(Bloomberg) -- California regulators approved the first phase of a $330 million desalination plant despite intense community opposition, underscoring the urgency for fresh water sources as a historic drought deepens in the region.

The project, proposed by California American Water, was given the go-ahead by the California Coastal Commission late Thursday, after a 13-hour hearing where many residents and speakers highlighted the cost and environmental risks. The plant, set to be located 80 miles southeast of San Francisco, would produce 4.8 million gallons of drinkable water per day.

“California needs to diversify our water portfolio and stretch existing supplies as extreme weather threatens to reduce the state’s water supply,” California Governor Gavin Newsom said in a statement, applauding the commission’s vote. The project still needs the approval of the California Public Utilities Commission to move forward.

California American Water -- a subsidiary of American Water Works Co., the largest publicly-traded water and wastewater company in the US -- said the plant would provide a drought-proof supply of water, support new housing construction and spur economic growth.

The project marks the second desalination plant to gain approval this year in a state plagued by droughts, as climate change dries river beds and makes it harder to get fresh water. Despite the desperation for new water sources, these plants have been controversial because of their expense and environmental risks.

The project would draw seawater from the coast, send it to a nearby desalination plant and pipe it to the Monterey Peninsula. The region relies heavily on groundwater and the Carmel River, which has been overdrawn in recent years. The state has mandated California American Water since 2009 to cut the amount of water it draws from the river, and the ongoing drought has further strained supplies in a region dependent on agriculture and tourism.

At the Thursday hearing, public officials and residents flagged the cost of the project, which could boost household water bills for California American customers by $47 to $50 per month, according to the Coastal Commission. Some officials said the plant threatened local aquifers. Residents of the small city of Marina where the plant would be built, which is not served by California American, also voiced opposition, saying they’d bear the environmental risks without receiving water from the project. 

“It’s a level of drought that is going to tear apart communities if we’re not proactive,” said California Coastal Commissioner Meagan Harmon, who voted to approve the project. 

The California Public Utilities Commission last month approved a desalination plant in Southern California after rejecting another in May largely because of environmental issues, and Governor Newsom has thrown his support behind building more.

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