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Statement to the Assembly Committee on Government Affairs in support of Assembly Bill No. 434

April 6, 2005

Public Citizen is a non-profit, non-partisan consumer advocacy organization headquartered in Washington, D.C. I work out of Henderson on national and international water privatization issues for Public Citizen’s Water for All Program.

I’m here to speak in favor of AB 434. I want to specifically address Section 5 dealing with water speculation.

“The water of all sources of water supply within the boundaries of the state whether above or beneath the surface of the ground belongs to the public.” (NRS 533.025). In Nevada, water is a public resource and should be managed in the long-term public interest.

Not everyone agrees. For instance, a California company called PICO Holdings, in its 2004 annual report filed with the Securities and Exchange Commission March 11, 2005, characterized Nevada’s water resources not so much as belonging to the public but as “an attractive business opportunity.”

The financial report also explains the method for profiting from this “business opportunity.” The corporation, through its subsidiary Vidler Water Co., “seeks to acquire water rights at prices consistent with their current use, with the expectation of an increase in value if the water right can be converted to a higher use.” Growth-induced demand for water by public water systems serving cities and towns features prominently in the company’s vision of potential higher uses. In other words, the company hopes to purchase rights to the public’s water, and then sell the public’s water back to the public at the highest price it can get.

It should be noted that Nevada communities are not the only potential customers being eyed by water speculators. For instance, PICO holds out the hope to its shareholders that profits might be realized by selling water to people outside the state. Again citing the company’s annual report, “currently there are not effective procedures in place for the transfer of water from private parties with excess supply in one state to end-users in other states. However, regulations and procedures are steadily being developed to facilitate the interstate transfer of water.”

Many Nevadans, including the members of this committee, are working very hard to wrestle with the state’s water problems in ways that are wise, cost-effective and environmentally conscious. Water speculation runs counter to those efforts.

It’s not cost-effective—as we are witnessing now in the international price of oil or the cost of Southern Nevada real estate, speculation increases costs to consumers.

And because the more water they sell, the more money they make, it is not in the interest of water speculators to conserve the resource, but, on the contrary, to make every effort to convince regulators to allow as much water pumping and water sales as possible.

Finally, Nevada is not alone in wrestling with the threat of water privatization. Throughout the region, the nation and the world, there is a growing push by private companies to control water for profit, accompanied by intense consolidation, merger and acquisition, led primarily by three giant European conglomerates. AB 434 protects the public’s resource from the pitfalls of ceding control to today’s speculators. But the legislation also may prove crucial to protecting the public’s resource from much larger, more aggressive and more sophisticated private operators in the future.

Please support AB 434.

Thank you.

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