Cadiz lands $175m investment for Mojave Groundwater Bank amid $800m expansion

Cadiz, Inc. has taken a crucial step toward transforming California’s water infrastructure by securing a $175 million investment for its Mojave Groundwater Bank project. This deal, formalized through a Letter of Agreement (LOA) with a lead investor, strengthens Cadiz’s financial position as it pushes forward with developing one of the largest water storage initiatives in the Southwest.

The investment will be directed toward the Mojave Groundwater Storage Company (MGSC), a newly formed entity created to oversee the construction, ownership, and operation of the Mojave Groundwater Bank. This deal follows Cadiz’s previous commitments from Native American Tribes and public sector investors, bringing total equity contributions for the project to an estimated $401 million.

With California facing increasing challenges related to climate change and long-term water shortages, the Mojave Groundwater Bank is positioned as a vital solution. Once operational, it will provide 2.5 million acre-feet of new water supply and 1 million acre-feet of underground storage, reinforcing the state’s ability to manage fluctuating water demands and extreme drought conditions.

What Role Will the Lead Investor Play in the Mojave Groundwater Bank Project?

The agreement marks a strategic partnership between Cadiz and a publicly traded company specializing in water infrastructure investments. The lead investor will play a significant role in MGSC, providing financial backing and collaborating on efforts to secure additional grants and funding sources for the project’s completion.

Cadiz has structured the agreement to transfer key assets to MGSC once funding obligations are met. These assets include the full ownership of the Northern Pipeline, the right-of-way for the Southern Pipeline, and 51% of water storage rights in the Mojave Groundwater Bank. In return, MGSC will compensate Cadiz with approximately $51 million and allocate up to $350 million toward project construction. Cadiz will retain 49% of water storage rights and maintain full control over its existing water supply contracts with public water systems.

To manage operations, Cadiz has also created the East Mojave Water Company, LLC (EMWC), which will serve as the managing member of MGSC. The investment structure ensures that MGSC investors receive priority returns until they reach an annual yield of 7.5%, after which revenue distributions will be extended to Cadiz and other stakeholders, including Native American Tribes and disadvantaged communities involved in the project’s advisory council.

How Will Stantec Support the Development of the Mojave Groundwater Bank?

As part of its long-term strategy, Cadiz has selected Stantec Inc., a leading engineering and design firm, to oversee the project’s development and construction. Stantec’s expertise in large-scale water supply projects will be instrumental in ensuring that the Mojave Groundwater Bank is completed on schedule and meets the highest infrastructure standards.

Under the agreement, Stantec will serve as the Owner’s Engineer, providing oversight for construction and procurement while assisting in the selection of contractors. The project will follow a Construction Management at Risk model, which helps streamline the development process while managing costs and mitigating potential risks.

The Mojave Groundwater Bank is designed to address persistent challenges in California’s water system, which has been strained by prolonged droughts and an overreliance on traditional surface reservoirs. By providing a sustainable underground storage solution, the project is expected to play a crucial role in stabilizing water supplies for communities across the Mojave River Basin, the Colorado River Basin, and California’s Inland Empire.

What Makes the Mojave Groundwater Bank a Critical Water Infrastructure Project?

The Mojave Groundwater Bank stands out as one of the largest new water infrastructure projects in the United States. Located at the base of a 2,000-square-mile watershed system, the underground aquifer currently holds an estimated 30 to 50 million acre-feet of groundwater, surpassing the total storage capacity of Lake Mead and Lake Powell combined.

The facility is permitted to deliver 2.5 million acre-feet of new water supplies while also providing storage capacity for up to 1 million acre-feet of imported water. This capability will help reduce pressure on California’s existing water infrastructure, particularly the heavily burdened State Water Project and Colorado River system.

The project also represents a significant milestone in collaborative water management. In late 2024, Cadiz announced a partnership with Native American Tribes to co-develop and operate the Mojave Groundwater Bank. This initiative is the first large-scale water infrastructure project developed in partnership with tribal entities outside of tribal lands, underscoring its importance as a model for future water security efforts.

What Are the Next Steps for Cadiz and Its Investors?

Despite the progress, the LOA does not constitute a binding agreement to close the transaction. The investment remains subject to further negotiations, regulatory approvals, and finalization of definitive contracts. The lead investor must also obtain shareholder approval before committing to the full funding amount.

Cadiz is actively coordinating with various stakeholders to secure additional funding sources, including government grants and public-private partnerships, to cover remaining construction costs. The company’s long-term vision for the Mojave Groundwater Bank is to establish it as a cornerstone of California’s water resilience strategy, ensuring that communities across the state have access to reliable and cost-effective water supplies.

With an estimated total project cost of $800 million, the Mojave Groundwater Bank represents one of the most ambitious investments in water infrastructure in recent history. As Cadiz and its investors move forward, industry experts will be closely monitoring developments to assess how this project could reshape California’s approach to water storage and distribution.