Building a Solution:
The Gateway to a Resourcient California
California defines the resourcient economy, but as a state we also face climate-driven volatility. As a state California:
celebrates, but also jealously protects, its beauty, its natural and its human resources, its diversity, and its outdoor lifestyles (resourceful);
is a melting pot of cultures and ethnicities that value diversity, education, health, creativity and technology and have given the state a vibrant diversified economy and outlook (resilient);
has long valued and invested in higher education and technology, with the never-ending drive of Silicon Valley continuously reinvigorating the State's business community (prescient); and
has long understood the importance of protecting that environment, conserving and more sparingly using those resources, limiting the disastrous consequences of pollution and Climate Change and constantly upgrading the quality of life of its residents (efficient).
These values are increasingly important not only to California, but to a growing list of communities, cities, states and nations. But even in California, we need to rededicate ourselves to preserving that heritage and what it means to the overall economic, social and environmental health of our beautiful state.
We can have clean energy, clean water, preserve our natural beauty and do so in a way that not only protects, but builds jobs, healthier communities, improves our economic outlook and increases the value of our land. We can provide all Californians with access to affordable, efficient and cleaner forms of transport. We can build homes, commercial buildings and towns that are more livable yet use less energy and water and produce less waste and pollution.
But we cannot stand still. We must invest in making sure that our future continues to be at least as bright as our past, even as California becomes home to more and more people. Already, we are seeing that Climate Change is driving both longer, deeper droughts, and periods of intense flooding, putting new stresses on an already aging infrastructure. So we must invest in building out more resilient forms of our infrastructure systems, from energy, to water, to transport and buildings. And we must protect and enhance the rich agricultural legacy that feeds not only the residents of California, but much of our nation.
It is time for our utilities, regulators, governing officials, investment entities, and our citizens and corporations to come together and rededicate ourselves to a resourcient State of California by setting forth a clear strategy for a clean, resilient, and more affordable energy, water, transport and urban ecosystem, while actively spurring technological innovation in energy, water, materials and agriculture, all bringing new investments into the State, and improving consumer choice.
Growing Challenges Amidst Ongoing Economic Opportunity. We straddle a fine line between the enormous economic opportunity Silicon Valley-style technological progress has enabled and a growing set of systemic risks that threaten to challenge that same economic opportunity. Environmental pollution, congestion, climate change, water and other resource shortages, are all symptoms of growing systemic risk. In addition, the early benefits of technological change have gone disproportionately to large urban areas – smaller towns and rural areas are just beginning to catch up and feel left out of economic progress. Those same more rural communities may feel the earliest brunt of both climate change and resource shortages (particularly water-related). As a result, our collective economic health depends on spreading infrastructure improvements and economic opportunities more broadly across the state.
Infrastructure Can Bridge the Gap. The greatest opportunity to address these systemic risks and to more broadly share the economic opportunities is to build out greater amounts of resilient infrastructure for the provision of energy, water and other resources (including data and communications and transport-related infrastructure). Providing lower cost energy and water to all our communities, giving them all access to the latest in data and communications capabilities (including educational opportunities inherent therein) and reducing wasted time in transport and wasted resource usage in buildings are all ways to ensure better economic health to all of California. Fortunately, technological progress over the last 20 years have made it possible to provide those benefits on an affordable-to-all basis.
Finding the Right Capital. The biggest challenge to achieving this future is matching capital to need. Even though almost all this infrastructure and related technologies are self-funding over time, they do require large amounts of initial capital. Many of this State’s largest pools of capital are struggling with finding ways to put enough money to work at rates that meet their cash flow obligations. Much of that money is interested in finding long-term, rather than not short-term, opportunities for yields north of 7% per annum. However, much, if not most of that infrastructure capital is today being provided by private equity players with much shorter-term return expectations and with fee loading that simply captures more profits than most transactions can bear. The challenge is building a more direct bridge between these large, long-term sources of capital and all the communities that would benefit significantly from the buildout of this new infrastructure.
Better Smarter Infrastructure. We have both the opportunity and the need to not just replace aging infrastructure, but to do so with infrastructure that is smarter, more interactive, more resilient and ultimately more supportive of further growing the California economy.
A Hybrid-Direct-Investment Model. An investment model that combines the best of the Silicon Valley entrepreneurial company model and the pooling of capital represented by most private equity funds is the best means of taking advantage of this opportunity. Building an investor-owned and controlled private infrastructure corporation can allow California to fund its own infrastructure needs and provide its various pension institutions with the rate of return they need to avoid the State having to increase the funding of their obligations. Such a private corporation can compete with the private equity world for the best in talent, can be fully-controlled and risk-managed by its owners, can provide for lower fees and costs and higher returns, and can address the longer-term needs of all parties involved.
A Solution with Immediate Economic Impact. The technologies that such a corporation must deploy are ready now, they can be deployed immediately and provide immediate job benefits and ongoing economic benefit to the applicable communities. They can allow all Californians to participate in the economic boom that started in Silicon Valley but is now much more broadly available to communities across the State provided they can get access to this needed infrastructure. Thus, we will lessen the pressure on congestion, resources and the environment that our biggest cities today threaten and we can deal with the systemic risks that threaten our very existence.
California has always been a place with excitement about its future and that future has become ever more tied to the discovery of new ways of doing things and new technologies to help us accomplish our needs. In a world resistant to change, we are the state that embraces it -- whether that change comes from new technological discoveries or the rich cultural fabric that this state has woven through the diversity of its population. For all of our lives, California has been the place where new trends started and then migrated across the nation. Now, more than ever, is the time to again show that entrepreneurial leadership in showing this nation how a state can use technology to improve its economy and lead to better lives for all of its residents.
Today, the most important technologies for California are those that will allow us to both continue our robust economic growth while fully potecting the healthy living environment environment and natural resources that make California such a great place to live. These are the technologies that provide us clean and affordable energy and water, that address traffic and congestion, prevent and solve crime, provide broad and affordable access to communication and information to all, preverse our ability to be America's food basket, deliver better healthcare to our residents, and boost our overall productivity.
Many of these technologies involve improving our underlying infrastructure, whether that be in energy, water, transport or agriculture. Fortunately, these technologies have made enormous strides over the last two decades and are now both cheaper and better than the technologies they replace. But we must find ways to deliver this new infrastructure and the benefits it can provide to cities and communities across the state and doing so will require new sources of financing and new collaborations to bring these possibilities to reality.
Our communities are the bedrock of our society and in order to be vibrant they must be able to supply attractive jobs, good living environments and affordable access to the resources of good living. The good news is that high-growth, entrepreneurial companies that provide interesting and financially rewarding jobs can now be started and scaled anywhere. We can build startup ecosystems in every California community that are focused on building the innovative, resilient and sustainable companies this state needs. By making sure that we also make these "smart communities" by making better and more efficient use of infrastructure through new technologies , will ensure a brighter future for everyone in California. Increasingly, economic and political power is shifting toward cities and communities; particularly those that function as epicenters of change and innovation.
Our task is to make the infrastructure improvements that reduce crime and congestion in our bigger cities, increase job growth and economic vibrancy in our smaller communities and preserve the rich agricultural heritage of this state in our rural communities. We can do all of this by ensuring that every one of these communities has access to clean and highly affordable energy and water, to the latest communication and information systems, and to other tools that will make them attractive homes to entrepreneurial people.
Doing so will require access to affordable financing to bring these new infrastructure technologies to the communities that need them, it will require new partnerships and collaboration among politicians, regulators, utilities and local businesses to make the buildout of this new infrastructure possible. Fortunately, this buildout will provide great new local jobs and the new businesses enabled by that infrastructure will mean that those jobs remain durable. But doing so will pay rapid dividends for the economic health and attractiveness of this State and will ensure us a brighter and more sustainable future for generations to come.
Recent events have also made us much more aware of income, racial and ethnic differences in our communities and the disparity of opportunity that results therefrom. Changing this will require rethinking the fabric of our communities and their infrastructure.
Droughts, Floods, Fires and More. California's environment is one of our greatest treasures and it is under stress at unprecedented levels. Droughts, floods, fires, species loss, and spreading disease are all signs of the impact that Climate Change is already having on our State. Increased drought means increased dust in our Central Valley. Dust also promotes the spread of valley fever, a potentially fatal disease that affects about 150,000 people a year. Warmer weather also contributed to the spread of West Nile virus, a threat to people across the State and to both pine bark beetles and sudden oak death, which threaten our forests.
Sea Level Rise. Approximately 85% of California’s population live and work in coastal counties. California's sea level has already risen nearly 8 inches in the past century and is projected to rise by as much as 20 to 55 inches by the end of this century. That could put nearly half a million people at risk of flooding by 2100; threatening $100 billion in property and infrastructure. Our storms and weather systems will also get more severe, with increased risk of flooding. Rising seas mean that saltwater will intrude into freshwater aquifers contaminating precious groundwater (the source of drinking water for 20 million Californians), and affecting both fisheries and agriculture in the San Francisco Bay and San Joaquin and Sacramento River Deltas, all of which are particularly vulnerable to sea level rise and changes in salinity, temperature, and runoff.
Fisheries. Our once vibrant commercial and recreational fisheries are on a continuous decline, as native species like salmon, steelhead, and trout are now outnumbered by nonnative species like carp. Most of these native specires are coldwater fish, meaning that they are further threatened by a warming climate. Currently, of the state's 121 native fish species, 82 percent are likely to be driven to extinction, or close to it, by climate change.
Forestry. Forest and rangelands cover more than 80% of this State's 100 million acres. Climate change is already affecting tree survival and growth, reducing these lands’ productivity and changing their habitats. It is also already affecting our fire patterns and fire severity by making forests and brush drier. Today's fire season in the western United States starts earlier, lasts longer, and is more intense than in the last several decades. This means not only loss of valuable forests but increased fire suppression and emergency response costs for the entire state.
Failing to protect our environment means failing to protect large chunks of California's economy, particularly parts of the economy that allow Califrnia to be such a self-sustaining and resilent economic environment. Protecting our environment preserves California jobs, insures our ability to preserve our agricultural heritage, protects our legacy parks and recreation systems and supports all of our comunities that rely on that environment for their heath and vibrance.
Water. More than three-quarters of California's freshwater comes from the Sierra Nevada snowpack. Normally, our snowpack is created in fall and winter and releases its water in the spring and summer, when we need it most. Our state's dams and water storage facilities were built for this weather pattern. Climate scientists predict our state will only get even hotter and drier. That also means more of our precipitation will fall as rain instead of snow in the mountains, it will run off the land more quickly, and end up in the ocean rather than in our reservoirs. The newer rain and snowfall patterns can create risk of both floods and water shortages, potentially requiring us to build a very different water system. As a result, California's farmers and cities will increasingly try to turn to reservoirs and groundwater, but those too are limited resources. Currently, California has only about a year and a half's water supply saved behind dams, and groundwater tables have been dropping precipitously. Lack of water also contributes to more and larger wildfires, including last year's Rim fire, which scorched the largest area on record in the Sierra Nevadas.
Energy. Water is inextricably tied to energy, as we require energy to pump water to where it is needed, to operate desalination plants, for agricultural pumping and ultimately as an energy source in our hydroelectric systems. Finding clean, renewable and affordable ways to generate that electricity here in California is a critical part of our assuring access to the resources needed to support our economy. As we transition the state and nation away from a reliance on foreign fossil fuels to a greater reliance on local clean power, we will need to further build out the distributed clean energy infrastructure needed to ensure ongoing access to reliable and resilent sources of affordable energy. In addition, warmer temperatures also mean higher summer cooling loads as greater and greater portions of California discover they now need summer air conditioning. This will raise summer electricity requirements across the State, but particularly in southern California and the Central Valley.
Agriculture. The same higher temperatures, droughts, floods and more severe weather pose significant threats to California's agricultural system through saltwater contamination from less freshwater runoff and from rising sea levels, from localized flooding, and increased risk of pests. This is a roughly $40 billion a year industry that is responsible for producing more than half of the Nation's fruits and vegetables. Climate change induced agricultural declines will lead to both higher food prices and potential food shortages, in addition to reduced economic vibrance for this critical part of California's economy. COVID-19 has made us much more aware of where our food comes from and how it is processed, showing major weaknesses both in our supply chains and in large scale processing plants.
Recent U.S. transportation studies have ranked Los Angeles as the most congested area in the United States (meaning its drivers spend 41 percent more time than average on their commutes). San Francisco comes in second in the nation (at 36 percent more time) and San Jose ranked fifth at 30 percent (but jumped to No. 3 during its afternoon commute). Congestion is a tax or burden on all, but especially the working class due to long commutes. The burden of hours a day in traffic falls disproportionately on them.
Unfortunately, all three cities have very little room for new roads, and finding the money to maintain aging highways, much less build more lanes, is increasingly difficult; so solving the congestion problem will have to come from different solutions and from implementing technologies that reduce that congestion. Los Angeles is making a multibillion-dollar investment in building or extending five rail lines.
One way to make existing highways more efficient is "high occupancy toll" (or HOT) lanes. The idea often involves converting carpool lanes that may be relatively car free into lanes that solo drivers can pay to use. New vehicles will increasingly be "smart cars," equipped with wireless technology that lets them share how fast they're going, their direction, whether they're braking and whether an accident just happened ahead. These rolling networks could relay information to specially equipped traffic signals and other "smart infrastructure," which in turn would be connected to traffic-management centers. In the San Francisco Bay Area, these self-driving cars of the future are an increasingly common sight. Nearly 80 prototypes have permission from the California Department of Motor Vehicles to test their skills on public roads, although a person must sit behind the wheel in case the on-board computers and sensors make a mistake. Advocates say the cars will be able to drive more closely together, as well as avoid the accidents that can snarl traffic for miles.
COVID-19 has re-introduced us to another mode of transport -- the bicycle. Increasingly, e-bikes in particular, are providing a safe, socially distanced way for urban and suburban commuters to get to work and to the store. Providing them with safe bike lanes has already become a major undertaking in European cities.
Historically we think of infrastructure as bridges, highways, airports, water systems and other similar construction projects. However, in today's technology-centric world, infrastructure such as laying of fiber-data networks or high-speed transmission lines tends to provide for greater economic benefits because they not only provide jobs in their construction and maintenance but because they enable commerce to occur in the communities connected to that infrastructure.
For California, infrastructure has taken on new meaning and importance. Not only is climate change forcing a shift to renewable energy, but our droughts, fires, rising seas and most recently pandemic, have dramatically increased the need for communities to build the infrastructure they need to make themselves more resilient to these threats.
As we have undergone fire related power outages, the ability to provide locally sourced wind, solar, battery and hydro-power not only provide the ultimate way to provide for a clean, low-cost energy future for the state, they are critical to permitting microgrid configurations that make our communities more resilient and able to del with broader outages. Supplying these cheap, clean and always available electrons everywhere across the State is as important as providing high-bandwidth data and communications capabilities to the same communities. Together they provide the means needed for our smaller towns and cities and our rural communities to compete in the 21st Century global economy.