As with the stock market, climate change requires a diversified portfolio of solutions. California Gov. Gavin Newsom recently signed an executive order to develop a comprehensive strategy for making the state’s water system climate-resilient. The order calls for a broad portfolio of collaborative strategies to deal with outdated water infrastructure, unsafe drinking water, flood risks and depleted groundwater aquifers. 

In a related study published earlier this year, Stanford researchers Newsha Ajami and Patricia (Gonzales) Whitby examined effective strategies to rising water scarcity concerns. Ajami is director of Urban Water Policy at Stanford’s Water in the West program and a hydrologist specializing in sustainable water resource management. Whitby is a recent Ph.D. graduate from Stanford’s civil and environmental engineering department and currently a water engineer at environmental consulting firm Brown and Caldwell. Below, they discuss their research and how a diversified water portfolio can meet the water needs of California into the future.

How does a diversified water portfolio reduce risks associated with water supply?

Ajami: Developing a water supply portfolio means moving away from dependence on one water source such as imported water or groundwater in order to develop a number of other water sources by incorporating local and regional solutions including conservation and efficiency, water recycling and reuse, rainwater and stormwater harvesting and desalination. The golden rule in an investment portfolio is to have diversification which prevents short-term and long-term risks. The same rule applies to a diversified water portfolio. In order to minimize the risk of short-term and long-term challenges and disruptions due to failing infrastructure or climate change impacts including intensified droughts and floods, it is important to rely on more than one supply source and develop a water portfolio that is comprised of multiple water options in order to increase systematic flexibility and resiliency. In developing such a portfolio, utilities and regions should not only focus on the number of sources but also need to think about the capacity of each supply. Our team has developed a water reliance index which can help measure these goals at both the utility and regional level.
 
Whitby: A water supply portfolio is the combination of water supply sources available to a utility. Diversifying means we’re not putting all of our eggs in one basket, so if something happens to one of the supplies like a disruption to the physical infrastructure or a water quality concern or a cutback due to drought, we still have a portfolio of other options available. Water supply diversification should pursue different types of water sources such that each supply has different risks and also different strengths. For example, water reuse is typically considered a robust supply that is resilient to drought. Similarly, diversification means not only having many different water sources available, but also leveraging those sources to reduce stress on the more traditional supplies.

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