Gov. Arnold Schwarzenegger has crisscrossed the state in recent weeks, including an appearance July 23 in Los Angeles, making a case to develop additional water resources for the state's residents.

His plan calls for $5.9 billion in improvements and new construction. More specifically: $4.5 billion for additional above- and below-ground water storage, $1 billion to shore up major needs in California's Delta, and $450 million for water conservation and management.

I also believe the Los Angeles business community has a lot at stake in the governor's plan.

Water fuels Los Angeles' economic supply chain. Nearly every business and industry relies on water to varying degrees to produce goods and services, and serve countless Southern California business needs. Building, manufacturing, food and agriculture, and the connected service industries, all depend on having water resources available to conduct business.

It's true that the quality of life for millions of Los Angeles residents is also affected by water. From having a safe and steady supply of drinking water, to enjoying water for recreation, to having a robust food supply, business and residential use is intricately bound together. However, the governor's plan is about much more than having water to sprinkle lawns and fill swimming pools. It is about having a critical resource that enables our economy to function and thrive.

There are three forces that could have a major impact on our ability to provide a safe and steady flow of water for both residents and business.

One is the increasing demand for water.

Projections show California's average annual water demands will increase between 1.7 and 6 million acre-feet by 2030 (as much as 14 percent per year). The California Department of Water Resources anticipates the demand for water will continue to exceed supplies from developed sources every year for at least the next 25 years.

Many experts predict increasing drought conditions in years ahead and the impact could be devastating. During the 1987-92 drought, California's farmers suffered an $800 million economic loss and Californians paid $500 million more for energy as utilities substituted more expensive forms of energy for hydroelectric power.

Growth factor

Another force is California's growth.

California's population is projected to reach almost 60 million by 2050, adding over 25 million since the 2000 census, according to long-range population projections by the California Department of Finance. From less than 34 million Californians counted in 2000, the data shows that the state will pass the 40 million mark in 2012, and exceed 50 million by 2032. I feel confident the economy can keep up with this population growth if we have the raw resources to fuel it, and that starts with water.

The third force is the lack of new infrastructure.

California's water development has been minimal over the past 20 years even though, in that same time, we have had a population growth from 20 million to 37 million people. Like our highway, port and airline systems, our water conveyance and storage facilities need to be updated and enhanced. This includes rebuilding levees and building new dams and reservoirs.

Central to any enhancement is improving conveyance in Northern California's delta region. Southern California gets 60 percent of its water from the delta region. Water from the delta supports $400 billion of economic activity, including fishing, farming and urban commerce.

Imagine not building a new highway in California for 25 years. Why have we waited this long to address the water problem?

Because water is so important, I've gotten involved, along with many other business groups. The California Latino Water Coalition, of which I am co-chairman, represents Latino government and business leaders and is working with the California Association of Water Agencies, Western Growers Association, State Building Trades (the umbrella organization for construction unions) and the Silicon Valley Leadership Council.

The emphasis Schwarzenegger has placed on water is warranted. Expect the spotlight to remain focused on water supply development as it takes on increasing importance for the whole state. It would be a mistake not to acknowledge that our economic prosperity is also directly connected to the water policy in California.

Ruben Guerra is chairman and chief executive of the Latin Business Association, headquartered in Los Angeles, and he is co-chairman of the California Latino Water Coalition.

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