The price of water — essential for human life, nature, communities and businesses — is often subsidized, reflecting a commonly held belief that everyone should have abundant access to clean water. But in many locations, those prices don’t reflect the true cost of addressing issues such as water quality or scarcity. That makes it difficult for companies to fully evaluate and account for the business risk of supplies drying up as a result of climate change.
In the midst of drought yet again, and two decades into the 21st century, California continues to operate with a water infrastructure engineered and constructed for 20th century climate conditions and populations. That’s true not only of the state’s physical network of dams and aqueducts, but of its legal and financial infrastructure as well — the pricing rules that allocate the state’s precious liquid resources among its 40 million thirsty people. The coronavirus emergency has highlighted some of the most serious stresses in the system.