad of expenses associated with access, licensure, environmental, and reclamation.

I believe it is unlikely that any new ROD, or even an adjustment of the existing 2007 Interim Guidelines will bypass the intent or structure of the existing federal guidelines. In other words, there will be no major initiatives to create new “Acts of Congress” to deal with this. Instead, this is a process that has been ongoing with the U.S. Department of the Interior in the driver’s seat.

The State of Arizona currently has a steering committee that is meeting to cover areas where water conservation can be leveraged. Negotiations surrounding intentionally created surplus management will be an important part of the 2019 operating plan. Our hopes are to leverage what we must to facilitate the best outcome for the region while maintaining our full allotment of water rights.

Dealing with minor cutbacks to our full allotment would, essentially, be inconsequential and rightfully so, the city has done amazing work with conservation and getting average consumption per person almost halved since conservation efforts started many years ago. Having water allocation cutbacks drawn up based on actual use would be very different. It would be seen as a functional cap on the region population level. So far, we are not aware of any precedence in any of the legal agreements, acts, or other governing instruments that can be leveraged in such a manner as to drive cutbacks upon stated current use versus full allotment. Further, California, having a vast holding of 1st priority rights, is now starting to be more open to a dialogue of water conservation as a mechanism to limit their withdrawals.

California understands that if we drive the level of the lakes down far enough, to the point where it becomes dead storage at 895 feet, they’ll go below the level where we can release any water at all. At that point, California would have lots of priority 1 water rights, but no ability to draw any water. The states duly impacted by a federal shortage will be able to negotiate under the already established guidelines and acts but going outside of that to establish entirely new government policy at the federal level is not likely to happen on the time frame being considered. Therefore, I believe our water supply is in good shape, that we should continue to invest in monitoring and defending the principle of keeping mainstream water on the Colorado River and preventing it from being creatively liberated from our groundwater supplies through programs such as fallowing.

NASA Gravity Recovery and Climate Experiment mission (GRACE) created a nine-year slice of data analyzed for the Colorado River System; it showed groundwater accounted for 50.1 km3 of the total 64.8 km3 of freshwater loss. Groundwater is being depleted as a vastly greater rate than surface water and may impact our ability to continue to meet scheduled deliveries. This is the data, I’m afraid, I do not hear people discussing. But this data is real and I am concerned it may be even more important than the dropping levels of Lake Mead; yet it appears most of the stakeholders are blissfully unaware of the GRACE Mission data. At the very least, the rate of groundwater depletion will exacerbate the water shortage in the basin.

The Bigger Picture for Regional Water 

Unfortunately, the larger picture is that climate change is likely to have a net negative impact on the water situation for Arizona. If we continue to exacerbate the drought without seeing Lake Mead and Lake Powell start to rise again, then we are in for a fast acceleration through our shortage levels. The main reason for that is twofold… the first is obvious, yet almost entirely overlooked. We think of the surface of either lake, but the lake is a reservoir, and to really understand the volumes, one must think of what it is like as a vessel.



The above image shows a view that brings the matter of volume into clear focus. In addition, new research is emerging from Lake Havasu City insomuch as a recent underwater mapping project has revealed more sedimentary deposits than are currently used with widespread existing modeling data, thus creating some potential that certain volume assumptions may be somewhat overstated. It is thought this might apply beyond Lake Havasu; and thus render a larger impact on the entire system.

Lake Havasu City's Priority 4 (P4) Water Rights are roughly outlined below. For reference, we use about 13,000 to 14,000 acre feet per year (estimated 2017) and we have over 28,000 acre feet authorized. Even with cutbacks to those allocations, we would still have an excess of water rights over water useage, and that's how the hottest city in the nation manages to have enough water during an extended drought. And of course, Lake Havasu City has extensive conservation efforts that have paid huge dividends over the years.




The Law of the River

The law of the river is not one set of codified articles set about in some leather-bound book on the shelves of fancy law offices. Instead, it is a mixture of various acts, key legal decisions, compacts, plans, traditions, and treaties; there is also a historical context.

The Secretary of the Interior, through the Bureau of Reclamation, is responsible for water management throughout the United States. The Bureau of Reclamation’s authority is limited throughout the western United States by various reclamation instruments and acts of Congress.


Acts of Congress 

  • Reclamation Act of 1902
  • Boulder Canyon Project Act of 1928
  • The Colorado River Storage Project Act
  • Colorado River Storage Act 1956
  • Colorado River Basin Act of 1968
  • Grand Canyon Protection Act of 1992 

Key Legal Decisions / Compacts / Treaties

  • US Supreme Court, Arizona vs. California 1963
  • US Supreme Court Consolidated Decree, Arizona vs. California 2006
  • Colorado River Compact 1992
  • Upper Colorado River Basin Compact 1948
  • Mexican Water Treaty 1944
  • Key Information Points on Shortage Declarations 2007 Interim Guidelines
  • The 2007 Record of Decision creating the 2007 Interim Guidelines - ROD expires 2026


 Annual Operating Plan 

Section 602(b) of the CRBPA of 1968 requires that the Secretary transmit to the Congress and to the Governors of the Basin States, by January 1st of each year, a report describing the actual operation under the LROC for the preceding compact water year and the projected operation for the current year. This report is commonly referred to as the “Annual Operating Plan” or the “AOP.” In 1992, in the Grand Canyon Protection Act, Congress required that, in preparing the 602(b) AOP, the Secretary shall consult with the Governors of the Basin States and with the general public, including representatives of academic and scientific communities, environmental organizations, the recreation industry; and contractors for the purpose of federal power produced at Glen Canyon Dam.

24 Month Study - April Adjustment 

April adjustments to Lake Powell operations in the Upper Elevation Balancing Tier (as specified in Sections 6.B.3. and 6.B.4.) shall be based on the April 24 Month Study projections of the September 30 system storage and reservoir water surface elevations for the current Water Year. Any such adjustments shall not require re-initiation of the AOP consultation process. In making these projections, the Secretary shall utilize the April 1 final forecast of the April through July runoff, currently provided by the National Weather Service’s Colorado Basin River Forecast Center.
Off-stream Banking

The diversion of Colorado River water to underground storage facilities for use in subsequent Years from the facility used by a Contractor diverting such water

Key Definitions 


Water Year

October 1st through September 30th

24-Month Study 

The projections are updated each month using the previous month’s reservoir contents and the latest inflow and water use forecasts. In these Guidelines, the term “projected on January 1” shall mean the projection of the January 1 reservoir contents provided by the 24-Month Study that is conducted in August of the previous Year. 

Contractor 

An entity holding an entitlement to Mainstream water under (a) the Consolidated Decree, (b) a water delivery contract with the United States through the Secretary, or (c) a reservation of water by the Secretary, whether the entitlement is obtained under (a), (b) or (c) before or after the adoption of these Guidelines.

Direct Delivery Domestic Use 

Direct delivery of water to domestic end users or other municipal and industrial water providers within the Contractor’s area of normal service, including incidental regulation of Colorado River water supplies within the Year of operation but not including Off-stream Banking. For the Metropolitan Water District of Southern California (MWD) Direct Delivery Domestic Use shall include delivery of water to end users within its area of normal service, incidental regulation of Colorado River water supplies within the Year of operation, and Off-stream Banking only with water delivered through the Colorado River Aqueduct. 

Intentionally Created Surplus (ICS) 

Surplus Colorado River System water available for use under the terms and conditions of a Delivery Agreement, a Forbearance Agreement, and these Guidelines.  



Current Status 

Lake Mead Elevation Projections  




Precipitation (October 2017 – June 2018) The bulk of the entire Colorado River basin, both lower and upper, has received at least 30% less precipitation than average, this is exacerbated in the lower basin where many areas are experiencing less than half the average precipitation. While there is some potential for a return of the El Niño weather pattern, the impact that may have on precipitation in the Colorado River Basin may be negligible.

The National Weather Service (NWS) Climate Prediction Center, of the National Oceanic and Atmospheric Administration, as of September 13th, 2018, is predicting a 50-55% chance of an El Niño onset in the Northern Hemisphere in the September to October timeframe, increasing to a 65-70% chance of an El Niño during the winter months. The October 2017 to June 2018 precipitation map shows severe shortages over the clear majority of the Colorado River Basin with only a handful of areas in Northern Colorado and Southern Wyoming experiencing average or slightly above average precipitation.



Colorado River Basin Precipitation (October 2017 to June 2018) – National Weather Service (NOAA)

The Bureau of Reclamation 24-month study provides data for operational guidelines. This includes a combined monthly/annual methodology to determine the annual release volume for Lake Powell. Methodology consists of a January 1 determination of the release volume with appropriate April adjustments to those volumes in order to provide necessary flexibility to respond to changing inflow forecasts while ensuring that the operation does not result in excessive changes in monthly releases from Lake Powell.

April adjustments to Lake Powell operations in the Upper Elevation Balancing Tier (as specified in Sections 6.B.3. and 6.B.4.) shall be based on the April 24-Month Study projections of the September 30 system storage and reservoir water surface elevations for the current Water Year. Any such adjustments shall not require re-initiation of the AOP consultation process. In making these projections, the Secretary shall utilize the April 1 final forecast of the April through July runoff, currently provided by the National Weather Service’s Colorado Basin River Forecast Center, which is a monthly study on a 24-month cycle.

 2007 Interim Guideline Definitions Normal Condition A “Normal Condition” exists when the Secretary determines that sufficient mainstream water is available to satisfy 7.5 million acre-feet (maf) of annual consumptive use in the Lower Division states (Arizona, California, and Nevada). If a state will not use all of its apportioned water for the year, the Secretary may allow other states of the Lower Division to use the unused apportionment, provided that the use is authorized by a water delivery contract with the Secretary.

Surplus Condition A “Surplus Condition” exists when the Secretary determines that sufficient mainstream water is available for release to satisfy consumptive use in the Lower Division states in excess of 7.5 maf annually. The water available for excess consumptive use is surplus and is distributed for use in Arizona, California, and Nevada pursuant to the terms and conditions provided in the ISG. The current provisions of the ISG are scheduled to terminate in 2016. In general terms, the ISG link the availability of surplus water to the elevation of Lake Mead. When Lake Mead is full and Reclamation is making flood control releases, surplus supplies are unlimited. As Lake Mead’s elevation drops, surplus water amounts are reduced, and ultimately eliminated. The ISG also link surplus availability to continued progress by California in reducing its agricultural use of water to benchmarks established in the ISG. If a state does not use all of its apportioned water for the year, the Secretary may allow other Lower Division states to use the unused apportionment, provided that the use is authorized by a water delivery contract with the Secretary.

Shortage Condition A “Shortage Condition” exists when the Secretary determines that insufficient mainstream water is available to satisfy 7.5 maf of annual consumptive use in the Lower Division states. To date, the Secretary has never made such a Interim Guidelines for the Operation of Lake Powell and Lake Mead December 2007 6 ROD - Colorado River Interim Guidelines for Lower Basin Shortages and Coordinated Operations for Lake Powell and Lake Mead determination, as flow in the Colorado River has been sufficient to meet Normal or Surplus delivery amounts. When making a shortage determination, the Secretary must consult with various parties as set forth in the Consolidated Decree and consider all relevant factors as specified in the LROC, including 1944 Treaty obligations, the priorities set forth in the Consolidated Decree, and the reasonable consumptive use requirements of mainstream water users in the Lower Division states. If a state does not use all of its apportioned water for the year, the Secretary may allow other Lower Division states to use the unused apportionment, provided that the use is authorized by a water delivery contract with the Secretary.

Lake Mead Shortage Triggers Policy and interim guidelines were brought forward in 2007 that remain applicable.

kaf = thousand acre-feet
maf = million acre-feet

1,075 feet = cutback of 400 kaf
1,050 feet = cutback of 500 kaf
1,025 feet = cutback of 600 kaf





Shortage Rules - Lake Mead 


Below 1,075 
In years when Lake Mead content is projected to be at or below elevation 1,075 feet and at or above 1,050 feet on January 1, a quantity of 7.167 maf shall be apportioned for consumptive use in the Lower Division States of which 2.48 maf shall be apportioned for use in Arizona and 287,000 af shall be apportioned for use in Nevada in accordance with the Arizona-Nevada Shortage Sharing Agreement dated February 9, 2007, and 4.4 maf shall be apportioned for use in California.

Below 1,050 
In years when Lake Mead content is projected to be below elevation 1,050 feet and at or above 1,025 feet on January 1, a quantity of 7.083 maf shall be apportioned for consumptive use in the Lower Division States of which 2.4 maf shall be apportioned for use in Arizona and 283,000 af shall be apportioned for use in Nevada in accordance with the Arizona-Nevada Shortage Sharing Agreement dated February 9, 2007, and 4.4 maf shall be apportioned for use in California.

Below 1,025 
In years when Lake Mead content is projected to be below elevation 1,025 feet on January 1, a quantity of 7.0 maf shall be apportioned for consumptive use in the Lower Division States of which 2.32 maf shall be apportioned for use in Arizona and 280,000 af shall be apportioned for use in Nevada in accordance with the Arizona-Nevada Shortage Sharing Agreement dated February 9, 2007, and 4.4 maf shall be apportioned for use in California. 2. During a Year when the Secretary has determined a Shortage Condition, the Secretary shall deliver Developed Shortage Supply available in a Contractor’s DSS Account at the request of the Contractor, subject to the provisions of Section 4.C. of the 2007 Interim Guidelines.

Lake Powell Shortage Triggers 

Shortage Criteria 2007 Interim Guidelines

When projections indicate Lake Powell’s elevation will be greater than 3,575 feet but Lake Mead would be lower than 1,075 feet, a short-term shortage would take effect. That impact would be felt by way of the reduction of 400,000 acre-feet per year. Beyond that, the numbers are set at 500,000 acre-feet at an elevation of 1,050 feet and 600,000 acre-feet when Lake Mead’s elevation drops to 1,025 feet.



Mohave County Power Generation & Misc. Water Use Data Points 


2015 Mohave County Generated 3,839.25 gigawatt hours
2015 Tucson 80 gallons per capita per day (GPCD)
2015 US Average 83 GPCD
2015 Arizona Average 146 GPCD
2015 New Mexico and Texas 81 GPCD (lowest in US)
2015 Idaho 186 GPCD (highest in US)

Structural Deficit 


Rebalancing Lake Mead & Lake Powell Policy and interim guidelines allow for rebalancing Lake Mead and Lake Powell for the remainder of 2018 by having additional releases from Lake Powell into Lake Mead. The conditions trigger a rebalancing that will release, from Lake Powell, not less than 8.23 million acre-feet and not greater than 9 million acre-feet. Lake Powell and Lake Mead, under the current circumstances, are projected to bypass the capacity for rebalancing activities in 2019 due to the structural imbalance build into the system. If shortage were declared, it would have distinct impacts, but most of the outcomes can be determined in advance through a careful examination of the policy, interim guidelines, and other negotiated arrangements that have been put forth amongst the various stakeholder groups, governments, and interested parties. 

Current Status 2018-2019 

Lake Powell  end of August 2018 levels
Elevation for end of August 2018 was 3,597 feet (103 feet from full pool) and 11.2 maf (47 percent of full capacity). Average unregulated inflow was 8.76 maf, or 81percent of the 30-year average (1981-2010)

Lake Powell Projected 2019 Release to Lake Mead
The operating tier for water year 2019, established by the August 2018 24-Month Study, is the Upper Elevation Balancing Tier. Under this Tier the initial annual water year release volume is 8.23 maf but there is potential for an April 2019 adjustment to equalization or balancing releases. Based on the current forecast, an April adjustment to balancing releases is projected and Lake Powell is currently projected to release 9.0 maf in water year 2019. This projection will be updated each month throughout the water year.

Lake Powell End of water year forecast 2019
US Bureau of Reclamation Projections indicate end of water year 2019 elevation and storage using the minimum and maximum probable inflow forecast are 3,566 feet (8.8 maf, 36 percent of capacity) and 3,648 feet (17.0 maf, 70 percent of capacity), respectively. Under these scenarios, there is a 10 percent chance that inflows will be higher, resulting in higher elevation and storage, and 10 percent chance that inflows will be lower, resulting in lower elevation and storage.

Metropolitan Water District (MWD) Forecast
While continued conservation by CAP could keep the lake at 1,075 and above through 2019, California’s future use of Mead water remains a big unknown with up to 175,000 to 200,000 acre-feet of water available for withdraw from California’s Metropolitan Water District (MWD). During the same period, the Central Arizona Project, with low priority water rights, hopes to conserve 180,000 acre-feet of river water this year, essentially creating a theoretical offset for the water planned for MWD use.

U.S. Bureau of Reclamation forecast
Results of 24 Month Study published in 2018 water year for water in the Colorado River anticipates declaration of a shortage in September 2019 in Lake Mead. That would trigger the reduced water releases from federal reservoirs in “lower basin” states including Nevada and Arizona.
Colorado and other “upper basin” states Utah, Wyoming and New Mexico would face increased scrutiny of flows from headwaters into the Lake Powell reservoir. On Wednesday, Lake Powell measured 49 percent full and Lake Mead measured 38 percent full.

A primary goal of the CBS policy is to significantly reduce the probability of an involuntary, uncompensated shortage in excess of 500,000 acre-feet (the approximate level at which CAP deliveries would be reduced beyond that currently utilized for water banking). As shown in Figure 4, below, the probability of shortages exceeding 500,000 acre-feet is reduced to 5% or less through the entire modeled period under the CBS policy. By contrast, the probability of shortage under the baseline policy rapidly approaches 30% during this same period. Furthermore, as shown in Figure 5, below, the CBS policy reduces the probability of any involuntary shortage by approximately 20% over the next 20 years.

Rising Power Costs

The recent drought and decrease in power production at both Hoover Dam and Glen Canyon Dam point to the dramatic costs imposed by the loss of reservoir storage. If Lake Mead falls to 1050 feet, power rates will need to be increased to an approximate composite rate of 2.31 cents/kWh, which is a 44.3% increase over current rates. Replacement power purchases would be (depending on the user) 2.9 to 3.7 times the Hoover rate. In FY03, replacement power may have cost customers an additional $24 million (Department of the Interior, 2018).

Arizona Cutbacks

The Central Arizona Project (CAP) will be subject to the largest cutbacks. Arizona is allocated 2.8 maf annually. Most of the cutbacks are expected to impact recharge programs in the Greater Phoenix and Tucson areas, but also agricultural water deliveries as well.

Arizona Steering Committee

The Lower Basin Drought Contingency Plan ( (LDBCP, 2018) is a plan developed by Arizona, California, Nevada, and the United States to create additional contributions to Lake Mead from Arizona and Nevada, along with new contributions from California and the U.S. with incentives for additional storage in Lake Mead.

Key points to conserve come from agricultural mitigation, tribal intentionally created surplus, Arizona conservation plans and excess water. Ultimately, the goal is to secure a joint resolution from the Arizona Legislature authorizing the Arizona Department of Water Resources Director to agree to the plan. Currently, the bulk of the first level of cutbacks would be borne by CAP water users.


Informational Agreements

  • Delivery Agreement between the United States and Imperial Irrigation District (IID)
  • Delivery Agreement between the United States and The Metropolitan Water District of Southern California (MWD)
  • Delivery Agreement between the United States, Southern Nevada Water Authority (SNWA) and the Colorado River Commission of Nevada (CRCN)
  • Funding and Construction of the Lower Colorado River Drop 2 Storage Reservoir Project Agreement among the United States, SNWA, and CRCN
  • Lower Colorado River Basin Intentionally Created Surplus Forbearance Agreement among the Arizona Department of Water Resources, the Southern Nevada Water Authority, CRCN, the Palo Verde Irrigation District (PVID), IID, Coachella Valley Water District (CVWD), MWD, and the City of Needles
  • California Agreement for the Creation and Delivery of Extraordinary Conservation Intentionally Created Surplus among the PVID, IID, CVWD, MWD and the City of Needles 

Jet Propulsion Laboratory (JPL) Grace Satellite Mission 

The extent of groundwater loss may pose a greater threat to the water supply of the western United States than previously thought. NASA's Gravity Recovery and Climate Experiment, also known as the GRACE satellite mission (NASA, 2018) was designed to track changes in mass of specific geological regions, including the Colorado River Basin. The gravitational variance is then analyzed with other data points to gain an estimate of sub-surface water loss.

We have two major dilemmas that our Jet Propulsion Laboratory helps to solve through the GRACE satellite mission. First, due to the overlapping governmental responsibilities and spheres of influence, there is no consolidated framework to properly assess and track sub-surface water. In the instances where data does exist, it is incomplete. In short, it’s very hard to get accurate groundwater data from all the different constituencies in such a manner that it may effectively be used for evidence-based decisions.

The other major dilemma is that we really don’t know how much groundwater we have left simply because we do not know how much we started with nor do we have suitable data to declare, with confidence, what recharge rates may be.  These dilemmas make it very challenging to quantify amalgamated groundwater resources with a high degree of accuracy.

Accounting for month over month changes in the estimated water mass allow us to make estimates of system wide depletion rates. Monthly measurements in the change in water mass from December 2004 to November 2013 revealed the overall Colorado River Basin lost nearly 53 million acre-feet (65 cubic kilometers) of freshwater, or approximately double the volume of Lake Mead. Of that depletion, more than three-quarters of the total, approximately 41 million acre-feet, was from groundwater (Middleton, 2017).

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Bibliography

AMWUA. (2018, 09 05). where-we-stand. Retrieved from Arizona Municipal Water Users Association AMWUA: http://www.amwua.org/where-we-stand/issues/colorado-riverstructural-deficit

Department of the Interior. (2018, 09 16). Colorado River Interim Guidelines (2007) for Lower Basin Shortages and the Coordinated Operations for Lake Powell and Lake Mead. Retrieved from US Bureau of Reclamation Lower Colorado Region, Programs and Strategies Record of Decision, December 2007: https://www.usbr.gov/lc/region/programs/strategies/RecordofDecision.pdf

Department of the Interior. (2018, 09 10). Conservation Before Shortage. Retrieved from U.S. Bureau of Reclamation: https://www.usbr.gov/lc/region/programs/strategies/alternatives/CBS2A.pdf

Famiglietti, S. L. (2014). Groundwater depletion during drought threatens future water security of the Colorado River Basin. Geophysical Research Letters, 41(16).

LDBCP. (2018, 09 10). Lower Basin Drought Contingency Plan Steering Committee. Retrieved from Arizona Department of Water Resources: https://new.azwater.gov/sites/default/files/media/LBDCP_Steering_Committee_Roster _8.28.pdf

Middleton, K. E. (2017). Global Sensitivity of Simulated Water Balance Indicators Under Future Climate Change in the Colorado Basin. Water Resources Research.

NASA. (2018, 09 10). Parched West Is Using Up Underground Water: NASA/UCI. Retrieved from Jet Propulsion Laboratory: https://www.jpl.nasa.gov/news/news.php?feature=4229

Reclamation, U. B. (2018, 10 01). FAQ Page. Retrieved from Reclamation Managing Water in the West: https://www.usbr.gov/lc/region/pao/faq.html

Reclamation, U. D. (2018, 10 01). Draft AOP 2019 third consultation. Retrieved from Bureau of Reclamation: https://www.usbr.gov/uc/water/rsvrs/ops/aop/AOP19_Third_Consultation_draft.pdf 

Monday, August 7, 2017

Globally Integrated Logistics Zone and FTZ

The Opportunity - Southwest and Asia Pacific Markets

Kingman offers a unique intersection of air, rail, and highway infrastructure. Proximity to major regional markets and international markets create unparalleled geographical advantages. The confluence of the CANAMEX Corridor through Mohave County alongside the Burlington Northern Santa Fe Railway (BNSF) creates a “made for business” logistics hub ready to meet the needs of increased traffic on the I-11 CANAMEX Corridor.

Low operating costs create a compelling business model and small to mid-sized companies with market presence in the Southwest and Asia-Pacific markets may capture proximity benefits for their supply chain.

Globally Integrated Logistics Zone // Port Regionalization

The emergence of intermediate hubs (offshore terminals) created a new hierarchy within the port system, acting as intermediate locations. Additionally, the efficiency and capacity of container cranes improved, enabling ports to handle larger ships and a higher containerized throughput, particularly in the context of efficient inland distribution.




The Port of Los Angeles and other large port gateways on the west coast must operate with a wide array of various issues that compress their ability to grow. Deep water requirements for Post Panamax ships combined with a wide variety of local and regional issues, have created reduced land availability in proximity to major gateways. Inland ports, such as Kingman, offer competitive advantages for Port operations that can be external to core gateway operations via port regionalization.

Kingman Advantages

  • Class 1 Rail Access
  • I-40 Corridor Access
  • CANAMEX Corridor Access
  • Reduced Operational Costs
  • Reduced Cost of Goods Sold (COGS)
  • >7 million market <200 miles (Maricopa Co. & Clark Co.)

Rail Segmentation

  • Aggregate
  • Bio-fuels
  • Chemicals
  • Cullet/glass
  • Machinery/equipment
  • LPG
  • Lumber
  • Metals
  • Plastic resin
  • Steel products
  • Petroleum products
* Load Types include Dry Bulk, Liquid Bulk, Dimensional, Pulp/ Paper, Food.

Foreign Trade Zone / FTZ

Inland ports typically designate an area for a Foreign-Trade Zones; secure areas under U.S. Customs and Border Protection supervision that are generally considered outside CBP territory upon activation. FTZ advantages accrue through;
  • Deferral of duty
  • Deferral of excise taxes
  • Tax free removal from the FTZ as per Tariff Act
  • Security Level for CBP specifications


Foreign-Trade Zones (FTZ) are secure areas under U.S. Customs and Border Protection (CBP) supervision that are generally considered outside CBP territory upon activation. Located in or near CBP ports of entry, they are the United States' version of what are known internationally as free-trade zones.

Authority for establishing these facilities is granted by the Foreign-Trade Zones Board under the Foreign-Trade Zones Act of 1934, as amended (19 U.S.C. 81a-81u). The Foreign-Trade Zones Act is administered through two sets of regulations, the FTZ Regulations (15 CFR Part 400) and CBP Regulations (19 CFR Part 146).

Foreign and domestic merchandise may be moved into zones for operations, not otherwise prohibited by law, including storage, exhibition, assembly, manufacturing, and processing. All zone activity is subject to public interest review. Foreign-trade zone sites are subject to the laws and regulations of the United States as well as those of the states and communities in which they are located.

Under zone procedures, the usual formal CBP entry procedures and payments of duties are not required on the foreign merchandise unless and until it enters CBP territory for domestic consumption, at which point the importer generally has the choice of paying duties at the rate of either the original foreign materials or the finished product. Domestic goods moved into the zone for export may be considered exported upon admission to the zone for purposes of excise tax rebates and drawback.

Qualified public or private corporations that may operate the facilities themselves or contract for the operation sponsors foreign-trade zones. The operations are conducted on a public utility basis, with published rates. A typical general-purpose zone provides leasable storage/distribution space to users in general warehouse-type buildings with access to various modes of transportation. Many zone projects include an industrial park site with lots on which zone users can construct their own facilities.

Subzones are normally private plant sites authorized by the Board and sponsored by a grantee for operations that usually cannot be accommodated within an existing general-purpose zone. (Department of Homeland Security, 2017)


 Advantages of an FTZ

  • CBP duty and federal excise tax, if applicable, are paid when the merchandise is transferred from the zone for consumption.
     
  • While in the zone, merchandise is not subject to U.S. duty or excise tax. Certain tangible personal property is generally exempt from state and local ad valorem taxes.
  • Goods may be exported from the zone free of duty and excise tax.
  • CBP security requirements provide protection against theft.
  • Merchandise may remain in a zone indefinitely, whether or not subject to duty.
  • The rate of duty and tax on the merchandise admitted to a zone may change as a result of operations conducted within the zone. Therefore, the zone user who plans to enter the merchandise for consumption to CBP territory may normally elect to pay either the duty rate applicable on the foreign material placed in the zone or the duty rate applicable on the finished article transferred from the zone whichever is to his advantage.
  • Merchandise imported under bond may be admitted to a FTZ for the purpose of satisfying a legal requirement of exporting the merchandise. For instance, merchandise may be admitted into a zone to satisfy any exportation requirement of the Tariff Act of 1930, or an exportation requirement of any other Federal law (and many state laws) insofar as the agency charged with its enforcement deems it so.

Considerations for establishing an FTZ in Mohave County

  • Discussions could be parsed into several logical parts
  • Geographic Benefits / Liabilities
  • Comparative Economic Benefits / Liabilities
  • Work Force Strengths, Weaknesses, Opportunities, Targets
Each area may draw conclusions which may or may not support the FTZ concept, but it will be beneficial to consider the first and most important goal of any FTZ is to establish a foothold of economic opportunity for Mohave County which can be a catalyst and act as a “launch pad” for the improvement of economic conditions for existing business. An FTZ should also be a major positive decision point in the recruitment of new and appropriate industry and business to Mohave County and to encourage discussion on the planned and systematic growth of the county.

Regional Positioning - California

California posted a 2.5 trillion GDP in 2015. If California were a nation state, it would rank behind the United States, China, Japan, Germany, and the United Kingdom. California ranks slightly ahead of France and Brazil (World Bank, 2017).



California Sectors

Three important sectors make up 29% California’s GDP, including transportation, trade, utilities, manufacturing, agriculture, and mining. Accordingly, the Mohave County region is proximal to approximately 725 billion GDP of highly targetable trade, and those three segments would still rank in the top 20 global economies, surpassing the entire GDP of Switzerland and Saudi Arabia.


 West Coast Ports

West coast ports transit large scale rail traffic to the KC Smartport from where 85% of the US domestic population may be reached in two days. Kingman is one day (16 hours or less) from the West Coast ports and offers access to Las Vegas, Phoenix, Albuquerque, El Paso, and Mexico City, the Port of Lazaro Cardenas, and Veracruz. Port traffic on the west coast is dominated by Los Angeles.

Port of Los Angeles and Long Beach

The Port of Los Angeles (POLA) is America’s largest, with the Port of Long Beach (POLB) in second place. Combined, they handle about 16 million twenty-foot equivalent units (TEU), almost three times the size of New York. This trade growth is fueled by China and Pan Asian trade routes.
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CANAMEX Corridor

The compilation of evaluation data for designation of the CANAMEX corridor through the Maricopa region is the Arizona Department of Transportation (AZDOT) report that solidifies the route proposed and accepted by the Maricopa Association of Governments. The map, shown here, delineates the route of the CANAMEX corridor and ties through Highway 40 in Kingman. Investments made to accommodate growing truck traffic on the CANAMEX Corridor align with known truck traffic patterns and correlate with warehouse densities in metropolitan zones. 

Sun Corridor

Moving trade across the CANAMEX corridor is part of the equation. Undertaking an industry led stakeholder identification of key synergies to be captured by the greater Kingman Region will provide the basis for an analysis of job creation potential and weight that with labor rate potential in order to capture as many jobs as possible and amplify the wage base.

The State of Arizona recognizes the importance of inter-municipal and inter-organizational collaboration. It requires partnerships to move cargo from a point of entry on Arizona’s border, to or through the state. These partnerships range the various modes of transportation while the corridor reflects an opportunity to connect Mohave County to the emerging super-corridor, a.k.a. the Sun Corridor.



The Joint Planning Advisory Council has a shared vision to jointly coordinate planning efforts and carries the consent of the Maricopa Association of Governments, Pima Association of Governments, the Central Arizona Governments, and the Sun Corridor Metropolitan Planning Organization (Joint Planning Advisory Council, 2017).


Proximity to the Auto Industry in Mexico

Proximity to Mexico offers some prospect to capture part of an 17 billion plastic resin supply chain (Export.gov, 2017). Due to the considerable number of automobile manufacturers in Mexico, the market for specialized plastic feedstock is accelerating, this may be immensely impacted by the expansion of commercialized 3D printing, which requires a specialized feedstock. The market for 3D printing feedstock is expected to meet or surpass the amalgamated plastic resin export market within five years.


Market Risk

Kingman is on the BNSF Class 1 rail line moves domestic traffic to the KC Smart Port. Kingman offers midpoint value and regional highway access to domestic markets of Phoenix and Las Vegas, it also connects to El Paso, thus able to connect to Mexico’s automobile production corridor while boasting Atlantic and Pacific access through bidirectional connectivity to the ports of Veracruz and Lazaro Cardenas.

Assumption of political risk is assigned to the North American Free Trade Agreement (NAFTA) being renegotiated and/or terminated during the proximal three-year horizon is low as confirmed by the Executive Office of the President through the U.S. Trade Representative Office as a releast of NAFTA negotiating objectives (Executive Office of the President, 2017).


Strategic Planning - Overview

Given the strategic location of Kingman and the nexus of rail, air, and highway, it seems like it would be wise to examine certain industry sectors to determine if they are candidates for Kingman served markets. These industries compromise the initial research required to formulate a solid and credible economic development plan that leverages the Kingman advantages.


The Example of Plastic Resin and 3D Printing with Polyamide Feedstock

Of the current market segmentation, plastic resin was selected for a brief scan of data and market opportunity relative to the geophysical positioning of Kingman. This was done due to major export and import points relative to BNSF class 1 rail and intra-rail connectivity providing a supply chain corridor from Joffre and Los Angeles to Mexico City.


U.S. exportation of plastic resin to Mexico represents a 17-billion-dollar export market. Mexico is also the largest export destination for U.S. Plastic and Rubber Equipment, Tools, Dies, Jigs, and Industrial Molds. It is also the fifteenth largest destination for U.S. Additive Manufacturing equipment. More importantly, Mexico is expected to see 3D printing feedstock, polyamides, exceed all other forms of imported resin by the year 2020.

Industry segmentation for the consumption of resin recollects companies like GM, Ford, Chrysler, and Toyota, but it also features companies like Fuji Heavy Industries and some of the World’s largest consumers of tech equipment used for processing and bio-packaging products in the food and beverage sector. BNSF also switches in El Paso with Ferromex offering integrated service to Mexico City.


Integration of the FTZ

Storage sites confer supply chain proximity of plastic resins with short market lead times, making them ideal for established corridors such as Los Angeles/Mexico City through Kingman. Trans-shipment of plastic resin, in addition to regional consumption, provide a customer base that could leverage economic benefit through FTZ storage and re-exportation duty free and excise tax free. This could, as an example, apply to Sterlite Manufacturing using plastic resin originating in Canada for plastic products exported either within the NAFTA market or external to it, with one way or two-way taxation benefits being applicable.


Collateral Opportunity Points applicable to FTZ and international markets

Other opportunities include materials for construction, electrical, and agricultural product trans-shipment. Extending the supply chain includes not only the Pacific Rim countries, but also Canada as a large feedstock supplier of North American plastic resin feedstock from Southern Alberta’s Joffre Novachem facility. Trans-shipment through Kingman offers not only tax exempted status, it also offers currency arbitrage opportunity through contract forwarding of exchange rates the NAFTA partners.


Project Management

Economic development project management must be aligned with the realities on the ground in addition to the vision and direction of local and regional governments. These components plus stakeholder groups from operational segments of the logistics zone and imperative. The physical proximity of class one rail, air operations, and the CANAMEX Corridor trucking access creates a trifecta of advantage for Kingman. A seven-step data set for industry targeting consultations with stakeholders;

  • Assessment of Alignment for Economic Stakeholders
  • Existing Market Status Analysis & Data Management
  • Data Collection, Normalization, and Statistical Analysis for Rail Cargo
  • Data Collection, Normalization, and Statistical Analysis for Truck Cargo
  • Data Collection, Normalization, and Statistical Analysis for Air Cargo
  • Integrated Analysis of Road Rail and Air Data to define overlap opportunity
  • Identification of Key Industry Targets

Regionalization Knowledge Management

  • Inland Port
  • Port Regionalization
  • NAFTA Trucking w CANAMEX export/import
  • Asia Pacific Truck/Rail/Shipping
  • Other International Markets
  • Transshipment
  • Public Communications
  • Foreign Trade Zone (FTZ)
  • U.S. / Mex / Can (customs/douane)

Governance

Port governance is flexible and may span central government owned entities to fully privately owned and controlled ports. Typically, port governance in the United States is most often public in nature. The organizational design in areas with private control in place and a shifting business environment quite often benefit from a hybridized governance structure that reflects the need for a flexible governance structure. These could involve a combination of private industry leaders from stakeholder industries alongside public representatives appointed by regional government entities and/or public trust institutions.
Rail operators, class 1 and short line, plus logistics service providers and other private stakeholders would be likely candidates for inclusion. So long as there is widespread agreement on the best structure, it is possible to have great flexibility in the design of any governance changes and/or initiatives.

References

Department of Homeland Security. (2017, 07 26). About Foreign-Trade Zones and Contact Info. Retrieved from U.S. Customs and Border Protection: https://www.cbp.gov/border-security/ports-entry/cargo-security/cargo-control/foreign-trade-zones/about
Executive Office of the President. (2017, 07 27). USTR Releases NAFTA Negotiating Objectives. Retrieved from Office of the United States Trade Representative: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/july/ustr-releases-nafta-negotiating
Export.gov. (2017, 07 27). Mexico Country Commercial Guide. Retrieved from Mexico - Plastic Materials / Resins: https://www.export.gov/article?id=Mexico-Plastic-Materials-Resins
Joint Planning Advisory Council. (2017, 07 27). A Planning Partnership for the Arizona Sun Corridor. Retrieved from Joint Planning Advisory Council: http://www.jpacaz.org
Kimley-Horn and Associates, Inc. (2000, August). CANAMEX Corridor Study. Retrieved from Maricopa Association of Governments: https://www.azmag.gov/Documents/pdf/cms.resource/ADOT-MAG_CANAMEX_FinalReport95374.pdf
Kingman and Mohave Manufacturing Association. (2017). Conceptual Overlay. Kingman: Kingman and Mohave Manufacturing Association.
World Bank. (2017, 07 26). Gross Domestic Product 2016. Retrieved from Databank - The World Bank: http://databank.worldbank.org/data/download/GDP.pdf



Monday, July 4, 2016

Independence Day


Happy 4th of July Lake Havasu! We just got back from the 4th of July celebration at Cavalry Baptist's new Sweetwater Campus and it was great! It was our first time in the new facility and we were stunned. The place was packed, standing room only if you arrived within ten minutes of show time. Happily, we managed seats because we did get there a bit early.


Every branch of the armed services was represented along with our veteran's service organizations. The Marine Corps League presented colors and honors. The choir was absolutely fantastic and the solo performers delivered beautiful renditions of patriotic songs including one of the best renditions of the national anthem I've heard in a very long time. In addition, the displays of photographs of our many veterans who have served were on display along with the historic collection of uniforms. It was Americans coming together in unity and the message was one of loving thy neighbors; Dr. Garrison did not disappoint.

We came back home and I rigged up the rotisserie for the bird that has been marinating since yesterday in anticipation of an afternoon feast followed by fireworks over the lake. We're going to walk down the street just a tad and then watch them from a bird's eye view of the bay. We are going to bask in the warmth of liberty.

Remembering how we became a nation and why… that truly is important. For two hundred and forty years, we have managed to survive every ordeal and trial placed upon us as a nation. We've taken our punches, we've got our battle scars, but we remain the most powerful nation on Earth; our quality of life is excellent and our liberty is secure. Sure, we can do better with things like health care and education; we should hold ourselves to the highest of standards. But all in all, our lives are pretty good.

Nothing divides us that cannot be overcome by that which binds us together. Today is a glittering reminder of our common roots and purposes. Today we celebrate our freedom together as one nation.

Tuesday, March 10, 2015

Leadership in 11 Bullet Points

Leadership in 11 Bullet Points
  • Know yourself and seek continuous self-improvement 
  • Be technically and tactically proficient 
  • Seek responsibility and take responsibility
  • Set the example
  • Know your people and look out for their welfare
  • Keep your people informed
  • Ensure the task is understood, supervised, and accomplished
  • Develop a sense of responsibility among your people
  • Train your people as a team
  • Make sound and timely decisions
  • Employ your work unit in accordance with its capabilities
It's not difficult...

Understand who you are, your values, priorities, strengths and weaknesses. Self-improvement is a process of sustaining strengths and overcoming weaknesses. Remember that before leaders can lead effectively, they must master the tasks required by the people they lead. Leaders do not avoid responsibility by placing the blame on someone else when things go wrong. Leaders realize that if they expect courage, responsibility, initiative, competence, commitment, and integrity from direct reports, they must demonstrate these characteristics. 

Telling your people you care about them has no meaning unless they see you demonstrating it. Your people must understand what you want done, to what standard and by when. Remember that over-supervision causes resentment while under-supervision causes frustration, so find your balance. Delegation indicates trust in people and encourages them to seek responsibility. Develop people by giving them challenges and opportunities. 

Train and cross train people until they are confident in the team’s abilities. Leaders must know the factors to consider when deciding how, when, and if to make decisions. Good decisions made at the right time are better than the best decisions made too late  Leaders must know their work unit’s capabilities and limitations. People gain satisfaction from performing tasks that are reasonable and challenging, but they are frustrated if tasks are too easy, unrealistic or unattainable.




Friday, February 14, 2014

Good Neighbours

We all know that the rapid expansion of Alberta's economy has greatly accelerated the demand for skilled and highly qualified labour in numerous sectors. Our steel fabrication industry is particularly important for energy industry projects and is one such area where the labour shortage is pressing.

Port Alberta Director Don Oborowski, CEO of Waiward Steel, joined me on a reciprocal trade mission to lay the foundations for a near-term deal between institutions of higher education in Idaho, Washington, and Alberta in order to develop a pipeline of qualified labour arriving with Alberta based curriculum and apprenticeship training. Preliminary discussions between American and Canadian institutions of advanced education have resulted in this exciting opportunity to put a real dent in a key labour shortage in our region. This opportunity is the result of a trade mission to encourage bilateral corporate investment between Alberta and neighbouring states.

Between 2007 and 2011, Alberta's exports to Washington and Idaho were worth more than $10 billion. It's wise to have good relations with your biggest business partners. When Mexico voted to allow foreign direct investment into key elements of its energy industry, Alberta's intra-hemispheric trading relationships were set to expand faster than ever. NAFTA countries already account for approximately 25% of global GDP. Our intra-hemispheric economic growth, combined with abundant energy and stabilized hemispheric labour costs, will accelerate "nearshoring activity", meaning a mutually beneficial transfer of the business to a neighbouring country.

These developments, combined with global economic recovery, will increase our hemispheric manufacturing capacity. Ameliorating labour shortages in our key industries will help our regional economy expand while enabling Albertans to export more products to neighbours and the rest of the world.