Cadiz Inc. (NASDAQ: CDZI) has secured 85% of the capacity for its Northern Pipeline project through water purchase agreements, setting the stage for construction to begin in 2025. The 220-mile pipeline across California is designed to deliver 25,000 acre-feet of water per year to communities in California's remote desert regions and the Inland Empire, which currently rely on imported water from Northern California's State Water Project and are vulnerable to supply disruptions. Susan Kennedy, Chairman and CEO of Cadiz, stated that executing a critical mass of water purchase agreements to support construction has been the company's primary objective this year. The agreements, including five contracts executed in 2024, are expected to deliver 21,275 acre-feet of water annually under long-term arrangements.
The urgency of this project is underscored by growing challenges from climate change and population growth in California and the Southwest, regions heavily affected by persistent drought conditions with unpredictable rainfall and rising water demands. Cadiz's comprehensive approach includes plans for a Southern Pipeline, a 43-mile extension to the Colorado River Aqueduct that will expand capacity by another 25,000 acre-feet per year. Once both pipelines are operational, Cadiz will manage the largest new groundwater banking operation in the Southwestern U.S., providing a buffer against water stress in the Mojave River Basin, the Colorado River Basin, and California's Inland Empire. The company's efforts extend beyond infrastructure, as its subsidiary, ATEC Water Systems, addresses water quality issues, recently securing three new sales contracts for iron and manganese filtration systems adding $1.5 million in projected revenue for 2024, with systems serving communities like rural Nevada and the University of Wisconsin, Madison.
For investors, securing agreements for 85% of Northern Pipeline capacity validates Cadiz's business model and positions it to attract third-party capital for construction, with initial water deliveries projected as soon as 2026 and expected net revenues of approximately $850 per acre-foot in 2024 dollars. The importance of this work extends beyond financial prospects, as water scarcity becomes a pressing global issue, making companies that provide reliable, clean, and affordable water solutions crucial for public health, economic stability, and environmental sustainability. As Cadiz moves forward with construction plans for the Northern Pipeline in 2025 and contracting for the Southern Pipeline later this year, it positions itself as a key player in addressing critical challenges in the American Southwest, potentially serving as a model for water management in other water-stressed regions worldwide. More information on the company's projects can be found at https://www.cadizinc.com.
