Cadiz Inc. (NASDAQ: CDZI), a leader in water solutions, has reached a pivotal milestone in its mission to combat water scarcity in the Southwestern United States by securing 85% of the capacity for its Northern Pipeline project through water purchase agreements. This achievement paves the way for the commencement of construction in 2025, targeting the delivery of 25,000 acre-feet of water annually to California's remote desert regions and the Inland Empire, areas currently dependent on the vulnerable State Water Project.
The Northern Pipeline, stretching 220 miles across California, is a testament to Cadiz's commitment to sustainable water management. With five contracts signed in 2024, the project is expected to supply 21,275 acre-feet of water each year under long-term agreements. Susan Kennedy, Chairman and CEO of Cadiz, highlighted the importance of these agreements, stating, "Executing a critical mass of water purchase agreements to support construction on the Northern Pipeline has been our primary objective this year."
The urgency of addressing water scarcity is amplified by climate change and population growth, with California and the Southwest facing severe drought conditions. Cadiz's strategy includes not only the Northern Pipeline but also plans for a Southern Pipeline, which will extend to the Colorado River Aqueduct, adding another 25,000 acre-feet per year to the company's capacity. Together, these projects will establish the largest new groundwater banking operation in the Southwestern U.S., offering a vital resource against water stress in critical basins.
Beyond infrastructure, Cadiz is tackling water quality through its subsidiary, ATEC Water Systems, which has secured contracts for iron and manganese filtration systems. These systems, expected to generate $1.5 million in revenue in 2024, will serve communities from rural Nevada to the University of Wisconsin, Madison, showcasing the wide-reaching impact of Cadiz's innovations.
For stakeholders, Cadiz's progress signifies a major advancement in the water sector, with the potential to attract third-party investment for the Northern Pipeline's construction. Anticipated initial water deliveries by 2026 could yield net revenues of approximately $850 per acre-foot, underscoring the financial viability of sustainable water solutions.
Cadiz's initiatives represent more than just business success; they are a critical response to global water scarcity, offering a blueprint for sustainable water management that could influence policies and infrastructure development worldwide. As the company prepares to break ground on the Northern Pipeline and advance the Southern Pipeline project, its role in securing water for the future becomes increasingly indispensable.
