Industry

Abstract

The industrial demand for water cannot be separated from the general growth of population and urbanization in California during the coming decades. Nonetheless, industrial and commercial activities account for more than three-quarters of employment and almost 85 percent of income in the state, and their performance will shape the investment climate and affect economic development and migration. Although adequate water supply is by no means assured for industry everywhere, its role is ambiguous. On the one hand, the threat to the state's economic climate posed by potential water shortages will require that government and the private sector support measures to maintain an adequate supply, as they have done for many years. On the other hand, the rising cost of new water projects, the competition for state Junding in a period of need for reinvestment in urban infrastructure, and the undoubted capacity of industry to outbid, if needed, almost all other users for water, all suggest that industry may best be served by an incremental change toward a partial market approach to water allocation in the medium term future. Such an approach is supported by the fact that most industrial water demand will occur in conjunction with urban and residential development. Competition for future supplies is likely to shape up between agriculture, urban users (including industrial and commercial), and conservation, rather than between industrial users and the rest. Those sectors with especially high demands, for example primary energy, are likely to make their own supply arrangements and seek improved conservation measures in the face of rising costs and local shortages of water.