Phase 2 and Phase 3 Markets
Until recently, only approximately 1% of the world's population received water from desalination/distillation facilities. The UN projects that by 2025, the percentage will increase to possibly 14% of the global population.
Global Water Farms aims to establish a presence and compete for market share globally. Specifically, GWF has identified the Western United States, with special emphasis on California, as its initial point of entry.
California Market Conditions
San Joaquin Valley
The San Joaquin Valley is one of two areas under primary consideration for construction of the prototype. This region also presents very strong potential for early adopter customers in Phases 2 and 3 for the following reasons: (1) agricultural and other water needs in this region are particularly pressing, (2) there are numerous sophisticated and well-financed potential clients, and (3) large reserves of unusable salt-water in the region present an untapped opportunity for new market entrants.
Beyond the need for new sources of clean water and the presence of large volumes of unusable salt-water, the San Joaquin Valley has a serious salt accumulation problem coupled with rising levels of arsenic, molybdenum and selenium in the soils and water. GWF’s ZLD-AEC technology presents a particularly well-suited solution for this suite of challenges and opportunities.
One of the most important factors in the San Joaquin Valley is the large volume of easily accessible but unusable salt-water in the form of: (1) shallow (or “perched”) brine aquifers under the topsoil but above a layer of clay, (2) deeper saline aquifers, and (3) agricultural irrigation runoff. A 2001 fact sheet produced by the CA Department of Water Resources reported that shallow groundwater could be found beneath more than 700,000 acres of irrigated farmland in the San Joaquin Valley, with up to 1 million acres ultimately likely to be affected. Calculations done by a hydro-geologist retained by GWF demonstrate that, conservatively, the minimum volume of perched aquifers in the Valley at moderate levels of salinity is 1,292,600 af (more than 421 billion gallons). The GWF system can distill salt-water at any salinity. The total volume of shallow aquifers in the Valley at all levels of salinity can be very conservatively estimated in the range of at least several million acre feet (maf), and quite possibly much higher.
Certain deeper aquifers in the region, particularly in the western part of the San Joaquin Valley, are increasingly saline. There are no current reliable comprehensive volume estimates for these deeper saline aquifers but many farmers in the Valley have fairly deep wells that are no longer usable due to rising salinity levels. One significant concern with pumping from these deeper aquifers is that doing so can cause land subsidence and aquifer compaction, just as occurs with pumping fresh water from deep aquifers.
Agricultural irrigation runoff water also contains salts in varying concentrations. There are no reliable estimates of the total volume of saline agricultural runoff in the Valley that could be treated for reuse but given the millions of acre feet used annually for irrigation with very large volumes draining off crops and soils, this runoff water represents another major untapped source of treatable salt-water. Due to the serious problems with land subsidence associated with pumping from deeper aquifers, and given the very large volumes of salt-water available from shallow aquifers and irrigation runoff, GWF’s initial market niche will be to focus on treating perched aquifers and agricultural irrigation runoff.
East Salton Sea Groundwater Basin
GWF is also considering constructing the prototype in the East Salton Sea Groundwater Basin, which straddles southern Riverside County and northern Imperial County and is bounded by the Chocolate Mountains to the north and east and by the Salton Sea to the west and south. The broader region surrounding this basin also provides very strong opportunities for early adopter customers in Phases 2 and 3.
The East Salton Sea Groundwater Basin and the immediate surrounding areas, including the Imperial and Coachella Valleys as well as more populated areas of Southern California to the west, present numerous characteristics which make this an ideal location for the prototype and for potentially very large-scale Water Farms: (1) large volumes of high salinity, shallow and easily accessible groundwater as well as less saline irrigation runoff from Imperial Valley farms; (2) very high levels of solar radiation year-round; (3) over-reliance by area water districts on unsustainable groundwater pumping from deep aquifers; (4) over-reliance by water districts on delivery of imported Colorado River Water, which is projected to become much less reliable in the future; and (5) an urgent need to remediate and permanently stabilize the environmental status of the Salton Sea.
California Drought and Long-Term Trends
The recent extreme California drought forced major supply reductions and price increases of surface water supplied for irrigation. According to the Public Policy Institute of California, and researchers at the University of California Davis, in 2014, farms in California faced a loss of 6.5 million acre feet (maf) of normal surface water supplies (a 37% cut) and in 2015 the cut was significantly higher, at 8.7 maf (48%). These cuts forced the fallowing of more than 550,000 acres of farmland in 2015 and 2016, a loss of between 10,000 and 20,000 jobs, more than $900 million annually in lost farm revenue, and between $2 and $2.7 billion in total annual economic losses related to California’s agricultural sector.
Water users have historically paid low prices for water, with agricultural users paying the lowest rates. For decades, California farmers were generally able to acquire all the water needed for irrigation for between approximately $10/af at the low end up to $300/af at the high end.xiiiIn recent years, however, prices for irrigation water have dramatically increased while available sources have been rapidly depleted and, in many cases, literally dried up.
For example, many California farmers who were paying between $100 and $200/af several years ago suddenly found themselves facing costs of more than $1,000/af and, in some cases, upwards of $2,000/af for imported water needed for irrigation as the recent drought took hold.xivThe average price in 2015 for imported water for agricultural irrigation was $750/af. Most estimates point to continued long-term price increases in coming years. Even if the recent drought is ameliorated by several years of heavy precipitation, the long-term outlook based on the overall supply-demand imbalance is not good.
The cuts to and price increases for surface water supplies have also driven a dramatic increase in deep-well drilling and increased pumping of groundwater suitable for crop irrigation. The additional drilling and pumping has cost the farm sector an estimated $595 million in recent years. These related issues are particularly acute in the Tulare Lake Basin in the Southern San Joaquin Valley, with groundwater pumping in this basin alone totaling more than 6 maf per year in recent years, an increase of nearly 3.5 maf compared to earlier years and nearly double that of the next ranked region for groundwater use. The Tulare Lake region is now highly dependent on groundwater, with this single source accounting for more than 50% of the region’s total water supply and extraction occurring at rates far in excess of the rates of aquifer recharge. The Coachella Valley and other regions in Southern California are also increasingly dependent on groundwater pumping for agricultural and non-agricultural uses.
Increased deep-well groundwater pumping has caused numerous wells throughout California to run dry, impacting small farms and agricultural communities that can not afford the cost of drilling new and deeper wells. Deep-well pumping has also continued to drive severe and worsening problems with land subsidence, particularly in the San Joaquin Valley. Excess demand for more and deeper wells has created a backlog of well-drilling requests, with waiting times in some places of up to 18 months. Many farms and municipalities throughout the region are facing catastrophic shortages and price increases for clean water for crops and drinking. Even with the increased groundwater pumping, the net agricultural water shortage statewide for 2015 was at least 2.5 maf and for 2016 as high as 3 maf. The net agricultural water shortage in the Tulare Lake Basin alone was estimated at 1.3 maf for 2015.
Surface water and aquifer sources contain varying amounts of numerous naturally occurring salts. Fertilizers and crop treatments, as well as additives introduced to water for municipal uses, further increase salinity to the point that runoff water is unsuitable for direct reuse. Historically, runoff waters have been discharged into the environment with minimal controls. Elevated levels of salts have accumulated in the soils as well as surface water bodies and aquifers. Increasing concentrations of salts have forced the fallowing of approximately 113,000 acres in the Western San Joaquin Valley and rendered many water sources throughout the state unsuitable for crops, livestock, wildlife and municipalities.xxi
The primary methods for managing saline runoff and salt accumulation have been to: (1) flush soils with less saline water to push the salt below the root zone, (2) remove degraded land from crop production, or (3) segregate and collect runoff, using “tile drains” and other collection systems, and then pump it into conveyance channels or rivers for disposal elsewhere (generally the ocean or retention basins). None of these methods present a sustainable or economical long-term solution to salt accumulation. All of them have become more problematic as traditional water supplies have dried up and costs have risen.