Cadiz Provides Progress Report on Water Program in Letter to Shareholders.

SANTA MONICA, Calif.--(BUSINESS WIRE)--Sept. 14, 1999--

Cadiz Inc. (Nasdaq:CLCI) Tuesday announced that it issued the following letter to shareholders:

Dear Shareholder,

Once again, we are pleased to provide our shareholders with a status report on the Cadiz Groundwater Storage and Dry-Year Supply Program ("the Program"), a cooperative water management program between Cadiz Inc. ("the Company") and the Metropolitan Water District of Southern California ("Metropolitan") that seeks to better manage Southern California's Colorado River resources.

Since our last shareholder update, distributed in January 1999, the Company and Metropolitan have accomplished a significant amount of work in completing technical studies and conducting the environmental review process, all of which are necessary for the execution of a final agreement. As such, we thought it was an appropriate time to highlight the most recent developments and outline our next steps.

As you will recall, in July 1998, Metropolitan and the Company executed Principles and Terms for Agreement ("Principles"), which outlined the Program's potential capacity and costs, and jointly appropriated $4 million to conduct geotechnical, hydrological and engineering studies, as well as environmental documentation. We are greatly encouraged by the results of the technical studies and progress on the preparation of the environmental documentation. In fact, these studies have determined that the Program is capable of performing well beyond our initial expectations, while staying within our original cost estimates.

Finally, this progress is timely since representatives of local, state and federal agencies continue to negotiate California's 4.4 Plan, a program that outlines how California will live within its entitled allocation of Colorado River water. Groundwater storage and dry-year supply programs, such as the Cadiz Program, will be essential components within the California 4.4 Plan and will play an integral role in helping Metropolitan address future water demands.

As the Company moves forward with implementation of the Program, we will continue to distribute these updates in order to keep our shareholders appraised of material events. We hope you find them of value, and look forward to hearing your comments. In addition, we look forward to providing additional information regarding our agricultural operations and other water development programs during our upcoming report on the Company's third quarter results.

If you have further questions regarding the Program or are new to the Company, please contact our office for a corporate information kit or visit our web site at www.cadizinc.com. As always, thank you for your continued interest and support.

Yours sincerely,

Keith Brackpool

President & Chief Executive Officer

-0-

Cadiz Groundwater Storage & Dry-Year Supply Program

Progress and Milestones

Program Capacity Is Significantly Increased

Geotechnical studies confirm that the groundwater basin will support storage and dry-year supply levels above the minimum expectations contained in the Principles. In addition, as previously reported, optimization studies have also determined that the Program capital facilities (pipeline, pumping plant, and spreading basins) can provide approximately 50% more capacity than previously outlined, while remaining below the original $150 million cost estimate. The Program will be able to convey, for either storage or supply operations, up to 145,000 acre-feet of water per year, in comparison to earlier estimates of 100,000 acre-feet per year.

This enhanced performance, combined with the increased capacity of the groundwater basin, will now allow the Program to store even greater amounts of Colorado River water. Accordingly, the Program's overall scope has expanded. Metropolitan will now store a minimum of 700,000 acre-feet of Colorado River water within the first 20 years of the Program, up from the 500,000 acre-feet originally estimated. In addition, Metropolitan's minimum purchase of 1,100,000 acre-feet of existing groundwater will increase to 1,500,000 acre-feet during the 50-year term of the agreement, in accordance with the safe operation of the groundwater basin.

Pilot Spreading Basin Project Is Operational And Yielding

Positive Results

Since March 1999, a pilot spreading basin project, which consists of a high-yield production well, eleven monitoring wells, and two 2.5-acre spreading basins, has been operational. Designed to test the storage and extraction of water, the project also analyzed infiltration rates, erosion control, and the design and operation of the future spreading basins. Information obtained from this project has also exceeded all expectations, specifically the rapid rate at which water percolates into the underlying aquifer system.

Phase I of Environmental Review Process Is Successfully Complete

According to state and federal environmental laws, an Environmental Impact Report/Environmental Impact Statement (EIR/EIS) that considers, documents and identifies mitigation measures for potential environmental effects from the Program must be prepared by Metropolitan and the U.S. Bureau of Land Management. Prior to the preparation and circulation of a Draft EIR/EIS, a series of procedural requirements, such as field surveys and public meetings, must be completed. This process is well underway and characterized below in three main phases:

I. Commence environmental analysis

Prepare & Circulate Notice of Intent/Notice of Preparation

(NOI/NOP)

45-day Public Comment Period

II. Prepare & Circulate Draft EIR/EIS

60-Day Public Comment Period

III. Prepare & Circulate Final EIR/EIS

Completed all field studies and surveys analyzing

environmental resources

Published NOI/NOP and distributed to stakeholder groups and

governmental agencies

Conducted first round of public meetings

Provided detailed program briefing to more than 200

representatives from stakeholder groups and governmental

agencies

Closed 45-day public comment period

Phase II of Environmental Review Process Is Underway

Concluding preparation of Draft EIR/EIS

Scheduled publication of Draft EIR/EIS for Fall 1999

Scheduling second round of public meetings

Permitting Process Required For Construction And Operation Of Program Has Commenced

Annual Program Payments Have Been Addressed

The parties have now structured annual payment terms for the committed minimum transfer of 1,500,000 acre-feet of existing groundwater.

Metropolitan will purchase the first 400,000 acre-feet in two installments -- $44 million payable upon environmental certification and the balance of $48 million, subject to adjustment for the water price index, payable upon completion of construction. Finally, Metropolitan will commit to purchase the additional 1,100,000 acre-feet at the earlier of delivery or in annual 40,000 acre-feet increments commencing at the start of operations.

With the increase in performance, the unit cost of water remains consistent with the previously approved Principles.

Final Agreement To Be Presented To Respective Boards

Information obtained through the environmental analysis and technical studies, as well as addressing annual program payments, is critical to documenting a final agreement between the two program partners. With this information in hand, a final agreement, which will be contingent upon completion of the environmental review process, is in the final phases of documentation and will be brought to the program partners' respective Boards for approval in the latter part of this year.

Forward-looking statements contained within this update are subject to significant risks and uncertainties, including statements related to the future operating and financial performance of the Company. Although the Company believes that the expectations reflected in its 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 price and yield fluctuations in the agricultural operations, seasonality, timing and terms of various approvals required to complete the Program, and other factors and considerations detailed in the Company's Securities and Exchange Commission filings.