Loreto Bay Water Quality and Supply FAQ

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1 Loreto Bay Water Quality and Supply FAQ Water is precious in any desert region and as part of our sustainability mission, Loreto Bay has committed that over the life of the project, the company will be a net producer of potable water. At various times, water questions arise; however, the fact that there will be sufficient potable water is not in question. The following will clarify many of the most frequently asked questions regarding both the quality and quantity of Loreto Bay s water supply. IS IT SAFE TO DRINK THE WATER IN LORETO BAY? One of the first things Loreto Bay did at the start of this project was to have the water supply tested by URS-Dames and Moore, one of the world s leading environmental engineers. They found that Loreto water from the faucet meets or exceeds all American EPA requirements for drinking water. The complete report may be found at the end of this FAQ. WHAT IS THE SOURCE OF WATER FOR LORETO BAY? The original FONATUR estimates (1983) for the water supply system from the San Juan Londo Basin found enough water to support a population in excess of 200,000. As you probably know, the master plan for Loreto Bay calls for a series of villages that will (over time) be home to approximately 20,000 people, a mere ten percent of FONATUR s planned community size. The well field and pumping plant were designed to provide enough water for the town of Loreto and FONATUR s planned development in Nopolo (now Loreto Bay). In addition, three wells were drilled in the El Zacatel well field in Nopolo, adjacent to Loreto Bay. FONATUR s assurances to Loreto Bay may be found in a letter at the end of this FAQ. In the past few years there have been questions about the reliability and longevity of the water source in Loreto. Current hydrology data is not available, and any calculation of projected supply is based on old data. It is impossible for us to accurately determine the extent of the San Juan supply. Loreto Bay is fully supportive of the Niparaja Foundation s (conservation NGO in La Paz) plans to fund a detailed hydrology study, so that accurate data can be made available to all. The current population of Loreto is 15,000. Therefore, water supply should continue to be adequate for both Loreto and Loreto Bay population expansion for a number of years. However, given the expected growth in the region, additional supplies of water will have to be developed sooner than later. Recognizing this reality, the management of Loreto Bay Company has moved very aggressively to develop additional water supplies.

2 The status of the aquifer for greater Loreto is currently the subject of controversy and it is very difficult to know what s really accurate. Some things we are certain about. First of all is that Loreto currently uses on a per capital basis three to four times the national average of water. It does this because most of the water that is pumped out of the aquifer is wasted through broken pipes and seepage. This was confirmed to us by the Mayor of Loreto in February, We also know that there are 10 wells in the aquifer. Of those ten wells only four have pumps in them. Of those four pumps only one has proper switching equipment. The primary well that is being drained does show surprisingly low water levels. Whether that would be true if there were 10 wells working or indeed if there were 200 wells working is unknown to us. There is controversy over the Federal government reports of 250,000 people being supplied by the aquifer versus other studies and speculation. We are not in a position to verify or dispute these studies until there is more data. Instead, we are concentrating on supplying our own water because it has always been the policy of Loreto Bay Company that in the long term we would not use the water system that is in place and that we would provide not only our own potable water but more potable water than we use. WHAT IS LORETO BAY COMPANY DOING TO DEVELOP ADDITIONAL WATER SUPPLIES? Given the expected growth in the region, Loreto Bay Company has moved very aggressively to develop additional water supplies. Efforts currently underway are: 1. Develop two production wells on our land in the El Tular Basin. A geohydrologist has investigated the potential well locations, and Loreto Bay Company has applied for permits. Because of the size of this basin and the underground flow pattern, it should be more productive than the two existing wells on the El Zacatel Basin which are able to supply almost all of Loreto Bay s current water requirements. 2. Expand the use of treated waste water from both the Loreto and Nopolo waste water treatment plants for use on landscaped areas within Loreto Bay and on the golf course. The golf course has been redesigned so that when it is redeveloped, it will use saline tolerant grass and plants, and can be watered with brackish water and reclaimed waste water. Also, the design will make maximum use of rainwater capture. 3. Construction on-site of a 1,000,000-gallon-per-day desalination plant. Soil borings have been completed and the application for test wells is in process. Expected production will be 325 million gallons a year which is more than adequate for the needs of Loreto Bay. Expansion by another 50 percent is possible and would ensure that Loreto Bay would be a net producer of water to the entire region.

3 WHAT IS THE BACKGROUND ON DESALINATION IN BAJA? Nearly every development of any scale in the Baja assumes that it will be getting its water from desalination. Virtually every major resort in Los Cabos has their own independent desalination plant and now the city is doing one for the city itself. Desalination water costs very little more than the current price paid to the Mexican government when you pump it out of the ground. IS DESALINATION HARMFUL TO THE LORETO MARINE PARK? At Loreto Bay we ve always taken the position that we would act in the most environmentally friendly manner possible. For our planned desalination plant, we will be using the best reverse osmosis (RO) technology available. Loreto Bay Company is in close communication with the Loreto Bay Marine Park Authority and the Mexican Water Authority (CNA), both of which agree with the technology we are proposing. We have been studying a model RO system built in Puerto Peñasco on the Sea of Cortés, which is highly regarded in terms of its history of salinity and biological testing. The Puerto Peñasco plan was the result of two years of research by a concerned community before installation. In general, harmful effects on the marine environment caused by desalination plants occur as a result of toxic discharges. The technology of extracting water from the soil and expelling the brine through deep wells has solved this environmental concern about desalination. For each of the potential harmful discharge effects, we have identified the best solutions. Our solution to the discharge of salt concentrations greater than the receiving waters is to dilute the salt brine to safe levels by one of two possible methods. The first method is by discharging it into existing sea water aquifers via deep injection wells. In this way, the brine is mixed with sea water underground, and by the time it actually reaches the open sea some distance away from shore, it will be diluted to a concentration extremely close to that of sea water. This discharge technology for desalination was recommended by the Save our Shores organization in collaboration with the Monterey Bay National Marine Sanctuary. The second method for discharging salt brine, also recommended by the California Coastal Commission, is by means of sparging tubes which are long pipes with holes that draw in sea water to mix with the brine at a rate and over a distance to ensure that eventual discharge at pipe s end is extremely close to sea water salinity, and therefore benign to marine life. One common problem with desalination that uses distillation technologies is that the discharge water is warmer than the receiving water. Since we are using RO, not distillation, this is not a problem.

4 The discharge of water with levels of solids, organics or metals greater than the receiving waters is also not an issue with RO concentrate. Solids and metals are pre-filtered and disposed of with other organic waste. Chemicals used in flushing the pipelines and cleaning the membranes in RO plants will occasionally be used, but will be segregated, removed from the plant, neutralized and safely disposed of. No chemicals will be discharged with the brine. A desalination plant requires a large amount of energy to operate. To provide that energy in an environmentally friendly way, Loreto Bay is building a wind farm that will not only provide low cost renewable energy for the desalination plant, but enable us to provide renewable energy to the surrounding municipalities. Finally, wind energy production is virtually pollution-free. WHAT ARE LORETO BAY S LONG-TERM PLANS FOR INCREASING WATER SUPPLIES? One of Loreto Bay s sustainability goals is to produce more potable water than we consume. We have strategies to reduce usage, to re-use up to 85 percent of potable water, as well as to increase the amount we generate, capture and harvest locally, or desalinate. In addition to the strategies listed above, our Long-term Regenerative Watershed projects will gradually increase groundwater levels in the El Zacatel and El Tular aquifers by placing borders and gabions (rainwater flow-slowing dams and diverers) in strategic tributary locations in the hills, selectively fencing areas to prevent overgrazing, and replanting the tributary with many layers of indigenous plants and trees. This will allow more water to percolate down through the soil, which over time will enrich the soil and facilitate re-vegetation, which increases soil porosity, thereby escalating its ability to receive and percolate increasing amounts of water. This program will take decades to complete, so that groundwater levels are increased substantially and can supply a significant portion of our water demand. A CONCLUDING MESSAGE ABOUT WATER FROM LORETO BAY CHAIRMAN DAVID BUTTERFIELD Since day one it has been the policy of Loreto Bay Company that in the long term we would not use the water system that is in place and that we would provide not only our own potable water but more potable water than we use. There are certainly problems with water infrastructure in the town of Loreto -- an infrastructure which is 25 years old and not upgraded until recently. The upgrades to date have been minor compared to what is required to provide a regular stream of water. It is not a lack of water it is a lack of infrastructure and Loreto Bay s taxes

5 perhaps FONATUR s contributions and municipal cooperation will be the principle ways in which the greater Loreto community provides its own water needs from the current aquifer. Bear in mind that the current system was built entirely to support the resort development plan, and take pride that Loreto Bay will only temporarily be using that system, and before Loreto needs the water, Loreto Bay will be supplying its own and more. The Villages of Loreto Bay will provide not only for Loreto Bay s water but contribute to a more secure water source for the entire community. That s the way we operate, that s who we are.

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