WATER

The Coquina Coast Desalination

Plant: Getting the Facts Straight
Fact Sheet • March 2010

T he Coquina Coast Ocean Desalination Project is one water supply alternative being
aggressively promoted by the St. Johns River Water Management District as a way to
complement traditional groundwater sources in Flagler, Volusia, St. Johns, Marion and
Lake County, Florida.

The latest reports on this desalination project by Malcolm

Pirnie, the consultant investigating the feasibility of build-
ing the 80 million gallon per day (MGD) facility, raise
many questions about the project, however.
Here are five major reasons why officials in the area should
be wary of supporting this project:

1. Desalination will be expensive.

Desalination is a capital-intensive source of water because
it requires heavy industrial machinery and lots of energy.
Malcolm Pirnie estimates the final desalination facility
will cost $1.3 billion to build and $60 million a year to
operate.1 Based on the preliminary funding scenarios put
together by Malcolm Pirnie, the capital and operating costs
of building the initial 50 MGD plant could increase the
average customer water bill by $94 to $158 a year (see
table 2).

2. Financing the project will be

difficult.
The financing plan proposes funding sources that will be
very difficult to acquire. For instance, it anticipates that
more than $200 million in federal government funds will
be available to help finance the project.2 Qualifying for
several of these proposed federal funds may be a chal-
lenge. Utility managers and local officials should be con-
cerned that water rates may become unmanageable should
any of the funding sources fall through.3

A simple analysis of three potential funding sources shows

just how difficult financing this project may be.

Drinking Water State Revolving Fund (SRF): The financing

A desalination plant in the Canary Islands. Photo by Irina Belousa/iStockphoto. initiative plan estimates that the SRF program can con-
tribute $50 million to the desalination project.4 Drinking
Water SRF monies, however, usually go to utility projects
that address water quality — not supply — problems, and
in 2009, only $56 million was available to assist large pub-
lic water systems.5 The underfunded Florida SRF program,
whose largest single loan last year was $6 million,6 already
approved dozens of projects that are still waiting for funds.7
It is unlikely that this desalination project would rise to the
top of this waiting list and receive $50 million.

Water Resource Development Act (WRDA): The financing

plan projects that WRDA can contribute $100 million to a
future facility.8 Projects approved under WRDA, however,
must go through a separate and lengthy congressional ap-
propriations process. Furthermore, the desalination project
would be competing for WRDA funds with a backlog of
more than 500 projects that have already been authorized.9
Notably, Rep. Jon Micah has requested $5 million for the
project through WRDA but is still waiting for that money to
be approved and appropriated.10 It seems unlikely that the
project would receive $100 million through WRDA.
Table 1. Key Figures: Coquina Coast
Interest-Free Bonds: Malcolm Pirnie estimates that more Desalination Project to Full Build-
than $600 million in bonds can be designated as “interest-
free” bonds by way of federal tax credit programs. The Out at 80 MGD
financing plan mentioned only one mechanism by which
Present value of total project cost $1,346,544,000
this can occur: the Clean Renewable Water Supply Bond
Act.11 While the bill was introduced in 2009, it was Annual operation and maintenance $59,768,400
only being discussed at committee level, as of the end of cost
February 2010.12 Even if the bill passed, however, it seems
unlikely that the federal government would provide tax Source: Malcolm Pirnie, Inc. Coquina Coast Seawater Desalination
Project. “Final Recommended Project Report.” January 2010 at 10-2,
credits to pay the interest on $600 million in bonds.
10-3

Table 2. Preliminary Funding Scenarios for Coquina Coast Desalination Plant

at 50 MGD (not full build-out)
Private Bank Loan Interest-Free Bond Mixed Sources
Total project cost $1,000,000,000 $1,000,000,000 $1,000,000,000
Grants and other assistance - - $202,200,000
WRDA $100,000,000
Other sources $102,200,000
Loans and bonds Interest Term $1,000,000,000 $1,000,000,000 $797,800,000
Private bank loan 5.50% 30 $1,000,000,000 - -
Interest free bond 0.00% 40 - $1,000,000,000 $607,800,000
Drinking Water SRF 3.00% 20 - - $50,000,000
USDA- RD 2.75% 40 - - $40,000,000
Municipal bond 5.00% 30 - - $100,000,000

Annual financing cost $68,805,390 $25,000,000 $26,722,189

Annual operation and maintenance cost $38,205,400 $38,205,400 $38,205,400
Total annual cost $107,010,790 $63,205,400 $64,927,589
Average annual cost per customer (assuming 675,465
customers) $158.43 $93.57 $96.12

Source: Malcolm Pirnie, Inc. Coquina Coast Seawater Desalination Project. “Final Recommended Project Report.” January 2010 at 10-2, 10-3
Appendix K: “Funding Initiative Plan.” October 2009 at 3-9 and 3-10.
3. The permitting process will be long
and complex.
The size and scope of the desalination project will require
an unusual level of permitting. An extra layer of permitting
activity, for instance, will be necessary since the project is
hoping to secure federal funding.
The project must complete a comprehensive environmen-
tal impact study as laid out in the National Environmental
Policy Act. The scope of the project will make it necessary
for several agencies, including the U.S. Environmental Pro-
tection Agency (EPA), the U.S. National Marine Fisheries
Services, and the U.S Fish and Wildlife Services, to review
this document.13 Further complicating this process is the
fact that several endangered and threatened species can be
found in the area.14
The Army Corp of Civil Engineers, the EPA and the Florida
Department of Environmental Protection (FDEP) will have
to work together on issuing permits necessary to build
needed water intake infrastructure and piping as well as
issuing permits for ocean discharge byproducts.15

Further complicating this permitting process is the fact that

Water Saved vs. Water Produced the FDEP has not permitted an ocean discharge of con-
(in millions of gallons per day, or MGD) centrated seawater and “there will be a bit of a learning
curve,” according to Malcolm Pirnie.16
100
83 80
80 4. Better options exist.
This expensive and environmentally risky water supply
alterative may ultimately preclude aggressive conservation
60 50 from ever becoming a reality in Florida. Experts around
the country have stated that conservation and efficiency
programs can reduce demand for water and be cheaper
40 than desalination.17
25
As recently as 2009, the St. Johns River Water Management
20 District said that a substantial portion of the area’s water
needs could be met through aggressive conservation.18 Ac-
cording to district estimates from 2005, conservation prac-
0 tices in the counties involved in the Coquina Coast Project
Conservation Desalination Desalination Desalination
2025 2015 2025 2030 could save more water than the projected amount that the
desalination plant would produce at half the cost.19
Cost
(in millions of dollars)
1,500
$1,347

1,200
$999
900

600 $490 $539

300

0
Conservation Desalination Desalination Desalination
(83 MGD) (25 MGD) (50 MGD) (80 MGD)

Sources: St. Johns River Water Management District. “District Water

Supply Plan 2005 Fourth Addendum.” (SJ2006-2D). May 12, 2009 at
8; Malcolm Pirnie, Inc. Coquina Coast Seawater Desalination Alterna-
tive Water Supply Project. “Final Recommended Project Report.”
December 2009 at 12-2 to 12-3
Desalination should not be pursued until significant reduc-
tion in water use is achieved through conservation and
general public education.
5. Private interests drive water policy.
Veolia and Sinclair Knight Merz, the two companies cur-
rently working on this project with Malcolm Pirnie,20 are
major multinationals that could benefit from the growth of
the desalination industry in Florida.21
In addition, Veolia and SKM’s track record raises red flags.
In Australia, the companies worked on a controversial and
problematic desalination plant, which The Courier-Mail
reported had problems with “rusting pipework, cracking
concrete, faulty valves and the leaching of contaminants.”22
Citizens in the area have pledged to never allow another
desalination plant in their area.23
Endnotes
1 Malcolm Pirnie, Inc. Coquina Coast Seawater Desalination Project. “Final
Recommended Project Report.” January 2010 at 10-12 and 10-13.  
2 This includes a $5 million federal legislative grant, $20 million USDA Rural
Development grant, $40 million USDA Rural Development loan, $15 million
U.S. Economic Development Administration Public Works grant, $50 million
loan from the Drinking Water State Revolving Fund program and $100 million
from the Water Resources Development Act. Ibid. at Appendix K: “Funding
Initiative Plan.” October 2009 at 3-10.
3 Ibid. at 3-9
4 Ibid.
5 Florida Department of Environmental Protection. “Drinking Water State
Revolving Fund Intended Use Plan For Use in Fiscal Year 2009 Capitalization
Grant.” 2009 at 14 to 16 and 2.
6 Ibid. at 31 to 32.
7 Ibid. at 31 to 32.
8 Malcolm Pirnie, Inc. at Appendix K 3-10.
9 Ibid. at 3-5.
10 “Water Resources Development Act.” Available at www.mica.house.gov/
WRDA, accessed February 18, 2010.
11 “Funding Initiative Plan.” at 3-10 and 3-6.
12 S. 1371, 111th Cong. (2009).
13 “Final Recommended Project Report.” at 8-1
14 Ibid. at Appendix H: “Intake and Concentrate Discharge Technical Memoran-
15
dum.” July 2009 at 2-7.
Ibid. at “Final Recommended Project Report.” at 8-4 through 8-8.
16 Ibid. at 8-5 to 8-6.
17 The Commonwealth of Massachusetts Executive Office of Environmental
Affairs and Water Resources Commission. “Water Conservation Standards.”
July 2006 at 4; Dickie, Phil. World Wildlife Fund. “Making Water Desalina-
tion: option or distraction for a thirsty world.” June 2007 at 25; Gleick, Peter,
et al. Pacific Institute. “Waste Not, Want Not: The Potential for Urban Water
Conservation in California.” November 2003; National Research Council.
Committee on Advancing Desalination Technology. “Desalination: A National
Perspective.” (Prepublication Copy.) 2008 at 142. 
18 St. Johns River Water Management District. “District Water Supply Plan 2005
Fourth Addendum.” (SJ2006-2D). May 12, 2009 at 7.
19 Ibid. at 8; “Funding Initiative Plan.” at ES-4 and 1-1.
20  Sinclair Knight Merz. [Press release.] “SKM involved in US seawater desali-
nation project.” October 15, 2008; “Project details: St. Johns River Water
Management District.” Global Water Intelligence. January 20, 2010.
21 Veolia Environnement. Securities and Exchange Commission. 20-F Filing. April
16, 2009 at 30, 99 and 124; “Building growth through capability.” Global
Water Intelligence. vol. 10, iss. 2. February 2009.
22 Stolz, Greg. “$1.2b Gold Coast desalination plant a dud.” The Courier-Mail.
July 1, 2009; “Project details: Tugun, Gold Coast.” Global Water Intelligence.
January 20, 2010; “The 2009 Global Water Awards: Membrane desalination
plant of the year.” Global Water Intelligence. vol. 10, iss. 2. February 2009.
23 Stolz, Greg and James O’Loan. “Tugun ready for war over second desalination
plant.” The Courier Mail. November 12, 2009.
For more information:
web: www.foodandwaterwatch.org
email: info@fwwatch.org
phone: (202) 683-2500 (DC) • (415) 293-9900 (CA)
Copyright © March 2010 Food & Water Watch