LOS ANGELES — Westlands Water District’s decision to not participate in the California WaterFix project won’t spell the end for the project, Fitch Ratings analysts said in a report Monday.

“The decision reflects the difficulty and complexity of negotiating among the many stakeholders who would pay for California’s biggest water project since the construction of the State Water Project in the 1960s, but it is likely to signal the beginning – not the end – of serious negotiations over the financing of the plan,” Fitch analysts wrote.“The prospects for a final deal have always been and remain quite uncertain.”

An aerial view of California's John E. Skinner Delta Fish Protective Facility, a key component of the system that delivers water from the San Joaquin-Sacramento River Delta to the State Water Project.
An aerial view of California's John E. Skinner Delta Fish Protective Facility, a key component of the system that delivers water from the San Joaquin-Sacramento River Delta to the State Water Project. Florence Low / California Department of Water Resources

A failure to address looming concerns about the ecologically troubled Sacramento-San Joaquin River Delta could pose significant risks for the state’s water users, Fitch said.

The Westlands Water District board voted to withdraw its financial support for the project last week. The board said as it rejected the Fix saying that the $16.3 billion plan to restore the Delta and build twin tunnels north of Sacramento was “not financially viable” for farmers.

The project includes construction of twin tunnels that would carry water under the Delta to the pumping stations that move the water to Southern California, the San Joaquin Valley and Silicon Valley via the U.S. Bureau of Reclamation’s Central Valley Project CVP and the State Water Project. The tunnels would combine to form the largest and most economically important water project in the U.S., Fitch said, which serves more than half of the population of the largest U.S. state and the nation’s most productive farmlands.

“A failure to eventually reach consensus on a set of meaningful improvements and upgrades to the aging Delta infrastructure would be negative for many of the state’s water providers, including Westlands and the Metropolitan Water District of Southern California, the nation’s largest urban water provider,” Fitch analysts said in the report.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.