California’s Water Crisis: A Contractor’s Challenge and Opportunity

The beautiful state of California is a vibrant and enticing place to live, but its stringent water regulations—designed to conserve water and promote sustainability—pose significant challenges for almost every industry sector. Numerous factors have impacted the state’s water resources and likewise the regulatory environment including weather, wildfires, historic population growth, environmental preservation, aging systems, and legal frameworks.

The agriculture industry is suffering because of very strict limits on irrigation. Construction, commercial development, and real estate firms are struggling because of water scarcity. Manufacturing companies are being forced to adopt water recycling and treatment technology to continue operations. But arguably, no industry group has been impacted more than the companies that contract with the government to deliver public water projects.

The Front Line

The impact of tighter water restrictions on plumbing and hydronic heating contractors has been classified as significantly painful. These companies are on the front line when it comes to dealing with water restrictions and mandates. They are dealing with new requirement standards and changes that call for more expertise, costly new tools and technology, and ongoing innovation.

There is high demand for water technology of all types. New equipment comes with water-efficient fixtures, leading-edge technology and expanded capabilities. Contractors are expected to have expertise related to every type of new device and be innovative enough to match the capabilities with project requirements while maneuvering around regulations. Firms that offer hydronic heating systems must find innovative ways to deliver minimized water use. Retrofitting of older plumbing systems now requires even more from contractors—a deep understanding of how to meld new technology and equipment with legacy systems and hold down costs while complying with regulatory mandates.

Expertise in Demand

There is no doubt that as regulations tighten and demands change plumbing contractors will begin to adjust to the challenges. The ongoing promotion of expertise and talent may become the gold standard for getting hired.

As projects become more complex, costs will escalate, and contractors will be called on to justify the increase. This provides another responsibility for contractors because they will be asked to explain their cost estimates to others who are not as well versed in technology, smart equipment, the basics of upgrading or replacing aging systems, or what is required to transport water from one location to another one.

Cost increases are never positive so a public-facing message that is easily understood will be another task for contractors to manage. Public entities, homeowners, private sector businesses, and all industries with needs for plumbing will be introduced to higher costs as conservation and water restriction goals stabilize.

Contracting firms will also be required to invest in new tools, techniques, and ongoing education for employees. California, however, is but the tip of an iceberg because other states will soon need to implement many of the same types of regulations. Companies that are already staffed to handle the new mandates will fare well in all states because water resources and water infrastructure are top of mind challenges for all public entities. Very few states are untouched by water resource shortages and many states are already mandating some of the same types of regulatory changes that are occurring in California.

Challenge and Opportunity

New challenges always result in new opportunities, as is currently being seen in California. The marketplace for water projects will be filled with contracting opportunities for the next decade.

A very large statewide water modernization project, known as the California State Water Project or the Delta Conveyance Project, is on the launch pad now. A tunnel system will be required, and the project will be designed to move water from one location to another by capturing and transporting water from the Sacramento River to other areas in need of water, particularly the Bay Area and San Joaquin Valley. This project is part of the state’s Water Resilience Portfolio, and it will address anticipated water supply reductions resulting from climate change. Plans call for it to launch in late 2025 or 2026 and the cost could be as high as $20 billion by the time it is completed. Many different types of contractor expertise will be required.

Another project currently in the planning and permitting stages is a reservoir expansion effort and the construction of a dam near Gilroy, California. The project is known as the Pacheco Reservoir Expansion Project. Officials at Clara County have tagged the effort with a cost projection of $2.5 billion. When completed the work will have expanded the existing Pacheco Reservoir enough to improve water storage capacity while also delivering flood protection, environmental benefits and habitat restoration upgrades.

The Monterey Peninsula Water Project, a large project to construct a new desalination plant with diversification solutions is currently in the pre-design phase. This new plant will utilize slant wells to draw seawater through a pipeline, cleanse it and then provide it for use by people in the Monterey Peninsula. It will reduce reliance on the Carmel River and Seaside Groundwater basin. A cost of $322 million has been estimated for the project which has a planned launch date of 2026.

Opportunities of every type and size will continue to be announced for contractors in California. They will all require compliance with California’s stringent water regulations, but savvy contractors will be in extremely high demand for many years.

As President and CEO of Strategic Partnerships, Inc. Mary Scott Nabers, a former statewide office holder in Texas, has decades of experience in the public and private sectors. Her unique expertise is her success in connecting the two sectors. Strategic Partnerships, Inc. publishes Government Market News, the premier platform for connecting public and private sector leaders in the government marketplace.