UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION

                     WASHINGTON, D. C. 20549


                            FORM 10-Q


(Mark One)
[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934 for the quarterly period
                    ended September 30, 2006

                               OR

[ ]  Transition Report Pursuant to Section 13 or 15(d) of
    the Securities Exchange Act of 1934 for the transition
                     period from ... to ...


                 Commission File Number 0-12114

                           CADIZ INC.

       (Exact name of registrant specified in its charter)

           DELAWARE                          77-0313235
 (State or other jurisdiction of          (I.R.S. Employer
incorporation or organization)          Identification No.)

  777 S. FIGUEROA STREET, SUITE 4250
      LOS ANGELES, CALIFORNIA                  90017
(Address of principal executive offices)     (Zip Code)

Registrant's telephone number, including area code: (213) 271-1600

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                         YES  X   NO
                             ---     ---

Indicate by check mark whether the Registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated
filer  (as defined in Exchange Act Rule 12b-2).

   LARGE ACCELERATED FILER      ACCELERATED FILER  X
                           ---                    ---
                    NON-ACCELERATED FILER
                                          ---

Indicate by check mark whether the Registrant is a shell company
(as defined in Exchange Act Rule 12b-2).

                         YES      NO  X
                             ---     ---

As of November 2, 2006 the Registrant had 11,526,181 shares of
common stock, par value $0.01 per share, outstanding.

                             Page i



                             CADIZ INC.

                               INDEX

FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2006            PAGE
---------------------------------------------------------------------

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

     CADIZ INC. CONSOLIDATED FINANCIAL STATEMENTS

     Unaudited Statements of Operations for the three months
     ended September 30, 2006 and 2005. . . . . . . . . . . . . . .1

     Unaudited Statements of Operations for the nine months ended
     September 30, 2006 and 2005. . . . . . . . . . . . . . . . . .2

     Unaudited Balance Sheets as of September 30, 2006 and
     December 31, 2005. . . . . . . . . . . . . . . . . . . . . . .3

     Unaudited Statements of Cash Flows for the nine months ended
     September 30, 2006 and 2005. . . . . . . . . . . . . . . . . .4

     Unaudited Statement of Stockholders' Equity for the nine
     months ended September 30, 2006. . . . . . . . . . . . . . . .5

     Unaudited Notes to the Consolidated Financial Statements. . . 6


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . 18

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK. . . . . . . . . . . . . . . . . . . . . . . 28

ITEM 4.  CONTROLS AND PROCEDURES. . . . . . . . . . . . . . . . . 28


PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . .29

                             Page ii



                           CADIZ INC.

        CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

----------------------------------------------------------------------
                                                FOR THE THREE MONTHS
                                                ENDED SEPTEMBER 30,
($ IN THOUSANDS EXCEPT PER SHARE DATA)             2006      2005
----------------------------------------------------------------------

Revenues                                         $     37  $     15
                                                 --------  --------
Costs and expenses:
 Cost of Sales                                          -         -
 General and administrative                         1,317     1,054
 Compensation costs from stock and option awards      768     2,305
 Depreciation and amortization                         38        67
                                                 --------  --------

Total costs and expenses                            2,123     3,426
                                                 --------  --------

Operating loss                                     (2,086)   (3,411)

Other income (expense)
 Interest expense, net                               (702)     (479)
 Change in fair value of derivative liability      (2,919)        -
 Other income                                          23         -
                                                 --------  --------
  Other income (expense), net                      (3,598)     (479)
                                                 --------  --------

Loss before income taxes                           (5,684)   (3,890)
Income tax provision                                    -       (27)
                                                 --------  --------

Net loss                                         $ (5,684) $ (3,863)
                                                 ========  ========

Net loss applicable to common stock              $ (5,684) $ (3,863)
                                                 ========  ========

Basic and diluted net loss per common share      $  (0.50) $  (0.35)
                                                 ========  ========

Basic and diluted weighted average
 shares outstanding                                11,331    10,966
                                                 ========  ========


  See accompanying notes to the consolidated financial statements.

                             Page 1



                          CADIZ INC.

       CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

----------------------------------------------------------------------
                                                FOR THE NINE MONTHS
                                                ENDED SEPTEMBER 30,
($ IN THOUSANDS EXCEPT PER SHARE DATA)             2006      2005
----------------------------------------------------------------------

Revenues                                         $    446  $     45
                                                 --------  --------

Costs and expenses:
 Cost of Sales                                        341         -
 General and administrative                         4,128     2,885
 Compensation costs from stock and option awards    1,826    13,554
 Depreciation and amortization                        117       201
                                                 --------  --------

Total costs and expenses                            6,412    16,640
                                                 --------  --------

Operating loss                                     (5,966)  (16,595)

Other income (expense)
 Interest expense, net                             (1,679)   (1,433)
 Loss on early extinguishment of debt                (868)        -
 Change in fair value of derivative liability      (2,919)        -
 Other income                                         373         -
                                                 --------  --------
   Other income (expense), net                     (5,093)   (1,433)
                                                 --------  --------

Loss before income taxes                          (11,059)  (18,028)
Income tax provision                                    1        29
                                                 --------  --------

Net loss                                         $(11,060) $(18,057)
                                                 ========  ========

Net loss applicable to common stock              $(11,060) $(18,057)
                                                 ========  ========

Basic and diluted net loss per common share      $  (0.98) $  (1.69)
                                                 ========  ========

Basic and diluted weighted average
 shares outstanding                                11,331    10,679
                                                 ========  ========

 See accompanying notes to the consolidated financial statements.

                            Page 2



                         CADIZ INC.

          CONSOLIDATED BALANCE SHEETS (UNAUDITED)

----------------------------------------------------------------------
                                            SEPTEMBER 30, DECEMBER 31,
($ IN THOUSANDS)                                  2006      2005
----------------------------------------------------------------------

ASSETS

Current assets:
 Cash and cash equivalents                       $ 12,012  $  5,302
 Accounts receivable                                   16       170
 Prepaid interest expense                               -       740
 Prepaid expenses and other                           566        34
                                                 --------  --------

  Total current assets                             12,594     6,246

Property, plant, equipment and water
 programs, net                                     35,227    35,323
Goodwill                                            3,813     3,813
Other assets                                          396       664
                                                 --------  --------

  Total Assets                                   $ 52,030  $ 46,046
                                                 ========  ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable                                $    326  $    369
 Accrued liabilities                                  755       819
 Current portion of long term debt                      9         8
                                                 --------  --------

  Total current liabilities                         1,090     1,196

Long-term debt, net of $11,868 unamortized
 discounts on September 30, 2006                   24,997    25,883
                                                 --------  --------

  Total Liabilities                                26,087    27,079

Commitments and contingencies (Note 7)

Stockholders' equity:

 Series F convertible preferred stock -
  $.01 par value; 100,000 shares authorized;
  shares issued and outstanding - 1,000 at
  September 30, 2006 and December 31, 2005              -         -
 Common stock - $.01 par value; 70,000,000
  shares authorized; shares issued and
  outstanding - 11,400,402 at September 30,
  2006 and 11,330,463 at December 31, 2005            115       114
 Additional paid-in capital                       244,773   226,738
 Accumulated deficit                             (218,945) (207,885)
                                                 --------  --------

 Total stockholders' equity                        25,943    18,967
                                                 --------  --------


 Total Liabilities and Stockholders' equity      $ 52,030  $ 46,046
                                                 ========  ========

  See accompanying notes to the consolidated financial statements.

                             Page 3



                            CADIZ INC.

         CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

----------------------------------------------------------------------
                                                FOR THE NINE MONTHS
                                                ENDED SEPTEMBER 30,
($ IN THOUSANDS EXCEPT PER SHARE DATA)             2006      2005
----------------------------------------------------------------------

Cash flows from operating activities:
 Net loss                                        $(11,060) $(18,057)
 Adjustments to reconcile net loss to
  net cash used for operating activities:
    Depreciation and amortization                     117       201
    Amortization of debt discount &
     issuance costs                                   400        21
    Interest expense added to loan principal        1,251       893
    Loss on early extinguishment of debt              868         -
    Change in value of derivative liability         2,919         -
    Compensation charge for stock awards and
     share options                                  1,826    13,554
    Stock issued for services                           -       469
 Changes in operating assets and liabilities:
    Decrease (increase) in accounts receivable        154       (16)
    Decrease (increase) in prepaid
     borrowing expense                                522       851
    Decrease (increase) in prepaid expenses
     and other                                       (532)       28
    Increase (decrease) in accounts payable           (43)      (96)
    Increase (decrease) in accrued liabilities        (64)     (396)
                                                 --------  --------

 Net cash used for operating activities            (3,642)   (2,548)
                                                 --------  --------

Cash flows from investing activities:
 Additions to property, plant and equipment           (20)      (53)
 Proceeds from asset disposition                        -        24
 Decrease (increase) in other assets                    -        11
                                                 --------  --------

  Net cash provided by (used by)
   investing activities                               (20)      (18)
                                                 --------  --------

Cash flows from financing activities:
 Proceeds from issuance of common stock             1,050         -
 Proceeds from issuance of long-term debt          36,375         -
 Debt issuance costs                                 (409)        -
 Principal payments on long-term debt             (26,644)        -
                                                 --------  --------

  Net cash provided by (used by)
   financing activities                            10,372         -
                                                 --------  --------

Net increase (decrease) in cash and
 cash equivalents                                   6,710    (2,566)

Cash and cash equivalents, beginning of period      5,302     9,031
                                                 --------  --------

Cash and cash equivalents, end of period         $ 12,012  $  6,465
                                                 ========  ========

Supplemental disclosure of non-cash investment
and financing activities:

 Reclassification of loan conversion option
  fair value from liabilities to
  stockholder's equity                           $ 15,160  $      -
                                                 --------  --------

  See accompanying notes to the consolidated financial statements.

                             Page 4



                           CADIZ INC.

       CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

--------------------------------------------------------------------------------
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
($ IN THOUSANDS)
--------------------------------------------------------------------------------

           PREFERRED STOCK    COMMON STOCK  ADDITIONAL                TOTAL
           ---------------    ------------   PAID-IN      ACCUM.   STOCKHOLDERS'
           SHARES   AMOUNT  SHARES   AMOUNT  CAPITAL     DEFICIT      EQUITY
           ------   ------  ------   ------  -------     -------      ------
Balance as of
 December 31,
 2005        1,000  $  -  11,330,463  $  114  $ 226,738  $(207,885)   $  18,967

Convertible
 term loan
 conversion
 option          -     -           -       -     15,160          -       15,160

Stock
 compensation
 expense         -     -           -       -      1,826          -        1,826

Common stock
 issued due
 to warrant
 exercise        -     -      70,000       1      1,049          -        1,050

Fractional
 shares
 retired         -     -         (61)      -          -          -            -

Net loss         -     -           -       -          -    (11,060)     (11,060)
           -------  ----  ----------  ------  ---------  ---------    ---------

Balance as of
 September 30,
 2006        1,000  $  -  11,400,402  $  115  $ 244,773  $(218,945)   $  25,943
           =======  ====  ==========  ======  =========  =========    =========

        See accompanying notes to the consolidated financial statements.

                             Page 5



                           CADIZ INC.

       NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION
------------------------------

GENERAL

     The Consolidated Financial Statements have been prepared by
Cadiz Inc., sometimes referred to as "Cadiz" or "the Company",
without audit and should be read in conjunction with the
Consolidated Financial Statements and notes thereto included in
the Company's Form 10-K for the year ended December 31, 2005.
The year-end condensed balance sheet data was derived from
audited financial statements, but does not include all
disclosures required by accounting principles generally accepted
in the United States of America.

     The foregoing Consolidated Financial Statements include the
accounts of the Company and contain all adjustments, consisting
only of normal recurring adjustments, which the Company considers
necessary for a fair presentation of the Company's financial
position, the results of its operations and its cash flows for
the periods presented and have been prepared in accordance with
generally accepted accounting principles.

     The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and the accompanying notes.  Actual
results could differ from those estimates and such differences
may be material to the financial statements. This quarterly
report on Form 10-Q should be read in conjunction with the
Company's Form 10-K for the year ended December 31, 2005.  The
results of operations for the nine months ended September 30,
2006 are not necessarily indicative of results for the entire
fiscal year ending December 31, 2006.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The financial statements of the Company have been prepared
using accounting principles applicable to a going concern, which
assumes realization of assets and settlement of liabilities in
the normal course of business.  The Company incurred losses of
$11.1 million for the nine months ended September 30, 2006 and
$18.1 million for the nine months ended September 30, 2005.  The
Company had working capital of $11.5 million at September 30,
2006 and used cash in operations of $3.6 million for the nine
months ended September 30, 2006 and $2.5 million for the nine
months ended September 30, 2005.  Currently, the Company's sole
focus is the development of its land and water assets.

     During the nine months ended September 30, 2006, the Company
raised $36.4 million through the private placement of a five year
zero coupon convertible term loan with Peloton Partners LLP
("Peloton"), as administrative agent, and an affiliate of Peloton
and another investor, as lenders.  The proceeds of the new term
loan were partially used to repay the Company's prior term loan
facility with ING Capital LLC ("ING").

     The Company's current resources do not provide the capital
necessary to fund a water or real estate development project
should the Company be required to do so.  There is no assurance
that additional financing (public or private) will be available
on acceptable terms or at all.  If the Company issues additional
equity or equity linked securities to raise funds, the ownership
percentage of the Company's existing stockholders would be
reduced.  New

                             Page 6

investors may demand rights, preferences or privileges senior to
those of existing holders of common stock. If the Company cannot
raise needed funds, it might be forced to make further substantial
reductions in its operating expenses, which could adversely affect
its ability to implement its current business plan and ultimately
its viability as a company.  These financial statements do not
include any adjustments that might result from these uncertainties.

PRINCIPLES OF CONSOLIDATION

     In December 2003, the Company transferred substantially all
of its assets with the exception of its office sublease, certain
office furniture and equipment and the investment in Sun World
International Inc.("Sun World") to Cadiz Real Estate LLC, a
Delaware limited liability company ("Cadiz Real Estate").  The
Company holds 100% of the equity interests of Cadiz Real Estate,
and therefore continues to hold 100% beneficial ownership of the
properties that it transferred to Cadiz Real Estate.  Because the
transfer of the Company's properties to Cadiz Real Estate has no
effect on its ultimate beneficial ownership of these properties,
the properties owned of record either by Cadiz Real Estate or by
the Company are treated as belonging to the Company.

     On January 30, 2003, Sun World and certain of its
subsidiaries filed voluntary petitions for relief under Chapter
11 of the Bankruptcy Code.  The financial statements of Sun World
were no longer consolidated with those of Cadiz due to the
Company's loss of control over the operations of Sun World on
that date.  Cadiz also wrote off its net investment in Sun World
of $195 thousand at the Chapter 11 filing date because it did not
anticipate being able to recover its investment.

     Further, in February 2005, Sun World completed the sale of
substantially all of its assets.  Sun World's consensual plan of
reorganization was confirmed by the U.S. Bankruptcy Court in
August, 2005 and became effective on September 6, 2005.  Cadiz
also reached a settlement with Sun World regarding certain tax
matters that became effective on September 6, 2005.  With the
final bankruptcy plan confirmation and settlement, Cadiz has no
further rights and obligations relating to Sun World assets or
indebtedness, and supplemental disclosure of Sun World financial
information is no longer included in Cadiz filings.

     As discussed above, subsequent to the effective date of the
plan of reorganization of Sun World, the Company's primary
activities are limited to the development of its water resource
programs and real estate assets.  From the effective date of the
plan of reorganization through September 30, 2006, the Company
incurred losses of approximately $16.3 million and used cash in
operations of approximately $4.9 million.

GOODWILL

     The Company has $3.8 million of goodwill which resulted from
a merger in May 1988 between two companies, which eventually
became known as Cadiz Inc.  Goodwill is not amortized but is
tested for impairment annually in the first quarter, or earlier
if events occur which require an impairment analysis to be
performed. The Company performed an impairment test of its
goodwill in the first quarter of 2006 and determined that its
goodwill was not impaired.

                             Page 7

INTANGIBLE AND OTHER LONG-LIVED ASSETS

     Property, plant and equipment, intangible and certain other
long-lived assets are amortized over their useful lives.  Useful
lives are based on management's estimates of the period that the
assets will generate revenue.  Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.

RECENT ACCOUNTING PRONOUNCEMENTS

     In December 2004, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
Number 123 (revised 2004), "Share Based Payment" ("SFAS 123R").
SFAS 123R requires all share-based payments to employees,
including grants of employee stock options, to be recognized in
the financial statements based on their grant date fair values.
SFAS 123R replaces SFAS No. 123, "Accounting for Stock Based
Compensation," ("SFAS 123") and supersedes APB Opinion No. 25,
"Accounting for Stock Issued to Employees."

     In January 2006, the Company adopted the new requirements
using the modified prospective transition method in the first
quarter of fiscal 2006, and, as a result, will not retroactively
adjust the results from prior periods.  Under this transition
method, compensation expense associated with stock options
recognized in the first nine months of fiscal 2006 included
$697,000 related to the remaining unvested portion of all stock
option awards granted prior to January 1, 2006, based on the
grant date fair value estimated in accordance with the original
provisions of SFAS 123.  The Company applied the Black-Scholes
valuation model in determining the fair value of share-based
payments to employees, which is then amortized on a straight-line
basis over the requisite service period.  In addition to the
$697,000 of stock option related expense due to the adoption of
SFAS 123R, the Company recognized $1,129,000 of expense related
to stock awards previously granted under the Management Equity
Incentive Plan.

     In June 2006, the FASB issued FSP FIN 48 which clarifies the
accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB
Statement No. 109, "Accounting for Income Taxes."  This
Interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken on a tax return.
This Interpretation also provides guidance on derecognition,
classification, interest, penalties, accounting in interim
periods, disclosure and transition.  The evaluation of a tax
position in accordance with this Interpretation will be a two-
step process.  The first step will determine if it is more likely
than not that a tax position will be sustained upon examination
and should therefore be recognized.  The second step will measure
a tax position that meets the more likely than not recognition
threshold to determine the amount of benefit to recognize in the
financial statements.  This Interpretation is effective for
fiscal years beginning after December 15, 2006.  The Company is
currently evaluating the impact of this Statement.

     In September 2006, the SEC staff issued Staff Accounting
Bulletin No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year
Financial Statements."  SAB 108 was issued in order to eliminate
the diversity of practice

                             Page 8

surrounding how public companies quantify financial statement
misstatements.  Traditionally, there have been two widely-recognized
methods for quantifying the effects of financial statement
misstatements:  the "roll-over" method and the "iron curtain"
method.  The roll-over method focuses primarily on the impact of
a misstatement on the income statement-including the reversing
effect of prior year misstatements-but its use can lead to the
accumulation of misstatements in the balance sheet.  The iron
curtain method, on the other hand, focuses primarily on the effect
of correcting the period-end balance sheet with less emphasis on
the reversing effects of prior year errors on the income statement.
We currently use the iron curtain method for quantifying identified
financial statement misstatements.

     In SAB 108, the SEC staff established an approach that
requires uantification of financial statement misstatements based
on the effects of the misstatements on each of the company's
financial statements and the related financial statement disclosures.
This model is commonly referred to as a "dual approach" because it
requires quantification of errors under both the iron curtain and
the roll-over methods.

     SAB 108 permits existing public companies to initially apply
its provisions either by (i) restating prior financial statements as
if the "dual approach" had always been used or (ii) recording the
cumulative effect of initially applying the "dual approach" as
adjustments to the carrying values of assets and liabilities as
of January 1, 2006 with an offsetting adjustment recorded to the
opening balance of retained earnings.  Use of the "cumulative
effect" transition method requires detailed disclosure of the
nature and amount of each individual error being corrected
through the cumulative adjustment and how and when it arose.

     The Company will initially apply the provisions of SAB 108
using the cumulative effect transition method in connection with the
preparation of our annual financial statements for the year
ending December 31, 2006.  The Company is currently assessing the
impact of this statement.

STOCK-BASED COMPENSATION

     Prior to the January 2006 adoption of SFAS 123R, the Company
accounted for grants of options to employees to purchase its
common stock using the intrinsic value method in accordance with
APB Opinion No. 25 and FIN No. 44, "Accounting for Certain
Transactions Involving Stock Compensation".  As permitted by SFAS
123 and as amended by SFAS No. 148, the Company chose to continue
to account for such option grants under APB Opinion No. 25 and
provide the expanded disclosures specified in SFAS 123, as
amended by SFAS No. 148.

     Had compensation cost for the Company's option grants been
determined based on their fair value at the grant date for awards
consistent with the provisions of SFAS 123R, the Company's  net
loss per share for the three months and nine months ended
September 30, 2005 would have been the adjusted pro forma amounts
indicated below (dollars in thousands):

                             Page 9

                                       PERIOD ENDING SEPTEMBER 30, 2005
                                         THREE MONTHS     NINE MONTHS
                                         ------------     -----------
                                                  (UNAUDITED)
  Net loss applicable to common stock,
   as reported                            $ (3,863)       $(18,057)

  Stock based employee compensation
   cost, net of tax effects, included
   in the determination of net income,
   as reported                               2,305          13,554


  Stock based employee compensation
   cost, net of tax effects, under the
   fair value method if the fair value
   method had been applied                  (2,482)        (14,463)
                                          --------        --------

  Proforma net loss if the fair value
  method had been applied                 $ (4,040)       $(18,966)
                                          ========        ========


                                       PERIOD ENDING SEPTEMBER 30, 2005
                                         THREE MONTHS     NINE MONTHS
                                         ------------     -----------
                                                  (UNAUDITED)
   Net loss applicable to common stock:
    as reported per basic and diluted
    common share                          $   (.35)       $  (1.69)

   Stock based employee compensation
    cost, net of tax effects, included
    in the determination of net income
    as reported                               0.21            1.26

   Stock based employee compensation
    cost, net of tax effects, under the
    fair value method if the fair value
    method had been applied                  (0.23)          (1.35)
                                          --------        --------
   Proforma net loss if the fair value
     method had been applied              $  (0.37)       $  (1.78)
                                          ========        ========

     For purposes of computing the pro forma disclosures required
by SFAS 123, the fair value of each option granted to employees
and directors is estimated using the Black-Scholes option pricing
model.

     The Company has issued options pursuant to its 2003
Management Equity Incentive Plan.  Options issued under the
Management Equity Incentive Plan were granted during 2005 and
have a ten year term with vesting periods ranging from issuance
date to three years.  Certain of these options have strike prices
that are below the fair market value of the stock on the date of
grant.  All options have been issued to directors, officers,
consultants and employees of the Company.

                             Page 10

     The Management Equity Incentive Plan provides for the
granting of up to 377,339 options to purchase one share of common
stock.  365,000 options were granted under the plan during 2005.
These options remain unexercised and outstanding on September 30,
2006.  There were no additional option grants during the 9 month
period ended September 30, 2006.

     In December 2004, the FASB issued SFAS No. 123R (revised
2004), "Share-Based Payment", which requires all share-based
payments to employees, including grants of employee stock
options, be recognized in the financial statements based on their
grant date fair values.  SFAS No. 123R replaces SFAS No. 123,
"Accounting for Stock-based Compensation," ("SFAS 123") and
supercedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees."  The Company adopted the new requirements using the
modified prospective transition method during the first quarter
of 2006, and as a result, will not retroactively adjust results
from prior periods.  Under this transition method, compensation
expense associated with stock options recognized in the first
quarter of fiscal 2006 included: 1) expenses related to the
remaining unvested portion of all stock option awards granted
prior to January 1, 2006, based on the grant date fair value
estimated in accordance with the original provisions of SFAS No.
123; and 2) expenses related to all stock option awards granted
subsequent to January 1, 2006, based on the grant date fair value
estimated in accordance with the provisions of SFAS No. 123R.
The Company will apply the Black-Scholes valuation model in
determining the fair value of share-based payments to employees,
which will then be amortized on a straight-line basis over the
requisite service period.  No stock options were granted during
the first nine months of 2006.

     As a result of the adoption of SFAS 123R, the Company
recorded expense in the amount of $697,000 in the first 9 months
of 2006 related to the fair value of options, all of which were
granted in 2005.  SFAS 123R also requires the Company to estimate
forfeitures in calculating the expense related to stock-based
compensation as opposed to only recognizing these forfeitures and
the corresponding reduction in expense as they occur.  The
remaining vesting periods are relatively short, and the potential
impact of forfeitures is not material.  The Company is in a tax
loss carryforward position and is not expected to realize a
benefit from any additional compensation expense recognized under
SFAS 123R.  See Note 4 - Income Taxes.

     All outstanding stock options were issued in May and October
of fiscal 2005 under the Management Equity Incentive Plan.  The
fair value of each option grant was estimated on the date of
grant using the Black-Scholes option pricing model with the
following weighted average assumptions:

          Risk free interest rate                      4.20%
          Expected life                                9.6 years
          Expected volatility                          46%
          Expected dividend yield                      0.0%
          Weighted average vesting period              0.7 years

     The Company recognized stock option related compensation
costs of $697,000 in the first nine months of fiscal 2006
relating to these options.  At September 30, 2006, the
unamortized compensation expense related to these options
amounted to $199,000.  No stock options were exercised during
fiscal 2005 and during the first nine months of fiscal 2006.

                             Page 11

     A summary of option activity under the plan as of September
30, 2006 and changes during the current fiscal year is presented
below:

                                              WEIGHTED-
                                WEIGHTED-      AVERAGE    AGGREGATE
                                 AVERAGE      REMAINING   INTRINSIC
                                EXERCISE     CONTRACTUAL    VALUE
   OPTIONS          SHARES        PRICE         TERM       ($000'S)
   -------          ------      ---------    -----------  ---------

Outstanding
 January 1, 2006     365,000     $ 12.71         9.4       $ 3,842
Granted                    -           -           -             -
Exercised                  -           -           -             -
Forfeited
 or expired                -           -           -             -
                     -------
Outstanding on
 September 30, 2006  365,000     $ 12.71         8.6       $ 3,842
                     =======     =======         ===       =======
Exercisable at
 September 30, 2006  238,335     $ 12.50         8.6       $ 2,435
                     =======     =======         ===       =======


     The weighted-average grant-date fair value of options
granted during the year 2005 was $10.53.

     The Company has also granted stock awards pursuant to its
Management Equity Incentive Plan and 2004 Management Bonus Plan.
The Management Equity Incentive Plan provided for the granting of
1,094,712 shares of common stock in May 2005, and the 2004
Management Bonus Plan provided for the granting of 10,000 shares
of common stock valued at $12.00 per share in December 2004.
Compensation cost for stock granted to employees is measured at
the quoted market price of the Company's stock at the date of the
grant.  For the nine months ended September 30, 2006, the
accompanying consolidated statement of operations includes
approximately $1,129,000 of stock based compensation expense
related to these stock awards.  At September 30, 2006, the
compensation expense relating to these stock awards was fully
amortized.

     A summary of stock awards activity under the plan as of
September 30, 2006 and changes during the current quarter is
presented below:

                                                       WEIGHTED-
                                                        AVERAGE
                                                       GRANT-DATE
                                                       FAIR VALUE
                                             SHARES     ($000's)
                                             ------    ----------

   Nonvested at December 31, 2005           125,779      $ 1,950
     Granted                                      -            -
     Forfeited or canceled                        -            -
     Vested                                       -            -
                                            -------      -------

   Nonvested at September 30, 2006          125,779      $ 1,950


     See Note 2 to the Consolidated Financial Statements included
in the Company's Form 10-K for further discussion of the
Company's accounting policies.

                             Page 12


NOTE 2 - PROPERTY, PLANT, EQUIPMENT AND WATER PROGRAMS
------------------------------------------------------

     Property, plant, equipment and water programs consist of the
following (in thousands):

                                         SEPTEMBER  30,   DECEMBER 31,
                                              2006          2005
                                              ----          ----

          Land and land improvements        $ 21,986      $ 21,986
          Water programs                      14,274        14,274
          Buildings                            1,191         1,191
          Machinery and equipment              2,123         2,103
                                            --------      --------

                                              39,574        39,554
          Less accumulated depreciation       (4,347)       (4,231)
                                            --------      --------

                                            $ 35,227      $ 35,323
                                            ========      ========

     Depreciation expense totaled $38 thousand and $67 thousand
during the three months ended September 30, 2006 and 2005, and
$117 thousand and $201 thousand for the nine months ended
September 30, 2006 and 2005.


NOTE 3 - DEBT
-------------

     In June, the Company entered into a $36.4 million five year
zero coupon convertible term loan with Peloton Partners LLP, as
administrative agent for the loan, and with an affiliate of
Peloton and another investor, as lenders.  Certain terms of the
loan were subsequently amended pursuant to Amendment #1 to the
Credit Agreement, which was effective September 29, 2006.  Under
the terms of the loan, interest accrues at a 5% annual rate for
the first 3 years and 6% thereafter, calculated on the basis of a
360 day year and actual days elapsed.  The entire amount of
accrued interest is due at the final maturity of the loan in
September, 2011.  The term loan is secured by substantially all
the assets of the Company and contains representations,
warranties and covenants that are typical for agreements of this
type, including restrictions that would limit the Company's
ability to incur additional indebtedness, incur liens, pay
dividends or make restricted payments, dispose of assets, make
investments and merge or consolidate with another person.
However, there are no financial maintenance covenants and no
restrictions on the Company's ability to issue additional common
stock to fund future working capital needs.

     At the lender's option, principal plus accrued interest is
convertible into the Company's $0.01 par value common stock.  The
loan is divided into two tranches: the $10 million Tranche A is
convertible at $18.15 per share, and the $26.4 million Tranche B
is convertible at $23.10 per share.  Lenders may not, unless and
until stockholder approval is received, exercise these conversion
rights to the extent that a lender would own more than 19.99% of
the Company's common stock outstanding after such conversion.  A
maximum of 2,221,909 shares are issuable pursuant to these
conversion rights, with this maximum number applicable if the
loan is

                             Page 13

converted on the final maturity date.  The Company has more than
sufficient authorized common shares available for this purpose.

     In the event of a change in control, the conversion prices
are adjusted downward by a discount that declines over time such
that, under a change in control scenario, both the Tranche A and
Tranche B conversion prices are initially $16.50 per share and
increase in a linear manner over time to the full $18.15 Tranche
A conversion price and $23.10 Tranche B conversion price on the
final maturity date.  In no event does the maximum number of
shares issuable to lenders pursuant to these revised conversion
formulas exceed the 2,221,909 shares that would be issued to
lenders pursuant to a conversion in full on the final maturity
date in the absence of a change in control.

     The respective tranches of the loan can be prepaid if the
price of the Company's stock on the NASDAQ Global Market exceeds
the conversion price by 40% or if the Company obtains a certified
environmental impact report for the Cadiz groundwater storage and
dry year supply program, a pipeline right-of-way and permits for
pipeline construction and financing commitments sufficient to
construct the project.

     The Company has filed a registration statement on Form S-3
covering the resale of all the securities issuable upon
conversion of the loan.  The Company is required to maintain the
effectiveness of this registration statement for at least 180
days after it has been declared effective.  The Company is
subject to a 0.5% monthly penalty assessed on the initial
principal balance of the loan for each 30 day period (or portion
thereof) during which any such requirements are not satisfied.

     The Company has analyzed all of the above provisions of the
convertible loan and related agreements for embedded derivatives
under FASB Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities and related Emerging Issues
Task Force (EITF) interpretations and SEC rules.  The Company
concluded that certain provisions of the convertible loan
agreement, which were in effect prior to the first amendment
date, may be deemed to be derivatives for purposes of the
application of FASB Statement No. 133 and EITF 00-19: Accounting
for Derivative Financial Instruments to, and Potentially Settled
in, a Company's Own Stock.  Therefore, in accordance with FASB
Statement No. 133, these embedded instruments were bifurcated
from the host debt instrument and classified as a liability in
the Company's financial statements.  The Company prepared
valuations for each of the deemed derivatives using a Black-
Scholes option pricing model and recorded a liability of
approximately $12 million on the June 30 loan funding date, with
an offsetting discount to the convertible term loan.

     On June 30, 2006, the derivative liability was classified
and recorded as part of long term debt in the balance sheet.

                             Page 14

     The debt discount will be amortized to interest expense over
the life of the loan using the interest amortization method.  The
principal valuation assumptions are as follows:

          Loan balance available for conversion:  $36.4 million
          Expected term:                          5 years
          Cadiz common share price:               $17.01
          Volatility:                             46%
          Risk-free Interest Rate:                5.18%
          Change in control probability:          10%

     On September 29, 2006 the terms of the loan were amended,
and it was determined that bifurcation of the imbedded equity
conversion option is no longer required.  The derivative
liability was adjusted to fair value on the amendment date, and
the $2,919,000 increase in fair value was recorded as an "Other
Expense" item in the Consolidated Statement of Operations.  The
$15.2 million fair value of the derivative liability was then
transferred to the Additional Paid-in Capital component of
Stockholder's Equity in accordance with the tentative conclusion
reached by the Emerging Issues Task Force at the task force's
September 7, 2006 meeting.

     The Company incurred $408,000 of outside legal expenses
related to the negotiation and documentation of the loan, which
will be amortized over the life of the loan using the interest
amortization method

     The proceeds of the new loan were applied to repay in full
the Company's term loan facility with ING described below.  As a
result, ING retained the $762,000 remaining balance of the
prepaid interest credit account described below, and the write-
off of this asset was reflected in the "Other Expense" caption of
the Statement of Operations.  The write-off of $106,000 of
unamortized debt issuance costs related to the ING loan was also
reflected under "Other Expense".

     On November 30, 2004 the Company entered into an amendment
of its senior term loan agreement with ING whereby it repaid in
full the senior term loan portion of the facility with ING of $10
million and reduced to $25 million the outstanding principal
balance under the existing revolving portion of the loan.  The
terms and conditions of the loan facility with ING were amended
in order to extend the maturity date of the debt until March 31,
2010, with a $10 million mandatory principal repayment due on or
before March 31, 2008, and an interest rate through March 31,
2008 of 4% cash plus 4% paid in kind ("PIK") increasing to 4%
cash plus 6% PIK for interest periods commencing on and after
April 1, 2008.

     As part of the private sale of common shares on November 30,
2004, the Company issued to its lender $2.4 million of units as
prepaid interest under the Company's $25 million borrowing from
ING.  The current portion of this interest was included in
Prepaid Interest Expense and the non-current portion was included
in Other Assets in the Consolidated Balance Sheet.  The total
amount of prepaid interest was $1.5 million on September 30,
2005.  No balance was outstanding after the ING loan repayment in
June, 2006.

                             Page 15

NOTE 4 - INCOME TAXES
---------------------

     As of September 30, 2006, the Company had net operating loss
(NOL) carryforwards of approximately $73.7 million for federal
income tax purposes.  Such carryforwards expire in varying
amounts through the year 2026.  This amount reflects the
effective reduction of the NOL carryforwards as a result of
ownership change annual limitation amounts, of approximately $6.6
million annually.  Because it is more likely than not that the
Company will not realize its net deferred tax assets, it has
recorded a full valuation allowance against these assets.
Accordingly, no deferred tax asset has been recorded in the
accompanying balance sheet.


NOTE 5 - NET LOSS PER COMMON SHARE
----------------------------------

     Basic earnings per share (EPS) is computed by dividing the
net loss, after deduction for preferred dividends either accrued
or imputed, if any, by the weighted-average common shares
outstanding.  Options, deferred stock units, warrants,
convertible debt, and preferred stock that are convertible into
shares of the Company's common stock were not considered in the
computation of diluted EPS because their inclusion would have
been antidilutive.  Had these instruments been included, the
fully diluted weighted average shares outstanding would have
increased by approximately 2,618,000 and 1,208,000 shares for the
three months ended September 30, 2006 and 2005, respectively.
For the nine months ended September 30, 2006 and 2005, weighted
average shares outstanding would have increased by approximately
1,488,000 and 846,000 shares, respectively.


NOTE 6 - PREFERRED AND COMMON STOCK
-----------------------------------

     During the quarter ended March 31, 2005, we issued 27,200
shares of common stock and 5,440 common stock purchase warrants
in consideration for services valued at $326,400.  The shares and
warrants were issued on the same terms as the November 2004
private placement, at which time the issue of the shares was
authorized, the services rendered and the amounts accrued.

     On November 30, 2004 the Company completed a private
placement of 400,000 Units at the price of $60.00 per Unit.  Each
Unit consisted of five (5) shares of the Company's common stock
and one (1) common stock purchase warrant.  Each Warrant entitles
the holder to purchase one (1) share of common stock at an
exercise price of $15.00 per share.  The warrants have a term of
three years, expiring on November 30, 2007, and may be cancelled
at the Company's option if the closing market price of the
Company's common stock exceeds $18.75 for 10 consecutive trading
days.

     During September, 2006, certain warrant holders exercised
rights to purchase 70,000 shares of the Company's common stock
for $15.00 per share.  335,440 warrants remain outstanding on
September 30, 2006.

                             Page 16

NOTE 7 - COMMITMENTS AND CONTINGENCIES
--------------------------------------

     On April 7, 2003, the Company filed an administrative claim
against The Metropolitan Water District of Southern California
("Metropolitan"), asserting the breach by Metropolitan of various
obligations specified in our 1998 Principles of Agreement with
Metropolitan and other related contracts.  The Company believed that
by failing to complete the environmental review process for the
Cadiz Project, failing to accept the Right of Way grant offered
by the Department of Interior and for taking other actions
inconsistent with their obligations, Metropolitan violated the
contracts between the parties, breached its fiduciary duties to
the Company and interfered with our prospective economic advantages.
The filing was made with the Executive Secretary of Metropolitan.

     When settlement negotiations failed to produce a resolution,
the Company filed a lawsuit against Metropolitan in Los Angeles
Superior Court on November 17, 2005 seeking recovery of damages.
Metropolitan counsel responded with a demurrer, seeking to have
certain claims disallowed.  On October 18, 2006 the Court ruled
in favor of Cadiz and overruled the demurrer to the claims for
breach of fiduciary duty, promissory estoppel, breach of implied
contract and specific performance. As a result, these claims will
all go forward to trial, along with the breach of express
contract claim, which was not addressed by the demurrer.

     See "Legal Proceedings" included in the Company's latest
Form 10-K for a complete discussion.

                             Page 17

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

     In connection with the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, the following
discussion contains trend analysis and other forward-looking
statements.  Forward-looking statements can be identified by the
use of words such as "intends", "anticipates", "believes",
"estimates", "projects", "forecasts", "expects", "plans" and
"proposes".  Although we believe that the expectations reflected
in these forward-looking statements are based on reasonable
assumptions, there are a number of risks and uncertainties that
could cause actual results to differ materially from these
forward-looking statements.  These include, among others, our
ability to maximize value from our Cadiz, California land and
water resources; and our ability to obtain new financings as
needed to meet our ongoing working capital needs.  See additional
discussion under the heading "Certain Trends and Uncertainties"
in Item 7 of our Annual Report on Form 10-K for the year ended
December 31, 2005.

OVERVIEW

     The Company's primary asset consists of land holdings
located in three areas of eastern San Bernardino County,
California totaling approximately 45,000 acres.  Virtually all of
this land is underlain by high-quality groundwater resources with
demonstrated potential for various applications, including water
storage and supply programs and recreational, residential, and
agricultural development.  Two of the three properties are
located in proximity to the Colorado River Aqueduct, the major
source of imported water for southern California.  The third
property is located near the Colorado River.

     The value of these assets derives from a combination of
projected population increases and limited water supplies
throughout southern California.  In addition, most of the major
population centers in southern California are not located where
significant precipitation occurs, requiring the importation of
water from other parts of the state.  We therefore believe that a
competitive advantage exists for companies that can provide high
quality, reliable, and affordable water to major population
centers.

     In 1997 we commenced discussions with the Metropolitan Water
District of Southern California ("Metropolitan") in order to
develop a long-term agreement for a joint venture groundwater
storage and supply program on our land in the Cadiz and Fenner
Valleys of eastern San Bernardino County (the "Cadiz Project").
Under the Cadiz Project, surplus water from the Colorado River
would be stored in the aquifer system underlying our land during
wet years.  When needed, the stored water, together with
indigenous groundwater, could be returned to the Colorado River
Aqueduct for distribution to Metropolitan's member agencies
throughout six southern California counties.

     Between 1997 and 2002, Metropolitan staff and the Company
received substantially all of the various permits required to
construct and operate the project, including a federal Record of
Decision from the U.S. Department of Interior, which endorsed the
Cadiz Project and granted a right-of-way for construction of
project facilities.  The federal government also approved a Final
Environmental Impact Statement ("FEIS") in compliance with the
National Environmental Policy Act ("NEPA").

                             Page 18

     Despite the significant progress made in the federal
environmental review process, in October 2002 Metropolitan's
Board refused to consider whether or not to certify the Final
Environmental Impact Report ("FEIR"), which was a necessary
action to authorize implementation of the Cadiz Project in
accordance with the California Environmental Quality Act
("CEQA").

     Regardless of the Metropolitan Board's actions in October
2002, Southern California's need for water storage and supply
programs has not abated, and the advantages of underground water
storage facilities are increasingly evident.  Therefore we
continue to pursue the completion of the environmental review
process for the Cadiz Project.  To that end, the County of San
Bernardino has agreed to serve as the CEQA lead agency for the
completion of the environmental review of the Cadiz Project and
issue any outstanding permits required under California law once
the review is completed.  We are also working with the U.S.
Department of Interior to have the permits that were approved
during the federal environmental review process, including the
right-of-way granted in the Record of Decision to Metropolitan,
issued directly to the Company for the benefit of any
participating public agency.  Additionally, we are in discussions
with several other public agencies regarding their interest in
participating in the Cadiz Project.  All of these agencies have
access to independent sources of water that can be stored in the
Cadiz Project.

     Due to significant population growth in Southern California,
where our properties are located, we have also begun to explore
additional uses of our land assets.  To this end, we retained an
outside service firm and obtained a detailed analysis which
confirmed the future development potential of our land.  We will
continue to explore strategies to maximize the value of these
properties over the longer term.

     We expect that these alternative scenarios will have
different capital requirements and implementation periods than
those previously established for the Cadiz Project.  After
Metropolitan's actions in 2002, we first entered into a series of
agreements with our senior secured lender, ING, to reduce our
debt to ING to $25 million and extended the final maturity date.
We have recently repaid the ING debt using proceeds from a new
$36.4 million zero coupon convertible term loan with other
lenders that matures on September 29, 2011.  During 2003 and
2004, we raised approximately $35 million of equity through
private placements.  On November 30, 2004, we completed a private
placement of 400,000 Units at the price of $60.00 per Unit.  Each
Unit consisted of five (5) shares of the Company's common stock
and one (1) common stock purchase warrant.  Each Warrant entitled
the holder to purchase one (1) share of common stock at an
exercise price of $15.00 per share.  Each Warrant has a term of
three (3) years, expiring on November 30, 2007, and is callable
by us if the closing market price of our common stock exceeds
$18.75 for 10 consecutive trading days.  Under the terms of our
current loan agreement, the Company would retain any proceeds
associated with a decision by holders to exercise the warrants.

     With the implementation of these steps, we have been able to
retain ownership of all of our land assets and assets relating to
our water programs and also to obtain the working capital needed
to continue our efforts to develop our water programs.  Because
many of our pre-existing common stockholders have participated in
the 2003 and 2004 private placements, our base of common
stockholders remains largely the same as before these placements.

                             Page 19

     Further, in 2005 the U.S. Bankruptcy Court confirmed a
consensual plan of reorganization for our wholly owned subsidiary
Sun World International, Inc. ("Sun World").  The plan became
effective on September 6, 2005, and Cadiz has no further interest
in the business or operations of Sun World.  Cadiz retains the
rights to use certain Sun World net operating loss carryovers for
income tax purposes.  See Note 4 to the Consolidated Financial
Statements - Income Taxes.

     We conduct limited agricultural operations on our Cadiz
Valley properties, where there are approximately 1,060 acres of
vineyards and lemon groves.  Historically, we have leased these
crops to Sun World and other third parties.  In the fourth
quarter of 2004, the lease with Sun World expired.  We leased
approximately 800 acres of vineyards to a third party for the
2005 growing season, and the amount of acreage under lease was
reduced to 160 acres in 2006.  The remaining crop lease is
renewable on a year to year basis with annual revenues of
approximately $12,000.  We operate the remaining vineyards and
lemon groves, subcontracting the labor, harvesting and marketing
of these crops to third parties.  Agriculture related revenues
and expenses are higher in 2006 than in prior years because the
Company is operating a larger portion of the property.

     We remain committed to our land and water assets, and we
continue to explore all opportunities for development of these
assets.  We cannot predict with certainty which, if any, of these
various opportunities will ultimately be realized.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO THREE MONTHS
ENDED SEPTEMBER 30, 2005
--------------------------------------------------------------

     We have not received significant revenues from our water
resource activity to date.  As a result, we have historically
incurred a net loss from operations.  We had revenues of $60
thousand for the three months ended September 30, 2006 and $15
thousand for the three months ended September 30, 2005.  Our net
loss totaled $5.7 million for the three months ended September
30, 2006 (including a $2.9 million charge for the increase of the
fair value of bifurcated equity conversion options embedded in
our zero coupon secured convertible term loan), compared with
$3.9 million for the three month period ended September 30, 2005.

     Our primary expenses are our ongoing costs to develop our
real estate and water assets and to secure the remaining
entitlements needed to continue developing the Cadiz Program.
These costs consist primarily of project management, legal,
consulting, engineering and administrative expenses, which are
characterized as general and administrative expenses for
financial statement reporting purposes.  We also have expenses
related to the limited farming activities that we conduct at the
Cadiz Ranch.  Other costs include interest expense and
compensation costs resulting from the grant of options under the
Cadiz 2003 Management Equity Incentive Plan and the revaluation
of equity conversion options embedded in our zero coupon secured
convertible term loan.

     REVENUES  Cadiz had revenues of $37 thousand for the three
months ended September 30, 2006 and $15 thousand for the three
months ended September 30, 2005.  The $22 thousand increase
resulted primarily from non-recurring revenues at the Cadiz
Ranch.

                             Page 20

     GENERAL AND ADMINISTRATIVE EXPENSES.  General and
administrative expenses during the three months ended September
30, 2006 totaled $1.3 million compared to $1.1 million for the
three months ended September 30, 2005.  The increase in expenses
is primarily due to higher legal and consulting costs related to
the ongoing Cadiz Program entitlement process and the lawsuit the
Company has filed against the Metropolitan Water District of
Southern California.  Farming related expenses were also higher
as the Company assumed responsibility for operating a larger
portion of the Cadiz ranch properties in 2006.

     COMPENSATION COSTS FROM STOCK AND OPTION AWARDS.  During the
three months ended September 30, 2006, the Company recognized
$768 thousand of expenses relating to stock and options issued
under the Cadiz 2003 Management Equity Incentive Plan, compared
with $2.3 million of expenses recognized during the comparable
2005 period.  The 2006 expenses relate to the unvested portion of
stock and option awards granted during 2005, and, to date, no
stock or option grants have been awarded in 2006.  Shares and
options issued under the Plan vest over varying periods from the
date of issue to October 2007.  These expenses include the
adoption and application of Statement of Financial Accounting
Standards No. 123(R), "Share -Based Payments" effective January
1, 2006.

     DEPRECIATION AND AMORTIZATION.  Depreciation and
amortization expense for the three months ended September 30,
2006 and 2005 totaled $38 thousand and $67 thousand,
respectively.

     INTEREST EXPENSE, NET.  Net interest expense totaled $0.7
million during the three months ended September 30, 2006,
compared to $0.5 million during the same period in 2005.  The
following table summarizes the components of net interest expense
for the two periods (in thousands):

                                            THREE MONTHS ENDED
                                               SEPTEMBER 30,
                                               -------------
                                               2006      2005
                                               ----      ----

      Interest on outstanding debt           $    464  $    513
      Amortization of debt discounts              373         -
      Amortization of financing costs              13         7
      Interest income                            (148)      (41)
                                             --------  --------
                                             $    702  $    479
                                             ========  ========

     Higher amortization of debt discounts and debt issuance
costs was partially offset by higher interest income from the
Company's short-term cash investments.  The higher amortization
of debt discounts and debt issuance costs were related to the new
June, 2006 Peloton loan, and the higher interest income on the
Company's short-term cash investments reflected higher cash
balances and the higher money market rates available in 2006.
See Note 3 of the Consolidated Financial Statements - Debt.

     OTHER INCOME (EXPENSE). The Company prepaid its existing
indebtedness with ING in June, 2006 with the proceeds of a new
five year zero coupon convertible term loan.  Prior to an
amendment to this new loan on September 29, 2006, the new loan
contained certain "embedded derivatives" which were bifurcated
from the host debt instrument and were recorded

                             Page 21

at fair value as liabilities on the Company's consolidated
balance sheet under GAAP.  These embedded derivatives were
subject to periodic revaluation based on changes in the fair
market value of our common stock, with changes in fair value
resulting from this revaluation reflected as an other income
or expense item.  On September 29, 2006 certain terms and
conditions of the credit agreement and the embedded derivatives
were amended.  The fair value of the equity conversion options
were recalculated, and a $2.9 million expense was recognized
due to an increase in fair value.  The primary reason for the
higher fair value was the increase in the trading price of our
common stock from June 30, 2006 to September 29, 2006.  Following
the September 29, 2006 amendment, bifurcation of the imbedded
equity conversion option is no longer required.  As a result,
the fair value of the imbedded derivatives has been transferred
from the liability accounts to stockholder's equity, and no
further fair value adjustments will be required.  See Note 3
to the Consolidated Financial Statements - Debt.


NINE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 2005
------------------------------------------------------------

     We had revenues of $469 thousand for the nine months ended
September 30, 2006 and $45 thousand for the nine months ended
September 30, 2005.  Our net loss totaled $11.1 million for the
nine months ended September 30, 2006 compared to $18.1 million
for the nine months ended September 30, 2005.

     Our primary expenses are our ongoing costs to develop our
real estate and water assets and to secure the remaining
entitlements needed to continue developing the Cadiz Program.
These costs consist primarily of project management, legal,
consulting, engineering and administrative expenses, which are
characterized as general and administrative expenses for
financial statement reporting purposes.  We also have expenses
related to the limited farming activities that we conduct at the
Cadiz Ranch.  Other costs include interest expense and
compensation costs resulting from the grant of options under the
Cadiz 2003 Management Equity Incentive Plan and the revaluation
of equity conversion options embedded in our zero coupon secured
convertible term loan.

     REVENUES  Cadiz had revenues of $446 thousand for the nine
months ended September 30, 2006 and $45 thousand for the nine
months ended September 30, 2005.  Higher revenues resulted
primarily from the sale of citrus crops, as during 2006 we farmed
certain lemon groves at the Cadiz Ranch that had been leased to a
third party during 2005.

     COST OF SALES.  Cost of Sales totaled $341 thousand during
the nine months ended September 30, 2006, reflecting the
production, harvesting and sale of citrus crops at the Cadiz
Ranch property.  Cadiz leased these crops to Sun World during the
growing season ending in early 2005 and did not include Sun
World's cost of sales in the consolidated financial statements
because Sun World was in bankruptcy.

     GENERAL AND ADMINISTRATIVE EXPENSES.   General and
administrative expenses during the nine months ended September,
2006 totaled $4.1 million compared to $2.9 million for the nine
months ended September 30, 2005.  The increase in expenses is
primarily due to higher legal and consulting costs related to the
ongoing Cadiz Program entitlement process and the lawsuit the
Company has filed against the Metropolitan Water District of
Southern California.  Accounting and audit expenses were higher,
due to the documentation and additional audit work required by
Section 404 of the Sarbanes Oxley Act of 2002.

                             Page 22

     COMPENSATION COSTS FROM STOCK AND OPTION AWARDS.  During the
nine months ended September 30, 2006, the Company recognized $1.8
million of expenses relating to stock and options previously
issued under the Cadiz 2003 Management Equity Incentive Plan,
compared with $13.6 million of expenses recognized during the
nine month period ending September 30, 2005.  The 2006 expenses
relate to the unvested portion of stock and option awards granted
during 2005, and, to date, no stock or option grants have been
awarded in 2006.  Shares and options issued under the Plan vest
over varying periods from the date of issue to October 2007.
These expenses include the adoption and application of Statement
of Financial Accounting Standards No. 123(R), "Share -Based
Payments" effective January 1, 2006.

     DEPRECIATION AND AMORTIZATION.  Depreciation and
amortization expense for the nine months ended September 30, 2006
and 2005 totaled $117 thousand and $201 thousand, respectively.

     INTEREST EXPENSE, NET.  Net interest expense totaled $1.7
million during the nine months ended September 30, 2006, compared
to $1.4 million during the same period in 2005.  The following
table summarizes the components of net interest expense for the
two periods (in thousands):

                                             NINE MONTHS ENDED
                                               SEPTEMBER 30,
                                               -------------
                                               2006      2005
                                               ----      ----

      Interest on outstanding debt           $  1,510  $  1,531
      Amortization of debt discounts              373         -
      Amortization of financing costs              27        21
      Interest income                            (231)     (119)
                                             --------  --------
                                             $  1,679  $  1,433
                                             ========  ========

     Higher amortization of debt discounts and debt issuance
costs was partially offset by higher interest income from the
Company's short-term cash investments.  The higher amortization
of debt discounts and debt issuance costs were related to the new
June, 2006 Peloton loan, and the higher interest income on the
Company's short-term cash investments reflected higher cash balances
and the higher money market rates available in 2006. See Note 3 of
the Consolidated Financial Statements - Debt.

     OTHER INCOME (EXPENSE).  During the nine month period ended
September 30, 2006, one of our stockholders determined that it
had, at a time when it was the beneficial holder of more than 10%
of our outstanding equity securities, inadvertently engaged in
trades which resulted in automatic short swing profit liability
to the Company pursuant to Section 16(b) of the Securities
Exchange Act of 1934.  After becoming aware of the situation, the
stockholder promptly made payments totaling $350,000 to the
Company to settle the entire short swing profit liability owed as
a consequence of these trades.

     The Company prepaid its existing indebtedness with ING in
June, 2006 with the proceeds of a new five year zero coupon
convertible term loan.  Prior to an amendment to this new loan on
September 29, 2006, the new loan contained certain "embedded
derivatives" which

                             Page 23

were bifurcated from the host debt instrument and were recorded at
fair value as liabilities on the Company's consolidated balance
sheet under GAAP.  These embedded derivatives were subject to
periodic revaluation based on changes in the fair market value of
our common stock, with changes in fair value resulting from this
revaluation reflected as an other income or expense item.  On
September 29, 2006 certain terms and conditions of the credit
agreement and the embedded derivatives were amended.  The fair value
of the equity conversion options were recalculated, and a $2.9
million expense was recognized due to an increase in fair value.
The primary reason for the higher fair value was the increase in
the trading price of our common stock from June 30, 2006 to September
29, 2006.  Following the September 29, 2006 amendment, bifurcation
of the imbedded equity conversion option is no longer required.
As a result, the fair value of the imbedded derivatives has been
reclassified from the liability accounts to stockholder's equity,
and no further fair value adjustments will be required.  See Note 3
to the Consolidated Financial Statements - Debt.


LIQUIDITY AND CAPITAL RESOURCES

(a)  CURRENT FINANCING ARRANGEMENTS
-----------------------------------

     As we have not received significant revenues from our water
resource and real estate development activities to date, we have
been required to obtain financing to bridge the gap between the
time development expenses are incurred and the time that revenue
will commence. Historically, we have addressed these needs
primarily through secured debt financing arrangements with our
lenders, private equity placements and the exercise of outstanding
stock options.

     In June 2006 we entered into a new convertible term loan
with Peloton Partners LLP ("Peloton") and subsequently amended
certain terms of the loan in September 2006.  Under the terms of
this financing arrangement, Peloton (through an affiliate) and
another participating lender have invested $36.4 million in a
five year zero coupon secured convertible loan with an initial
interest rate of 5% per annum.  After three years, the interest
rate will increase to 6% per annum for the remainder of the term.
Interest is capitalized quarterly, and all interest payments are
deferred until the final maturity date in September 2011.  At the
lenders' option, $10 million of principal and accrued interest
thereon may be converted into Cadiz common stock at $18.15 per
share, and $26.4 million of principal and accrued interest
thereon may be converted into Cadiz common stock at $23.10 per
share.  See Note 3 of the Notes to the Consolidated Financial
Statements - Debt and Exhibit 10.1 to this Report.

     In addition to allowing us to prepay our former credit
facility with ING, the new term loan provided us with $9.3
million of additional working capital and the total facility has
a significantly lower interest rate than the former credit
facility with ING.  Furthermore, the current loan, unlike the ING
facility, permits us to retain any proceeds received from the
future exercise of warrants to purchase our common stock for
$15.00 per share.  See Note 6 of the Notes to the Consolidated
Financial Statements - Common and Preferred Stock.  However, our
ability to prepay the loan is more limited than was the case
under the ING facility.

     In September 2006, certain holders of our warrants chose to
exercise their rights to purchase a total of 70,000 shares our
common stock at $15.00 per share.  Net proceeds of $1,050,000
were received during the month of September from the warrant
holders.  335,440

                             Page 24

warrants remain outstanding.  See Note 6 of the Notes to the
Consolidated Financial Statements - Preferred and Common Stock.

     As we continue to actively pursue our business strategy,
additional financing specifically in connection with our water
programs will be required.  As the parties anticipate this need,
the restrictive covenants in our credit facility are crafted in a
way that, in our view, should not materially limit our ability to
undertake debt or equity financing in order to finance our water
development activities.

     We have no other outstanding credit facilities of material
size or preferred stock other than the Series F preferred stock
held by ING as described in our 10-K for the year ended December
31, 2005.

     CASH USED FOR OPERATING ACTIVITIES.  Cash used for operating
activities was $3.6 million for the nine months ended September
30, 2006, as compared to $2.5 million for the nine months ended
September 30, 2005.  The increased cash usage is primarily due to
higher general and administrative expenses, which are primarily
due to higher legal and consulting costs related to the
entitlement of the Cadiz Program and the lawsuit the Company has
filed against the Metropolitan Water District of Southern
California.  Accounting expenses were also higher, as the 2005
year-end audit included a Sarbanes-Oxley Section 404 review for
the first time.

     CASH FLOW FROM INVESTING ACTIVITIES.  During the nine months
ended September 30, 2006, net cash flow used in investing
activities was $20 thousand, primarily due to expenditures for
plant and equipment at the Cadiz Ranch.

     CASH FLOW FROM FINANCING ACTIVITIES.  During the nine months
ended September 30, 2006, net cash provided by financing
activities was $10.4 million, representing the proceeds remaining
from our new $36.4 million convertible debt facility, after
repayment of the ING credit facility and debt issuance costs, and
the issuance of common stock to warrant holders that exercised
their right to purchase our common stock for $15.00 per share
during September 2006.

OUTLOOK

    SHORT TERM OUTLOOK.  The proceeds of our new $36.4 million
convertible term loan and our 2003 and 2004 private placements,
in which we have raised approximately $45 million, provide us
with sufficient funds to meet our expected working capital needs
for the next 12 months.  The Company contemplates continuing with
its historical practice of structuring its financing arrangements
to match the anticipated needs of its development activities.
See "Long Term Outlook", below.  No assurances can be given,
however, as to the availability or terms of any new financing.

     LONG TERM OUTLOOK.  In the longer term, we will need to
raise additional capital to finance working capital needs and any
payments due under our convertible term loan at maturity.  See
"Current Financing Arrangements" above.  Payments will be due
under the convertible term loan only to the extent that lenders
elect not to exercise equity conversion rights prior to the
loan's final maturity.  Our future working capital needs will
depend upon the specific measures we pursue in the entitlement
and development of our real estate and water resources.  We will
evaluate the amount of cash needed, and the manner in which such
cash will be raised, on an ongoing basis.  We may meet any future
cash

                             Page 25

requirements through a variety of means, including equity or
debt placements, or the sale or other disposition of assets.
Equity placements would be undertaken only to the extent
necessary, so as to minimize the dilutive effect of any such
placements upon our existing stockholders.

RECENT ACCOUNTING PRONOUNCEMENTS

     In December 2004, the Financial Accounting Standards Board
issued SFAS No. 123R (revised 2004), "Share-Based Payment" which
amends SFAS Statement 123 and was effective for the Company
beginning January 1, 2006.  The new standard requires the Company
to recognize compensation costs in its financial statements in an
amount equal to the fair value of share-based payments granted to
employees and directors.  The Company recognized $697,000 of
stock based compensation expense in connection with the adoption
of SFAS No. 123R.

     In June 2006, the FASB issued FSP FIN 48 which clarifies the
accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB
Statement No. 109, "Accounting for Income Taxes."  This
Interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken on a tax return.
This Interpretation also provides guidance on derecognition,
classification, interest, penalties, accounting in interim
periods, disclosure and transition.  The evaluation of a tax position
in accordance with this Interpretation will be a two-step process.
The first step will determine if it is more likely than not that
a tax position will be sustained upon examination and should
therefore be recognized.  The second step will measure a tax
position that meets the more likely than not recognition threshold
to determine the amount of benefit to recognize in the financial
statements.  This Interpretation is effective for fiscal years
beginning after December 15, 2006.  The Company is currently
evaluating the impact of this Statement.

     In September 2006, the SEC staff issued Staff Accounting
Bulletin No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year
Financial Statements."  SAB 108 was issued in order to eliminate
the diversity of practice surrounding how public companies
quantify financial statement misstatements.  Traditionally, there
have been two widely-recognized methods for quantifying the
effects of financial statement misstatements:  the "roll-over"
method and the "iron curtain" method.  The roll-over method
focuses primarily on the impact of a misstatement on the income
statement-including the reversing effect of prior year
misstatements-but its use can lead to the accumulation of
misstatements in the balance sheet.  The iron-curtain method, on
the other hand, focuses primarily on the effect of correcting the
period-end balance sheet with less emphasis on the reversing
effects of prior year errors on the income statement.  We
currently use the iron curtain method for quantifying identified
financial statement misstatements.

     In SAB 108, the SEC staff established an approach that
requires quantification of financial statement misstatements
based on the effects of the misstatements on each of the
company's financial statements and the related financial
statement disclosures.  This model is commonly referred to as a
"dual approach" because it requires quantification of errors
under both the iron curtain and the roll-over methods.

                             Page 26

     SAB 108 permits existing public companies to initially apply
its provisions either by (i) restating prior financial statements
as if the "dual approach" had always been used or (ii) recording
the cumulative effect of initially applying the "dual approach"
as adjustments to the carrying values of assets and liabilities
as of January 1, 2006 with an offsetting adjustment recorded to
the opening balance of retained earnings.  Use of the "cumulative
effect" transition method requires detailed disclosure of the
nature and amount of each individual error being corrected
through the cumulative adjustment and how and when it arose.

     The Company will initially apply the provisions of SAB 108
using the cumulative effect transition method in connection with
the preparation of our annual financial statements for the year
ending December 31, 2006.  The Company is currently assessing the
impact of this statement.

CERTAIN KNOWN CONTRACTUAL OBLIGATIONS
-------------------------------------

                                  PAYMENTS DUE BY PERIOD
CONTRACTUAL              1 YEAR
OBLIGATIONS    TOTAL     OR LESS   2-3 YEARS   4-5 YEARS   AFTER 5 YEARS
-----------    -----     -------   ---------   ---------   -------------

Long term debt
 obligations  $ 36,873  $      9   $     18    $ 36,846      $      -

Interest
 Expense        10,909         1          1      10,907             -

Operating
 leases             98        88         10           -             -
              --------  --------   --------    --------      --------

              $ 47,880  $     98   $     29    $ 47,753      $      -
              ========  ========   ========    ========      ========

                             Page 27

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
          MARKET RISK

     In June 2006, we entered into a $36.4 million five year zero
coupon convertible term loan.  We analyzed all the provisions of
the loan and related agreements for embedded derivatives under
FASB Statement No. 133, Accounting for Derivative Instruments and
Hedging Activities and related Emerging Issues Task Force
interpretations and SEC rules and  concluded that certain
imbedded derivatives were required to be bifurcated and
separately valued as assets and liabilities on the Company's
financial statements.  The Company prepared valuations for each
of the deemed derivatives using a Black-Scholes option pricing
model and recorded a liability of approximately $12 million on
the June 30 loan funding date, with an offsetting discount to the
convertible term loan.  On September 29, 2006 the terms of the
loan were amended, and it was determined that bifurcation of the
imbedded equity conversion option is no longer required as of
that date.  The derivative liability was adjusted to fair value
on the amendment date, and the $2,919,000 increase in fair value
was recorded as an "Other Expense" item in the Consolidated
Statement of Operations.  The $15.2 million fair value of the
derivative liability was then transferred to the Additional Paid-
in Capital component of Stockholder's Equity.

     Other information about market risks for the nine months
ended September 30, 2006 does not differ materially from that
discussed under Item 7A of Cadiz' Annual Report on Form 10-K for
the year ended December 31, 2005.


ITEM 4.   CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

     We have established disclosure controls and procedures to
ensure that material information related to the Company,
including its consolidated entities, is accumulated and
communicated to senior management, including the Chairman and
Chief Executive Officer (the "Principal Executive Officer") and
Chief Financial Officer (the "Principal Financial Officer") and
to our Board of Directors.  Based on their evaluation as of
September 30, 2006, our Principal Executive Officer and Principal
Financial Officer have concluded that the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-
15(e) under the Securities Exchange Act of 1934) are effective to
ensure that the information required to be disclosed by the
Company in the reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms, and such
information is accumulated and communicated to management,
including the principal executive and principal financial
officers as appropriate, to allow timely decisions regarding
required disclosures.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

     In connection with the evaluation required by paragraph (d)
of Rule 13a-15 under the Exchange Act, there was no change
identified in the Company's internal control over financial
reporting that occurred during the last fiscal quarter that has
materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.

                             Page 28


PART  II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     On April 7, 2003, we filed an administrative claim against
The Metropolitan Water District of Southern California
("Metropolitan"), asserting the breach by Metropolitan of various
obligations specified in our 1998 Principles of Agreement with
Metropolitan and other related contracts.  We believe that by
failing to complete the environmental review process for the
Cadiz Project, failing to accept the Right of Way grant offered
by the Department of Interior and for taking other actions
inconsistent with their obligations, Metropolitan violated the
contracts between the parties, breached its fiduciary duties to
us and interfered with our prospective economic advantages.  The
filing was made with the Executive Secretary of Metropolitan.

     When settlement negotiations failed to produce a resolution,
we filed a lawsuit against Metropolitan in Los Angeles Superior
Court on November 17, 2005 seeking recovery of damages.
Metropolitan counsel responded with a demurrer, seeking to have
certain claims disallowed.  On October 18, 2006 the Court ruled
in favor of Cadiz and overruled the demurrer to the claims for
breach of fiduciary duty, promissory estoppel, breach of implied
contract and specific performance. As a result, these claims will
all go forward to trial, along with the breach of express
contract claim, which was not addressed by the demurrer.

     See  "Legal  Proceedings" included in the  Company's  latest
Form 10-K for a complete discussion.


ITEM 1A.  RISK FACTORS

     In June 2006, the Company entered into a new $36.4 million
long-term debt facility (the "Loan") - see Part I, Item 2 above.
As a consequence, our senior secured indebtedness has increased
from approximately $25.9 million as of December 31, 2005 to
approximately $36.4 million as of September 30, 2006.  The Loan
is convertible into shares of our common stock, and an election
by lenders to convert all or a portion of the Loan will dilute
the percentage of our common stock held by current stockholders.
As before, if we default on our debt obligations, our lenders may
sell off the assets that we have put up as collateral and this,
in turn, would result in a cessation or sale of our operations.

     In addition, pursuant to the Registration Rights Agreement
which we entered into as a condition to the Loan, we have filed a
Registration Statement with the SEC covering the resale of all
shares issuable upon conversion of the Loan.  This registration
statement was declared effective on August 11, 2006.  We are
required to maintain the effectiveness of this Registration
Statement for at least 180 days after the date it was declared
effective.  We must pay to the holders of the Loan an amount in
cash equal to 0.5% of the initial principal amount of the Loan
for each 30 day period (or portion thereof) during which this
requirement is not satisfied.

     There have been no other material changes to the factors
disclosed in Item 1A. Risk Factors in our Annual Report on Form
10-K for the year ended December 31, 2005.

                             Page 29

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE
          OF PROCEEDS

     During September, 2006 the Company issued 70,000 shares of
the Company's common stock for $15.00 per share pursuant to the
exercise by certain of the company's warrant holders of
outstanding common stock purchase warrants.  These warrants had
been issued on November 30, 2004, when the Company completed a
private placement of 400,000 Units at the price of $60.00 per
Unit.  Each Unit consisted of five (5) shares of the Company's
common stock and one (1) common stock purchase warrant.  Each
warrant entitles the holder to purchase one (1) share of common
stock at an exercise price of $15.00 per share.  The warrants
have a term of three years, expiring on November 30, 2007, and
may be cancelled at the Company's option if the closing market
price of the Company's common stock exceeds $18.75 for 10
consecutive trading days.  335,440 warrants remain outstanding on
September 30, 2006.

     The issuance of the common stock underlying the warrants as
described above was not registered under the Securities Act of
1933, as amended (the "Securities Act"), but was exempt from the
registration requirements of the Securities Act by virtue of
Section 4(2) of the Securities Act as the transactions (including
the issuance of the warrants) did not involve public offerings,
the number of investors was limited, the investors were provided
with information about us, and we placed restrictions on the
resale of the securities.


ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

     Not Applicable.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not Applicable.


ITEM 5.   OTHER INFORMATION

     Not Applicable.


ITEM 6.   EXHIBITS

     The following exhibits are filed or incorporated by
reference as part of this Quarterly Report on Form 10-Q.

     10.1  Amendment #1 to the $36,375,000 Credit
           Agreement among Cadiz Inc. and Cadiz Real Estate
           LLC, as Borrowers, the Several Lenders from time to
           time parties thereto, and Peloton Partners LLP, as
           Administrative Agent, dated as of September 29, 2006(1)

     31.1  Certification of Keith Brackpool, Chairman and
           Chief Executive Officer of Cadiz Inc. pursuant to
           Section 302 of the Sarbanes-Oxley Act of 2002

     31.2  Certification of O'Donnell Iselin II, Chief
           Financial Officer and Secretary of Cadiz Inc.
           pursuant to Section 302 of the Sarbanes-Oxley Act
           of 2002

                             Page 30

     32.1  Certification of Keith Brackpool, Chairman and
           Chief Executive Officer of Cadiz Inc. pursuant to 18
           U.S.C. Section 1350, as adopted pursuant to Section
           906 of the Sarbanes-Oxley Act of 2002

     32.2  Certification of O'Donnell Iselin II, Chief
           Financial Officer and Secretary of Cadiz Inc.
           pursuant to 18 U.S.C. Section 1350, as adopted
           pursuant to Section 906 of the Sarbanes-Oxley Act of
           2002

     (1)  Previously filed as an Exhibit to our Current Report on
Form 8-K dated September 29, 2006 as filed on October 4, 2006.

                             Page 31

SIGNATURE


     Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

CADIZ INC.



By: /s/ Keith Brackpool                   November 9, 2006
    -------------------------             ----------------
    Keith Brackpool                       Date
    Chairman of the Board and
    Chief Executive Officer
    (Principal Executive Officer)


By: /s/ O'Donnell Iselin II               November 9, 2006
    -------------------------             ----------------
    O'Donnell Iselin II,                  Date
    Chief Financial Officer and
    Secretary (Principal
    Financial Officer)

                             Page 32