Capital Investment
The Texas Water Backbone requires significant upfront investment to build infrastructure that will serve Texas for 100+ years.
Build options:
| Approach | Capital Cost | Capacity | Per-AF Capital Cost |
|---|---|---|---|
| Phased Build | $8.6B | 300K AF/yr initially | $28,667 |
| Dual Pipeline | $11.15B | 500K AF/yr | $22,300 |
The phased approach reduces initial investment while allowing expansion as demand grows. The dual pipeline approach achieves lower per-unit costs through economies of scale.
Funding Sources
Multiple funding mechanisms support the project:
| Source | Role |
|---|---|
| Texas Water Development Board | Low-interest state financing |
| Revenue bonds | Backed by water sales contracts |
| Federal infrastructure programs | Potential grants/loans |
| Private capital | Desalination plant investment |
The TBA itself does not require general fund appropriations—the project is designed to be self-sustaining through water sales.
Revenue Streams
The backbone generates revenue from multiple sources:
| Source | Annual Revenue | Notes |
|---|---|---|
| Water sales | $450M | Primary revenue |
| HVDC transmission | $75M | Corridor lease |
| Fiber optic leases | $12M | Corridor lease |
| Brine transport | $8-15M | Transport fees from brackish operators |
| Total | $545-552M |
Multi-use corridor revenues offset water transmission costs, keeping municipal rates lower. The brine transport service provides an additional revenue stream—brackish desalination operators pay the TBA to transport concentrate to the coast for valorization rather than managing expensive individual disposal.
Municipal Rates
Target municipal rate: $1,400/AF
This rate includes:
- Desalinated water production cost
- Transmission through the backbone
- TBA operating costs
- Capital recovery
Rate comparison:
| Source | Cost/AF | Reliability |
|---|---|---|
| Texas Water Backbone | $1,400 | Drought-proof |
| Marvin Nichols Reservoir | $800-1,200 | Weather-dependent |
| Emergency supplies (drought) | $2,000-5,000 | Unpredictable |
| Aquifer depletion | Irreversible | Finite |
Return on Investment
The financial case for the backbone rests on:
- Avoided costs: $153B/year in economic damages from water shortages
- Economic growth: Water security enables development
- Rate stability: Predictable costs vs. drought price spikes
- Intergenerational value: 100-year infrastructure serving future Texans
This is not a project that generates returns for private investors—it’s public infrastructure that enables Texas to thrive.