The Sierra snowpack is dismal. Lake Oroville is at one-third of its capacity.

Over on the Colorado River, Lake Mead has dropped to its lowest level in four decades. The D-word – drought – is on everyone's lips.

Given these circumstances, you might think that Southern California would be leading the fight for new reservoirs. It's not. While Central Valley farmers and Gov. Arnold Schwarzenegger are all clamoring for state-funded surface storage (that's water community jargon for dams and reservoirs), Southern California has examined the price tag of these projects and said, "Thanks, but no thanks."

Largely unnoticed by the state's media, the Southland's reservations about reservoirs are rocking the debate over water investments. In the 1960s, powerful farm industries in the Central Valley teamed up with Southern California to create Lake Oroville and other pieces of the State Water Project. History has shown that, when these groups cooperate, California can make water to flow uphill toward money.

But several converging trends are souring Southern California's support for new dams, including those pushed by the governor. Construction costs are skyrocketing, along with prices of energy needed to move water south. Water stored in Northern California has to be shipped through the Sacramento-San Joaquin Delta, an increasingly undependable transit point for exports.

Add these up, and surface storage becomes a risky, expensive option, according to a draft report released this month by the Los Angeles County Economic Development Corp.

"From a Southern California perspective, dams in the northern part of the state have to be considered unreliable," said the report, aptly entitled "Where will we get the water?"

Prepared for Southern California business leaders, the LAEDC report is significant on several fronts. For one, this is not the work of a think tank with an anti-dam agenda. LAEDC is a group with wide respect in economic development circles. In addition, it has taken a unique, comprehensive look at the Southland's current water options, and the likely costs of those options over 30 years.

According to the report, conservation would be the least costly alternative, at $210 per acre-foot of treated water. Capturing storm water would cost about $350 but wouldn't help during a drought; groundwater storage would cost $580; and recycling about $1,000. Ocean desalination would cost more than $1,000 per acre-foot, depending on energy prices.

By contrast, surface storage – including proposals such as the Sites Reservoir in Northern California and the Temperance Flat dam near Fresno – would cost $760 to $1,400 per acre-foot. Most of these expenses would come from shipping the water through or around the Delta, "a legally and environmentally tortuous path," the report states.

Does this mean that Los Angeles is done financing water projects in Northern California? Don't bet on it. If California were to approve a new peripheral canal, Southern California would likely provide funding, and new storage projects would then become more viable.

But for now, diversification is the name of the game in a region where 22 million people are dangerously dependent on water imports.

"The region needs to undertake an urgent program to secure sufficient, reliable water supplies," the Southern California report states. "The solution will have to incorporate a portfolio of water strategies, since no single strategy will provide a 'silver bullet.' "