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How Does Selling H2O To Southern California Help Southern Nevada?


Los Angeles river

Southern Nevada is selling water to the Metropolitan Water District of Southern California.

Here in the desert southwest, where the drought is beginning to make residents see water as a commodity more valuable than gold, this might surprise you.

A deal that transfers some 150,000 acre-feet of water from the Southern Nevada Water Authority to Southern California is seen as a positive move by Moody’s, the global bond credit rating business.

It’s also seen as a positive for the Metropolitan Water District of Southern California, also known as The Met.

William Oh, an analyst for Moody's, said because of the SNWA's aggressive management of its water supply it is in a good position to get money for the water it has and still have enough for Southern Nevada.

"SNWA has more than seven years of water supply stored in Lake Mead and with various partners in the region," he said.

If the water authority decided to just leave the water in Lake Mead, it would be subject to 3 percent evaporation, but by sending it to Southern California, the authority avoids that loss and gets money, Oh explained.

He also said that getting it back in the future is fairly simple: "Should SNWA want or need that water back, all they have to do is return the money that they recieved from Met Water back to Met Water and it will once again use that water that it has banked with them."

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California is under a mandatory water reduction plan after suffering through a four-year drought. So, with extra water in the coffers so to speak, won't people be discouraged from saving water?

Michael Wertz,  the lead analyst for the Met for Moodys, says no. 

"I think the correct way to interrept this is not that they are purchasing water from Southern Nevada to avoid implementing conservation but rather as another tool to help them manage what is now a four-year drought." 



William Oh, analyst, Moody's; Michael Wertz, analyst, Moody's

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