Southern California's plans to fix water supply

Southern California is moving ahead with plans to shore up its drought year water supplies.

Press Release: CADIZ INCORPORATED
Cadiz Announces Agreement with Arizona & California Railroad Company
for New Water Pipeline
99-Year Lease Agreement Will Provide Southern California with as Much
as 150,000 Acre-Feet/Year of Clean and Reliable Water

LOS ANGELES, Sep 18, 2008 (BUSINESS WIRE) --
Cadiz Inc. (NASDAQ:CDZI) announced today the execution of a 99-year
lease agreement with the Arizona & California Railroad Company (ARZC).
The agreement will allow Cadiz to utilize a portion of the railroad's
right-of-way for a conveyance pipeline as part of the Cadiz Valley
Dry-Year Supply Project.

The Cadiz Valley Dry-Year Supply Project (Project) is a water storage
and supply program, which will provide Southern California with as much
as 150,000 acre-feet/year (49 billion gallons) of clean and reliable
water during years of droughts, emergencies, or other periods of urgent
need by utilizing the aquifer system that underlies Cadiz's 35,000-acre
landholding in the Cadiz and Fenner valleys of eastern San Bernardino
County. Historically, such dry periods occur in approximately three out
of every ten years. In any given dry year, this water would be enough
to serve more than 1.2 million people.

This past August, the Metropolitan Water District of Southern
California (MWD) announced that it may implement mandatory rationing in
2009 since it does not have enough water to meet demand. Furthermore,
state water agencies will receive only 35% of their normal water
allocations for 2008 -- down from 60% in 2007 -- and they expect to
only receive between 10% & 20% in 2009.

"Southern California is facing chronic water shortages," said Richard
Stoddard, CEO of Cadiz Real Estate LLC. "The Cadiz Project is an
innovative and environmentally responsible way to help meet the
region's need for new water supplies and more water storage."

As part of the agreement with ARZC, Cadiz now has the right to
construct an underground pipeline within the railroad right-of-way to
connect the Project area to the Colorado River Aqueduct (CRA) rather
crossing U.S. Bureau of Land Management (BLM) lands, as was considered
in earlier iterations of the Project. Although this alignment is
significantly more costly, it is considered to be more environmentally
friendly than routes that would have crossed federal lands because the
railroad right-of-way is already active and disturbed.

"We are excited to hear about this new alternative pipeline alignment
that would enable the Cadiz Project to deliver water to Southern
California," said Fern Steiner, Chairwoman of the San Diego County
Water Authority. "Given the current water crisis affecting the entire
region, San Diego County Water Authority is interested in exploring all
possible supply opportunitiesincluding projects like the Cadiz
Projectwhich couldaccelerate the delivery of much needed supplies to
the region."

"In the ensuing years, the Southern California region has need of
projects like Cadiz to responsibly and efficiently meet an
unprecedented demand for 'new' water supplies. Along with increased
recycled water and desalination, the Cadiz Project presents an
important alternative that can add to the region's water supply
reliability," said Floyd Wicks, CEO of American States Water, whose
subsidiary, Golden State Water Company, provides retail water service
to more than a million Californians. "We are pleased with the news that
the Project has advanced to the point which may yield an alternative
that could quickly deliver these supplies to the region."

Construction of the Project facilities could begin as soon as the
environmental review for the Project is completed. It is now
anticipated that the County of San Bernardino will serve as California
Environmental Quality Act (CEQA) lead agency and that it will oversee a
comprehensive Groundwater Monitoring and Management Plan for the
Project. Cadiz is currently engaged in discussions with a group of
public water providers interested in participating in the Project.

"I look forward to the County playing the lead role on the Groundwater
Monitoring and Management Plan and in helping to implement this
important project," said San Bernardino County Supervisor Brad
Mitzelfelt. Supervisor Mitzelfelt's District is the largest in San
Bernardino County and includes the Cadiz Project area.
The Groundwater Monitoring and Management Plan will be similar to one
previously authored by San Bernardino County, the U.S. Geological
Survey, National Park Service, BLM, and MWD in 2001.

This Plan was originally designed to alleviate concerns raised by
Senator Dianne Feinstein (D-CA), and it will maintain those principle
objectives: protect the desert environment in and surrounding the
Project area, ensure groundwater quality, and maintain the long-term
yield and storage capacity of the aquifer system.

Information on the Aquifer System

The aquifer system that underlies the Project area has the ability to
provide both a new supply of indigenous groundwater and to store
approximately 1 million acre-feet of Colorado River water that could be
imported from the CRA in "wet" years. This stored water and indigenous
groundwater could be delivered to the CRA in "dry" years for
distribution to participating water providers throughout Southern
California. The aquifer system is recharged by precipitation (both
rainfall and snow melt) that occurs within a regional watershed of
1,300 square miles. For this reason, any transfers of indigenous
groundwater will be naturally replenished over time.

History of the Project

The Cadiz Project has been a decade-long effort to bring a new, clean
and reliable water supply to Southern California. Cadiz's original
partner, MWD, together with the BLM prepared a Final Environmental
Impact Report/ Environmental Impact Statement (FEIR/ FEIS) for the
Project in 2001. The FEIS for the Project, including a right-of-way for
the conveyance pipeline, was approved by the US Department of the
Interior (DOI) in a highly supportive Record of Decision issued in
August 2002:

"By providing storage of surplus Colorado River water, and the export
of indigenous groundwater under specified conditions, the Cadiz Project
will help ensure needed dry-year water supply reliability and will
assist California in efficiently managing its water supplies. Future
water supply needs in Metropolitan's Southern California service area,
without implementation of the Cadiz Project, would substantially exceed
demands by the year 2020. The public benefits of the Cadiz Project are
compelling reasons for the Department of the Interior to cooperate to
the greatest extent possible in assisting California in meeting its
water supply goals."

However, MWD refused to accept the right-of-way offered by the DOI and
decided not to proceed with the Project in October 2002. MWD is
currently facing unprecedented water shortages, which would have been
significantly mitigated by implementation of the Cadiz Project in 2002.

Founded in 1983, Cadiz Inc. is a publicly held land and water resource
development firm. The Company owns more than 45,000 acres of land with
substantial water resources in eastern San Bernardino County,
California. Further information on the Company can be obtained by
visiting our corporate web site at www.cadizinc.com.
This release contains forward-looking statements that are subject to
significant risks and uncertainties, including statements related to
the future operating and financial performance of the Company and the
financing activities of the Company. Although the Company believes that
the expectations reflected in our forward-looking statements are
reasonable, it can give no assurance that such expectations will prove
to be correct. Factors that could cause actual results or events to
differ materially from those reflected in the Company's forward-looking
statements include the Company's ability to maximize value for Cadiz
land and water resources, the Company's ability to obtain new financing
as needed, and other factors and considerations detailed in the
Company's Securities and Exchange Commission filings.
SOURCE: Cadiz Inc