UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549
                          SCHEDULE 14A
                         (Rule 14a-101)
             INFORMATION REQUIRED IN PROXY STATEMENT
                    SCHEDULE 14A INFORMATION
   PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
                      EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as Permitted by
    Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-12

                           CADIZ INC.

        (Name of Registrant as Specified in Its Charter)

  (Name of Person(s) Filing Proxy Statement, if other than the
                           Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
    6(i)(1) and 0-11.

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    pursuant to Exchange Act Rule 0-11 (set forth the amount on which
    the filing fee is calculated and state how is was determined):

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[ ] Fee paid previously with preliminary materials.
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    the offsetting fee was paid previously. Identify the previous
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                           CADIZ INC.
                           ----------

            NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                 TO BE HELD ON OCTOBER 25, 2006


To our Stockholders:

     The annual meeting of Stockholders of Cadiz Inc., a Delaware
corporation, will be held at the law offices of Stephan,
Oringher, Richman, Theodora & Miller located at 2029 Century Park
East, 6th Floor, Los Angeles, California 90067, on Wednesday,
October 25, 2006, at 11 a.m., local time, and any adjournments
thereof, to consider and act upon the following matters:

(1)  The election of four members of the Board of Directors,
     each to serve until the next annual meeting of stockholders
     or until their respective successors shall have been
     elected and qualified;

(2)  Ratification of the selection by the Audit Committee of our
     Board of Directors of PricewaterhouseCoopers LLP as Cadiz'
     independent certified public accountants for fiscal year
     2006;

(3)  The approval of Cadiz' Outside Director Compensation Plan;
     and

(4)  The approval of the issuance of Cadiz common stock upon the
     conversion of the loan with Peloton Multi-Strategy Master
     Fund in an amount in excess of the 19.99% "Exchange Cap"
     provided for in the credit agreement for this loan
     transaction; and

(5)  The transaction of such other business as may properly come
     before the meeting and any adjournments thereof.

     The accompanying proxy statement contains a more complete
description of these proposals.

     Only stockholders of record at the close of business on
September 5, 2006 are entitled to notice of and to vote at the
annual meeting. In order to constitute a quorum for the conduct
of business at the annual meeting, holders of a majority of all
outstanding voting shares of our common stock and preferred stock
must be present in person or be represented by proxy.

     Whether or not you expect to attend the annual meeting in
person, please either vote your shares via Internet, by phone
(detailed instructions are included on the proxy card) or date,
sign and mail the enclosed proxy in the postage paid return
envelope provided as promptly as possible.  The proxy is
revocable and will not affect your right to vote in person if you
attend the meeting.

                              By Order of the Board of Directors


                              -----------------------------------
                              O'Donnell Iselin II
                              Secretary

Los Angeles, California
September __, 2006



                           CADIZ INC.
                 ANNUAL MEETING OF STOCKHOLDERS


                        TABLE OF CONTENTS

                                                             Page

INFORMATION ABOUT SOLICITATION AND VOTING. . . . . . . . . . .1
     Record Date, Voting Securities and Quorum. . . . . . . . 1
     Revocability of Proxies. . . . . . . . . . . . . . . . . 2
     Cost of Solicitation. . . . . . . . . . . . . . . . . . .2
PROPOSAL 1:  ELECTION OF DIRECTORS. . . . . . . . . . . . . . 3
DIRECTORS AND EXECUTIVE OFFICERS. . . . . . . . . . . . . . . 3
THE BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . 5
     Meetings and Committees of the Board of Directors. . . . 6
CODE OF ETHICS. . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. . . .8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
 AND MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . .9
STOCK PRICE PERFORMANCE. . . . . . . . . . . . . . . . . . . .12
EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . 13
     Summary Compensation Table. . . . . . . . . . . . . . . .13
     Option Grants in Last Fiscal Year. . . . . . . . . . . . 15
     Aggregate Option Exercises and Fiscal Year-End Option
      Values. . . . . . . . . . . . . . . . . . . . . . . . . 15
     Employment Agreements. . . . . . . . . . . . . . . . . . 16
COMPENSATION OF DIRECTORS. . . . . . . . . . . . . . . . . . .16
EQUITY COMPENSATION PLAN INFORMATION. . . . . . . . . . . . . 17
STOCK OPTION AND AWARD PLANS NOT APPROVED BY STOCKHOLDERS. . .17
     Management Equity Incentive Plan. . . . . . . . . . . . .18
     2004 Management Bonus Plan. . . . . . . . . . . . . . . .18
     1996 Stock Option Plan, 1998 Stock Option Plan and 2000
      Stock Option Plan. . . . . . . . . . . . . . . . . . . .18
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. .19
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. . . .19
AUDIT COMMITTEE REPORT. . . . . . . . . . . . . . . . . . . . 21
PRINCIPAL ACCOUNTANT FEES AND SERVICES. . . . . . . . . . . . 22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . 23
PROPOSAL 2:  APPROVAL OF INDEPENDENT REGISTERED PUBLIC
 ACCOUNTING FIRM. . . . . . . . . . . . . . . . . . . . . . . 24
PROPOSAL 3:  APPROVAL OF OUTSIDE DIRECTOR COMPENSATION PLAN. .25
PROPOSAL 4:  APPROVAL OF ISSUANCE OF SHARES UPON CONVERSION OF
 LOAN IN EXCESS OF EXCHANGE CAP. . . . . . . . . . . . . . . .28
OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . .32
STOCKHOLDER PROPOSALS. . . . . . . . . . . . . . . . . . . . .32
ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . 32

APPENDIX A
APPENDIX B



                           CADIZ INC.
               777 S. Figueroa Street, Suite 4250
                  Los Angeles, California 90017

                         PROXY STATEMENT
                               For
                 ANNUAL MEETING OF STOCKHOLDERS
                 TO BE HELD ON OCTOBER 25, 2006


            INFORMATION ABOUT SOLICITATION AND VOTING

     The Board of Directors of Cadiz Inc. is soliciting proxies
to be voted at the annual meeting of our stockholders to be held
on Wednesday, October 25, 2006, at the time and place and for the
purposes set forth in the  accompanying Notice of Annual Meeting
of Stockholders.  This proxy statement contains information that
may help you decide how to vote.  These proxy materials were
mailed on or about September __, 2006 to all stockholders of
record.

     Cadiz' Annual Report on Form 10-K for the year ended
December 31, 2005, as amended, including audited financial
statements, is being mailed to you with this proxy statement.

RECORD DATE, VOTING SECURITIES AND QUORUM

     The Board of Directors has fixed the close of business on
September 5, 2006 as the record date for determination of
stockholders entitled to notice of, and to vote at, the annual
meeting.

     On the record date, 11,330,402 shares of our common stock
were outstanding and 1,000 shares of our convertible preferred
stock were outstanding.  Holders of common stock are entitled to
one vote per share.  Holders of preferred stock are entitled to
that number of votes equal to the number of shares of common
stock issuable upon conversion of the preferred stock at the time
the shares are voted, which is approximately 17.29 votes for each
share of preferred stock.  Only stockholders of record at the
close of business on the record date will be entitled to vote.

     The candidates for director receiving a plurality of the
votes of the shares present in person or represented by proxy
will be elected (Proposal 1).  An affirmative vote of a majority
of the shares present or represented by proxy and voting at the
meeting is required for approval of Cadiz' independent registered
public accounting firm (Proposal 2), the Outside Director
Compensation Plan (Proposal 3), and the issuance of Cadiz common
stock upon the conversion of the loan with Peloton Multi-Strategy
Master Fund in an amount in excess of the 19.99% "Exchange Cap"
(Proposal 4).  If you complete, sign, and date the enclosed proxy
and return it before the meeting, the persons named will vote
your shares as you specify in the proxy. If you sign, date, and
return your proxy but do not indicate how you wish your shares
voted, they will be voted for the proposals. If you do not return
a signed proxy, or submit your vote via Internet or by phone,
then your shares will not be voted unless you attend the meeting
and vote in person.

     To have a quorum, holders of a majority of all shares of
voting stock outstanding on the record date must be present at
the meeting, either in person or by proxy.  Abstentions and
"broker non-votes" - shares held by brokerage firms for their
clients as to which the firms have not received voting
instructions from their clients and therefore do not have the
authority to vote - will be counted for purposes of determining a
quorum, but will be treated as neither a vote "for" nor a vote
"against" the proposals.

                           Page 1

REVOCABILITY OF PROXIES

     You may revoke a proxy any time before the voting begins in
any of the following ways:

     *  By giving written notice to our corporate secretary;

     *  By signing and delivering a later dated proxy; or

     *  By attending and voting in person at the meeting.

COST OF SOLICITATION

     We are paying the expenses of this solicitation. If
requested, we will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable
expenses in sending proxy material to principals and obtaining
their instructions. In addition to solicitation by mail, our
directors, officers, and employees may solicit proxies, without
extra compensation, in person or by telephone, fax, e-mail, or
similar means.

                           Page 2


                           PROPOSAL 1

                      ELECTION OF DIRECTORS

     The Board of Directors has nominated the four persons listed
below for election at the annual meeting to serve as directors
for a term expiring at the 2007 annual meeting of stockholders or
until their respective successors are elected and qualified.

      Keith Brackpool
      Murray H. Hutchison
      Timothy J. Shaheen
      Stephen J. Duffy

     Each of the nominees currently serves as a director and has
agreed to serve as such for another term if elected.  Prior to
the June 29, 2006 closing of our new credit facility with Peloton
Multi-Strategy Master Fund and Milfam II L.P., as lenders, and
Peloton Partners, LLP, as administrative agent (collectively,
"Peloton")which resulted in the payment in full of Cadiz' loan
with ING, Raymond J. Pacini served on the Board as a designee of
ING along with Gregory W. Preston.  As of June 30, 2006, Mr.
Preston resigned as a member of our Board of Directors and was
replaced, effective July 3, 2006, with Mr. Duffy, as a result of
our repayment in full of our loan with ING and the termination of
ING's right to designate two directors to our Board of Directors.
Mr. Pacini continues to serve on our Board of Directors, but as
the designee of Peloton pursuant to the right of Peloton to
designate a single director under the terms of Cadiz' new credit
facility with Peloton.  Mr. Pacini will serve as a director along
with the other persons who are elected as directors from the four
nominees named above.

     In addition to the four nominees named above, the Company is
seeking to identify a qualified individual for nomination to the
Board of Directors who would also serve on the Company's audit
committee prior to the annual meeting.  If the Company does
identify such individual prior to the annual meeting, the Board of
Directors intends to add this individual as an additional nominee
at the annual meeting and information about this additional nominee
would be included in the definitive proxy solicitation materials.

     Proxies will be voted for the election of the nominees named
above and any additional nominee identified in the definitive
proxy solicitation materials unless instructions are given to the
contrary. Proxies cannot be voted for a greater number of persons
than the number of nominees named.  Should any nominee become
unable to serve as a director, the persons named in the enclosed
form of proxy will, unless otherwise directed, vote for the
election of such other person as the present Board of Directors
may designate to fill that position.


                DIRECTORS AND EXECUTIVE OFFICERS

     The following sets forth certain biographical information,
the present occupation and the business experience for the past
five years or more of each director and executive officer:

Nominees for Director:

      Name                     Age    Position with Cadiz
      ----                     ---    -------------------

      Keith  Brackpool         48     Chairman of the Board,
                                      President and
                                      Chief Executive Officer

      Murray H. Hutchison      67     Director

      Timothy J. Shaheen       46     Director

                           Page 3

      Stephen J. Duffy         53     Director


Director designated by the
Peloton Credit Agreement:

      Name                     Age    Position with Cadiz
      ----                     ---    -------------------

      Raymond J. Pacini        50     Director


Executive Officers who are not Directors:

      Name                     Age    Position with Cadiz
      ----                     ---    -------------------

      O'Donnell Iselin II      52     Chief Financial Officer and
                                      Secretary

      Richard E. Stoddard      55     Chairman of the Board of
                                      Managers and CEO of Cadiz Real
                                      Estate LLC


     Keith Brackpool is a founder of Cadiz, has served as a
member of Cadiz' Board of Directors since September 1986, and has
served as President and Chief Executive Officer of Cadiz since
December 1991. Mr. Brackpool assumed the role of Chairman of the
Board of Cadiz on May 14, 2001, and was the Chief Financial
Officer from May 19, 2003 until the appointment of Mr. Iselin to
that position in October 2005. Mr. Brackpool has also been a
principal of 1334 Partners L.P., a partnership that owns
commercial real
estate from 1989 to present.

     Murray H. Hutchison was appointed a director of Cadiz in
June 1997. He is also a member of the Board of Managers (an LLC's
functional equivalent of a Board of Directors) of Cadiz'
subsidiary, Cadiz Real Estate LLC. In his capacity as a manager
of the LLC he performs essentially the same duties on behalf of
the LLC as he would as an outside director for a corporation.
Since his retirement in 1996 from International Technology
Corporation, a publicly traded diversified environmental
management company, Mr. Hutchison has been self-employed with his
business activities involving primarily the management of an
investment portfolio. From 1976 to 1996, Mr. Hutchison served as
Chief Executive Officer and Chairman of International Technology.
Mr. Hutchison currently serves as Chairman of the Board of TEPPCO
Partners, L.P., a publicly traded partnership operating in
refined petroleum products, liquefied petroleum gases and
petrochemical transportation and storage.  Mr. Hutchison serves
as a director on the boards of Jack in the Box, Inc., a publicly
traded fast food restaurant chain; and Cardium Therapeutics,
Inc., a publicly traded medical technology company. Additionally,
Mr. Hutchison serves as Chairman of the Huntington Hotel
Corporation, a privately owned hotel and office building, and as
a director of several other non-publicly traded U.S. companies.

     Timothy J. Shaheen was appointed a director of Cadiz in
March 1999. Mr. Shaheen is a private investor and principal of
Difinity Capital Partners LLP.  From September 1996 to April
2005, Mr. Shaheen served as the President, Chief Executive
Officer and a director of Sun World International.  Prior to
joining Sun World, Mr. Shaheen served as a senior executive with
Albert Fisher North America, a publicly traded domestic and
international produce company from 1989 to 1996. While with
Albert Fisher, Mr. Shaheen also served as director of its
Canadian produce operations and as a director of Fresh Western
Marketing, one of the largest growers and shippers of fresh
vegetables in the Salinas Valley of California. Prior to his
employment with Albert Fisher, Mr. Shaheen has seven years of
experience with the accounting firm of Ernst & Young LLP. Mr.
Shaheen is a certified public accountant.

     Raymond J. Pacini was appointed a director of Cadiz
effective June 16, 2005 as a nominee of ING pursuant to the
rights of ING, our prior lender, as holder of Cadiz' Series F
preferred stock.  As of June 29, 2006, Cadiz' loan with ING was
paid in full and ING's right to designate members of our Board of
Directors was terminated. Mr. Pacini will remain on the Board but
as the designee of Peloton pursuant to

                           Page 4

the right of Peloton to designate a single director under the
terms of Cadiz' credit facility with Peloton.  Since May 1998,
Mr. Pacini has been the President, Chief Executive Officer and a
Director of California Coastal Communities, Inc. (CALC), a publicly
traded (NASDAQ:CALC) residential land development and homebuilding
company operating in Southern California.  From June 1990 until
May 1998, Mr. Pacini was the Chief Financial Officer of CALC
(formerly known as Koll Real Estate Group, Inc. and Henley
Properties, Inc.).

     Stephen J. Duffy was appointed a director of Cadiz effective
July 3, 2006 to replace outgoing director Gregory Preston, who
resigned on June 30, 2006.   Since 2004 Mr. Duffy has served as
Chief Operating Officer for Western National Realty Advisors.
Western National Realty Advisors is the apartment acquisition,
development and investment management company of Western National
Group, a fully integrated multi-family owner/operator.  Prior to
joining Western National Realty Advisors, Mr. Duffy was the
Partner-in-Charge of Real Estate Capital Markets for the Western
U.S. with Ernst & Young, LLP.  Ernst & Young, LLP merged with
Kenneth Leventhal & Company in 1995, and Mr. Duffy was the
Managing Partner of Kenneth Leventhal & Company's Real Estate
Consulting Practice in Newport Beach, California at that time.
Mr. Duffy has over 25 years of management consulting and finance
experience, specializing in capital markets and strategic
planning.

     Richard E. Stoddard serves as Chairman and CEO of the Board
of Managers of Cadiz Real Estate LLC, a wholly-owned subsidiary
of Cadiz, directing the development of the Cadiz Groundwater
Storage Program and the other Cadiz real estate assets.  In
addition, since 1988, Mr. Stoddard has served as the Chairman and
CEO of Kaiser Ventures LLC, an unrelated company involved in real
estate development and waste management projects in southern
California.

     O'Donnell Iselin II joined Cadiz as its Chief Financial
Officer in October 2005.  From October 2004 until his appointment
as Cadiz' Chief Financial Officer, Mr. Iselin served as Treasurer
of Southwest Water Company, a NASDAQ listed water utility and
services company.  From 1989 to 2004, Mr. Iselin was employed in
various capacities by Hughes Electronics Corporation, now The
DIRECTV Group, Inc., serving since 2000 as Director of Treasury.


                     THE BOARD OF DIRECTORS

     Directors of Cadiz hold office until the next annual meeting
of stockholders or until their successors are elected and
qualified.  There are no family relationships between any
directors or current officers of Cadiz.  Officers serve at the
discretion of the Board of Directors.

     The Board is elected annually.  Presently the Board is
comprised of five directors, of whom two are current or former
executive officers of Cadiz or a former subsidiary of Cadiz.  Mr.
Brackpool is the Company's Chief Executive Officer and Mr.
Shaheen served as President, Chief Executive Officer and a
director of Sun World International, the Company's former
subsidiary, until April 2005.  One of the remaining directors,
Mr. Pacini, is a designee of Peloton pursuant to the right of
Peloton to designate a single director under the terms of
Peloton's credit facility.   Mr. Pacini and the two remaining
directors, Messrs. Hutchison and Duffy, have both been
affirmatively determined by the Board to be "independent" under
all relevant securities and other laws and regulations, including
those set forth in Securities and Exchange Commission rules and
regulations and pertinent listing standards of the NASDAQ Global
Market (formerly NASDAQ National Market), as in effect from time
to time.

     The Board maintains three committees, whose functions are
described below.  The Board has determined that all members of
its committees are  independent.  Each committee maintains a
written charter detailing its authority and responsibilities.
These charters are reviewed periodically as legislative and
regulatory developments and business circumstances warrant and
are available in their entirety on the Company's website at
http://www.cadizinc.com and to any stockholder otherwise
requesting a copy.

     The Company's independent directors meet routinely in
executive session without the presence of management.

                           Page 5

     Stockholders wishing to communicate with the Board, or with
a specific  Board member, may do so by writing to the Board, or
to the particular Board member, and delivering the communication
in person or mailing it to: Board of Directors c/o O'Donnell
Iselin II, Corporate Secretary, Cadiz Inc., 777 S. Figueroa
Street, Suite 4250, Los Angeles, California 90017.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

     During the year ended December 31, 2005, the Board of
Directors held four formal meetings, conferred on a number of
occasions through telephone conferences, and took action, when
appropriate, by unanimous written consent.  Each current director
attended all the meetings of the Board and all the meetings of
the Board committees of which each was a member during his term.

     The Board of Directors has three standing committees, the
Audit Committee, the Compensation Committee and the Corporate
Governance and Nominating Committee, each of which is comprised
entirely of directors whom the Board has affirmatively determined
to be independent, as they meet the objective requirements set
forth by the NASDAQ Global Market and the SEC, and have no
relationship, direct or indirect, to the Company other than as
stockholders or through their service on the Board.

     The Audit Committee is responsible for (i) considering the
adequacy of the Company's internal accounting control procedures,
(ii) overseeing the Company's compliance with legal and
regulatory requirements, (iii) reviewing the independent
auditor's qualifications and independence, (iv) the appointment,
compensation and oversight of all work performed by the
independent registered public accounting firm and (v) overseeing
the accounting and financial reporting processes of the Company
and the audits of the financial statements of the Company.  The
Committee advises and makes recommendations to the Board of
Directors regarding the financial, investment and accounting
procedures and practices followed by the Company.  The Committee
operates under a written charter adopted by the Board of
Directors, which is available on the Company's website at
http://www.cadizinc.com and to any stockholder otherwise
requesting a copy.  For the year ended December 31, 2005, the
members of the Committee were Messrs. Preston, Pacini and
Hutchison.  On June 30, 2006, Mr. Preston resigned from the
Company's Board of Directors, and from all committees of the
Board, including the Audit Committee, as a result of the
Company's repayment in full of its loan facility with ING and the
accompanying termination of ING's rights to designate members of
the Company's Board of Directors and committees of the Board.
Effective July 3, 2006, Mr. Duffy replaced Mr. Preston on the
Audit Committee.  Additionally, effective July 31, 2006, Mr.
Hutchison resigned from the Audit Committee solely due to his
service on the audit committee of a New York Stock Exchange
listed company which prohibits members of its audit committee
from serving on more than two other audit committees.  Prior to
the annual meeting, the Board of Directors intends to appoint
another director to the Audit Committee to replace Mr. Hutchison.
The Audit Committee met four times during the year ended December
31, 2005.

     The Compensation Committee oversees compensation of the
Chief Executive Officer and key executives and oversees
regulatory compliance with respect to the Company's compensation
matters.  The Committee also oversees the Company's compensation
policy applicable to senior management of the Company and advises
and makes recommendations to the Board of Directors regarding the
compensation of directors and executive officers.  The Committee
operates under a written charter adopted by the Board of
Directors, which is available on the Company's website at
http://www.cadizinc.com and to any stockholder otherwise
requesting a copy.  For the year ended December 31, 2005, the
members of the Committee were Messrs. Preston, Pacini and
Hutchison.  On June 30, 2006, Mr. Preston resigned from the
Company's Board of Directors, and from all committees of the
Board, including the Compensation Committee, as a result of the
Company's repayment in full of its loan facility with ING and the
accompanying termination of ING's rights to designate members of
the Company's Board of Directors and committees of the Board.
Effective July 3, 2006, Mr. Duffy replaced Mr. Preston on the
Compensation Committee.  The Compensation Committee met once
during the year ended December 31, 2005.

     The Corporate Governance and Nominating Committee is
responsible for the establishment of procedures for the
Committee's oversight of the evaluation of the Board and
management.  The Committee makes recommendations to the Board of
corporate guidelines  principles applicable to the

                           Page 6

Company.   The Committee is also responsible for the identification
and recommendation to the Board of qualified candidates for
nomination to the Company's Board of Directors. The Committee
will consider director candidates recommended by  stockholders
provided the nominations are received on a timely basis and contain
all information relating to such nominee as is required to be
disclosed in solicitations of proxies for elections of directors
pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended, including such person's written consent to being
named in the Proxy Statement as a nominee and to serve as a director
if elected, the name and address of such stockholder or beneficial
owner on whose behalf the proposed nomination is being made, and the
class and number of shares of the Company owned beneficially and of
record by such stockholder or beneficial owner.  The Corporate
Governance and Nominating Committee will consider nominees suggested
by stockholders on the same terms as nominees selected by the
Corporate Governance and Nominating Committee.  The Corporate
Governance and Nominating Committee believes that nominees for
election to the Board of Directors must possess certain minimum
qualifications.  The Committee will consider a candidate's judgment,
skill, diversity, experience with businesses and other organizations
of comparable size, financial background, beneficial ownership of
the Company, and the interplay of the candidate's experience with
the experience of other Board members, among other factors, in
assessing a candidate.  Except as set forth above, the Corporate
Governance and Nominating Committee does not currently have a
formal policy regarding the handling or consideration of director
candidate recommendations received from a stockholder, or a
formal process for identifying and evaluating nominees for
directors (including nominees recommended by stockholder).  These
issues will be considered by the Corporate Governance and
Nominating Committee, which will then make a recommendation to
the Board.  The Corporate Governance and Nominating Committee
operates under a written charter adopted by the Board of
Directors, which is available on the Company's website at
http://www.cadizinc.com and to any stockholder otherwise
requesting a copy.  For the year ended December 31, 2005, the
members of the Committee were Messrs. Preston, Pacini and
Hutchison.  On June 30, 2006, Mr. Preston resigned from the
Company's Board of Directors and from all committees of the
Board, including the Corporate Governance and Nominating
Committee, as a result of the Company's repayment in full of its
loan facility with ING and the accompanying termination of ING's
rights to designate members of the Company's Board of Directors
and committees of the Board.  Effective July 3, 2006, Mr. Duffy
replaced Mr. Preston on the Corporate Governance and Nominating
Committee.  The Corporate Governance and Nominating Committee did
not meet during the year ended December 31, 2005.

     Gregory Ritchie and Geoffrey Arens served on the Board of
Directors of Cadiz, the Audit Committee, the Compensation
Committee and the Corporate Governance and Nominating Committee
as the two Series F directors during 2005 until their retirement
from these positions on June 16, 2005 and January 6, 2006,
respectively.  Upon Mr. Ritchie's and Mr. Arens' retirement, Mr.
Pacini and Mr. Preston, respectively, replaced them on the Board
of Directors and all three committees.  Mr. Pacini remains on the
Audit Committee, the Compensation Committee and the Corporate
Governance and Nominating Committee but not as a designee of ING.
Mr. Pacini is the designee of Peloton pursuant  to Peloton's
right to designate a single director to Cadiz' Board of Directors
under the terms of Cadiz' new credit facility with Peloton.

     The Board of Directors has determined that Mr. Pacini, a
member of the Company's Audit Committee, is an "audit committee
financial expert" as that term is defined in Item 401(h) of
Regulation S-K under the Securities Act.


                         CODE OF ETHICS

     Cadiz has adopted a code of ethics that applies to all of
its employees, including its chief executive officer and chief
financial officer.    A copy of the code of ethics may be found
on Cadiz' website at http://www.cadizinc.com. Any employee who
becomes aware of any existing or potential violation of the code
of ethics is required to report it.  Any waivers from the code of
ethics granted to directors or executive officers will be
promptly disclosed on the Company's website at
http://www.cadizinc.com.

                           Page 7


     SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934
requires Cadiz' directors and executive officers, and persons who
beneficially own more than 10% of a registered class of Cadiz'
equity securities ("reporting persons"), to file with the
Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of common stock and other
equity securities of Cadiz.  Reporting persons are required by
Commission regulations to furnish Cadiz with copies of all
Section 16(a)forms they file.

     To Cadiz' knowledge, based solely on a review of the copies
of reports and amendments thereto on Forms 3, 4 and 5 furnished
to us by reporting persons and forms that we filed on behalf of
certain directors and officers, during, and with respect to,
Cadiz' fiscal year ended December 31, 2005, and on a review of
written representations from reporting persons to Cadiz that no
other reports were required to be filed for such fiscal year, the
Form 3 filed on February 17, 2006 by O'Donnell Iselin II which
reported Mr. Iselin's appointment as our Chief Financial Officer
on October 3, 2005 was inadvertently filed late, the Form 3 filed
on January 25, 2006 by Morgan Stanley, which reported
transactions by which it became a 10% owner on April 12,
2005, was inadvertently filed late and the Forms 4 filed by
Morgan Stanley on January 25, 2006, which reported 125 purchases
of an aggregate of 519,181 shares and 7 sales of an aggregate of
37,442 shares executed between April 15, 2005 and December 9,
2005 were inadvertently filed late, and all other Section 16(a)
filing requirements applicable to Cadiz' directors, executive
officers and greater than 10% beneficial owners during such
period were satisfied in a timely manner.

                           Page 8


 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth the beneficial ownership of
Cadiz voting securities, as of the record date for the annual
meeting unless otherwise stated, including our class of common
stock and our class of preferred stock, by each stockholder who
we know to own beneficially more than five percent of each class,
and by each director, each named executive officer and all
directors and executive officers as a group, excluding, in each
case, rights under options or warrants not exercisable within 60
days. All persons named have sole voting power and investment
power over their shares except as otherwise noted.


                      CLASS OF COMMON STOCK

                                Amount and Nature of   Percent
Name and Address                Beneficial Ownership   of Class
--------------------------      --------------------   ----------

Peloton Partners, LLP               2,264,947(1)         19.9%
17 Broadwick Street
London X0 W1F 0DJ

ING Groep N.V.                      1,339,815(2)         11.8%
ING Capital LLC
Amstelveenseweg 500
1081 KL Amsterdam

FMR Corp.                           1,067,726(3)          9.4%
82 Devonshire Street
Boston MA 02109

Bedford Oak Partners, L.P.            908,537(4)          8.0%
Bedford Oak Capital, L.P.
Bedford Oak Offshore
100 South Bedford Road
Mt. Kisco, NY 10549

Pictet Asset Management LTD           799,259(5)          7.0%
Tower 42, Level 37
25 Old Broad Street
London XOEC2N 1HQ

Pictet & Cie Europe SA                672,615(6)          5.9%
1 Boulevard Royal
Luxembourg
Luxembourg L-2016 N4

Morgan Stanley & Co.                  622,184(7)          5.5%
International Limited
1585 Broadway
New York, NY 10036

Lloyd Miller I, III                   619,574(8)          5.5%
4650 Gordon Drive
Naples, FL 33940

Keith Brackpool                       237,436(9)          2.1%
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

                           Page 9

Richard E. Stoddard                   171,191             1.5%
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

Timothy J. Shaheen                     57,290               *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

Murray Hutchison                        6,490(10)           *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

O'Donnell Iselin                            0               0
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

Raymond J. Pacini                           0               0
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

Stephen J. Duffy                            0               0
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

All directors and officers            472,407(9)(10)      4.7%
as a group
(six individuals)
------------------------------------------------------------------

*  Represents less than one percent of the 11,330,402 outstanding
   shares of common stock of Cadiz as of September 5, 2006.

                           Page 10


                CLASS OF SERIES F PREFERRED STOCK

                                Amount and Nature of   Percent
Name and Address                Beneficial Ownership   of Class
--------------------------      --------------------   ----------

ING Groep N.V.                         1,000(1)          100%
ING Capital LLC
Amstelveenseweg 500
1081 KL Amsterdam

(1)  Based upon a Schedule 13G/A filed on June 30, 2006 with
     the SEC, Peloton Partners LLP beneficially owns an aggregate of
     2,264,947 shares of Cadiz common stock.

(2)  Based upon Form 4 filed with the SEC on May 4, 2006 by ING
     Groep N.V. on behalf of its wholly-owned subsidiary ING Capital
     LLC, and based on Cadiz corporate records, the ING entities
     beneficially own 1,000 shares of Cadiz Series F Preferred Stock
     and have sole voting and dispositive power as to all of the
     shares. The preferred stock held by ING is initially
     convertible into 17,289 shares of Cadiz common stock. In
     addition to the preferred stock, ING holds 1,339,815 shares of
     Cadiz common stock, and ING has sole voting and dispositive
     power as to the common stock. In addition to the common and
     preferred stock, ING holds 40,000 warrants, each exercisable
     into one share of Cadiz common stock, and ING has sole voting
     and dispositive power as to the warrants. The principal office
     of ING Capital LLC is located at 1325 Avenue of the Americas,
     New York, NY 10019.

(3)  Based upon Form 13F filed with the SEC on in August 2006 by
     Fidelity Investments, Cadiz corporate records of stock
     issuances and correspondence with Fidelity Investments and
     its parent FMR Corp., FMR Corp. and its affiliated entities
     beneficially own an aggregate of 1,067,726 shares of Cadiz
     common stock, and have sole voting and dispositive power of
     the stock. In addition, FMR Corp. holds 72,500 warrants,
     each exercisable into one share of Cadiz common stock.

(4)  Based upon Form 13F filed with the SEC in August 2006,
     Cadiz corporate records of stock issuances and
     correspondence with Bedford Oak Advisors, the listed related
     funds beneficially own an aggregate of 908,537 shares of
     Cadiz common stock, and 17,000 warrants, each exercisable
     into one share of Cadiz common stock.

(5)  Based upon a Form 13F filed on July 26, 2006 with the SEC,
     Cadiz corporate records of stock issuances and correspondence
     with Pictet Asset Management LTD, Pictet Asset Management Ltd
     beneficially owns an aggregate of 799,259 shares of Cadiz
     common stock.

(6)  Based upon a Schedule 13G filed on May 18, 2006 with the
     SEC, Cadiz corporate records of stock issuances and
     correspondence with Pictet & Cie Europe SA, Pictet & Cie Europe
     SA beneficially owns an aggregate of 672,615 shares of Cadiz
     common stock.

(7)  Based upon Schedule 13G/D filed by Morgan Stanley & Co.
     International on March 10, 2006, Cadiz corporate records of
     stock issuances and correspondence with Morgan Stanley,
     Morgan Stanley has shared voting rights and shared
     dispositive power over an aggregate of 622,184 shares of
     Cadiz common stock and 60,000 warrants, each exercisable
     into one share of Cadiz common stock.

(8)  Based upon a Schedule 13G filed on June 29, 2006 with
     the SEC, Cadiz corporate records of stock issuances and
     correspondence with Lloyd I. Miller, III, the listed related
     funds beneficially own an aggregate of 619,574 shares of
     Cadiz common stock, and 10,000 warrants, each exercisable
     into one share of Cadiz common stock.

(9)  Includes 50,311 shares allocated to Mr. Brackpool under
     the Issuer's 2003 Management Equity Incentive Plan which
     will vest December 7, 2006.

(10) Includes 1,490 shares underlying presently exercisable
     options.

                           Page 11


                     STOCK PRICE PERFORMANCE

     The stock price performance graph below compares the
cumulative total return of Cadiz common stock against the
cumulative total return of the Standard & Poor's Small Cap 600
NASDAQ U.S. index and the Russell 2000r index for the past five
fiscal years. The graph indicates a measurement point of December
31, 2000 and assumes a $100 investment on such date in Cadiz
common stock, the Standard & Poor's Small Cap 600 and the Russell
2000r indices. With respect to the payment of dividends, Cadiz
has not paid any dividends on its common stock, but the Standard
& Poor's Small Cap 600 and the Russell 2000r indices assume that
all dividends were reinvested. The stock price performance graph
shall not be deemed incorporated by reference by any general
statement incorporating by reference this annual report on Form
10-K into any filing under the Securities Act of 1933, as
amended, except to the extent that Cadiz specifically
incorporates this graph by reference, and shall not otherwise be
deemed filed under such acts.

          COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURNS*

      Among Cadiz Inc., The Russell 2000 Index and
             the S&P Smallcap 600 Index

            12/00     12/01     12/02     12/03     12/04     12/05

Cadiz Inc.  100.00    89.73      6.15      2.48      6.93     10.46
S&P Smallcap
 600		100.00   106.65     90.95    126.23    154.82    166.71
Russell
 2000		100.00   102.49     81.49    120.00    142.00    148.46

* $100 invested on 12/31/00 in stock or index-including reinvestment
of dividends.  Fiscal year ending December 31.

Copyright (c) 2006, Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.  All rights reserved.  www.researchdatagroup.com/S&P.htm

                           Page 12


                     EXECUTIVE COMPENSATION

     The tables and discussion below set forth information about
the compensation awarded to, earned by, or paid to Cadiz'
executive officers during the years ended December 31, 2005, 2004
and 2003 and to the chief executive of Cadiz' subsidiary, Cadiz
Real Estate LLC, during the years ended December 31, 2005 and
2004.

SUMMARY COMPENSATION TABLE

                                                  LONG-TERM
                         ANNUAL                  COMPENSATION
                    COMPENSATION (1)(2)             AWARDS
                    -------------------          ------------

NAME AND                                    RESTRICTED    SECURITIES   ALL OTHER
 PRINCIPAL                                    STOCK       UNDERLYING    COMPEN-
 POSITION        YEAR  SALARY($)  BONUS($)  AWARDS($)(3)  OPTIONS(#)   SATION($)
---------------- ----  ---------  --------  ------------  -----------  ---------

Keith Brackpool  2005  $250,000         -   $5,489,960(4)  100,000(5) $     -
 President and   2004   250,000   240,000(6)         -           -          -
 Chief Executive 2003   188,461   200,000(7)         -           -    850,000(8)
 Officer

O'Donnell
 Iselin II       2005    41,589         -            -       40,000(9)      -
 Chief Financial 2004         -         -            -            -         -
 Officer and     2003         -         -            -            -         -
 Secretary

Richard E.       2005   250,000(10)     -   $5,489,960(11)  100,000(12)     -
 Stoddard        2004   250,000(10)     -            -            -         -
 Chief Executive 2003         -         -            -            -         -
 Officer, Cadiz
 Real Estate LLC

--------------------------------------------


(1)  The information presented in this table is for the years ended
     December 31, 2005, 2004 and 2004. The executive officers for
     whom compensation has been disclosed for the year ended
     December 31, 2005, are the only executive officers of Cadiz
     or its subsidiaries as of December 31, 2005. Mr. Iselin was
     appointed Chief Financial Officer of Cadiz effective October 3,
     2005.  Mr. Stoddard was appointed chief executive officer of
     Cadiz Real Estate LLC effective October 29, 2004. No other
     executive officer received total salary or bonus exceeding
     $100,000 during the year ended December 31, 2005.

(2)  No column for "Other Annual Compensation" has been included
     to show compensation not properly categorized as salary or
     bonus, which consisted entirely during each fiscal year of
     perquisites and other personal benefits, because the aggregate
     amounts did not exceed the lesser of either $50,000 or 10% of the
     total of annual salary and bonus reported for Mr. Brackpool for
     each fiscal year, Mr. Iselin for 2005 and for Mr. Stoddard for
     2005 or 2004. See "Employment Arrangements" below.

(3)  The stock awards are from the Company's Management Equity
     Incentive Plan.  Mr. Brackpool and Mr. Stoddard were each
     awarded 354,191 shares on May 4, 2005.  The value is based on the
     closing price of the Company's common stock as reported by the
     NASDAQ Global Market of $15.50 on May 4, 2005 multiplied by the
     number of shares awarded.  The 2005 stock awards vest in
     installments from the award date.  On May 5, 2005, Mr. Brackpool
     and Mr. Stoddard sold 144,850 and 128,000 shares, respectively,
     for tax purposes.  The value of the remaining shares held
     pursuant to these awards on December 31, 2005 is $4,500,831.50
     for Mr. Brackpool and $4,863,106.50 for Mr. Stoddard, taking into
     account their ownership of 209,341 and 226,191 shares,
     respectively, as of that date.  The value is calculated by
     multiplying the closing price of $21.50 for the Company's common
     stock as reported by NASDAQ Global Market on December 30, 2005 by
     the number of shares held on December 31, 2005.

                           Page 13

(4)  Mr. Brackpool was awarded an aggregate of 354,191 shares of
     stock in 2005 under our Management Incentive Plan, of which
     185,816 vested on May 4, 2005, 50,312 vested on December 7,
     2005, 67,752 vested on December 11, 2005, and of which 50,311
     will vest on December 7, 2006.

(5)  Mr. Brackpool was awarded options from our Management Incentive
     Plan to purchase 100,000 shares of the Company's common stock
     at an exercise price of $12.00 per share on May 4, 2005.
     The options vest in installments of 33,334 on May 4, 2005, 33,333
     on December 7, 2005 and 33,333 on December 7, 2006.

(6)  This amount represents a bonus awarded to Mr. Brackpool under the
     Incentive Plan consisting of $120,000 in cash which was paid
     during the year ended December 31, 2004 and 10,000 shares of
     common stock valued at $120,000 which were issued in 2005
     immediately following the effectiveness of our S-8 Registration
     Statement registering these shares and shares issued under
     our Management Equity Incentive Plan.

(7)  This bonus was paid to Mr. Brackpool in February 2004 for services
     completed in the preceding calendar year.  Mr. Brackpool was
     provided the opportunity to receive the bonus in cash or an
     equivalent amount in common stock valued at $2.50 per share.
     Mr. Brackpool elected to receive his compensation in stock.

(8)  Mr. Brackpool received an aggregate $850,000 in compensation for
     the termination of his previous employment agreement without
     cause and foregone salary.

(9)  Under the terms of Mr. Iselin's employment contract, on
     October 3, 2005 he was granted options under the Company's
     Management Incentive Plan to purchase 40,000 shares of the
     Company's common stock at an exercise price of $17.25 per share.
     The options vest in installments of 13,334 on October 3, 2005,
     13,333 on October 3, 2006 and 13,333 on October 3, 2007.

(10) Mr. Stoddard receives $20,833 monthly in accordance with a
     consulting agreement dated August 1, 2002 and revised and
     extended on January 1, 2004.

(11) Mr. Stoddard was awarded an aggregate of 354,191 shares of
     stock in 2005 under the Management Incentive Plan, of which
     185,816 vested on May 4, 2005, 50,312 vested on December 7,
     2005, 67,752 vested on December 11, 2005, and of which 50,311
     will vest on December 7, 2006.

(12) Mr. Stoddard was awarded options from our Management Incentive
     Plan to purchase 100,000 shares of the Company's common stock
     at an exercise price of $12.00 per share on May 4, 2005.
     The options vest in installments of 33,334 on May 4, 2005, 33,333
     on December 7, 2005 and 33,333 on December 7, 2006.

                           Page 14

OPTION GRANTS IN LAST FISCAL YEAR

     The table below sets forth information about option grants to
our Chief Executive Officer and our other named executive
officers during the last fiscal year ended December 31, 2005.

                                                                  POTENTIAL
                                                                 REALIZABLE
                                                                  VALUE AT
                            PERCENT                            ASSUMED ANNUAL
                            OF TOTAL                            (COMPOUNDED)
                            OPTIONS                            RATES OF STOCK
               NUMBER OF   GRANTED TO        GRANT                 PRICE
               SECURITIES  EMPLOYEES  EXCER-  DATE              APPRECIATION
               UNDERLYING   IN LAST   CISE   MARKET EXPIR-        FOR THE
               OPTIONS      FISCAL    PRICE  PRICE  ATION       OPTION TERM
NAME           GRANTED(#)    YEAR     ($/SH) ($/SH) DATE     5%($)      10%($)
----           ----------  ---------  ------ ------ ------   -----      ------
Keith Brackpool   100,000     27%     12.00  15.50  5/4/15  1,324,787  2,820,301
 President and
 Chief Executive
 Officer

O'Donnell          40,000     11%     17.25  17.25 10/3/15    433,937  1,099,682
 Iselin II(1)
 Chief Financial
 Officer

Richard Stoddard  100,000     27%     12.00  15.50  5/4/15  1,324,787  2,820,301
 Chief Executive
 Officer, Cadiz
 Real Estate LLC

----------------------------

(1)   Mr. Iselin was appointed Chief Financial Officer in October
       2005.

AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES

     The following table shows, as to the individuals named in the
Summary Compensation Table above, information about the year-end
value of options and the value of unexercised options at that
date.  No options were exercised by these officers during the
fiscal year ended December 31, 2005.

                     NUMBER OF SECURITIES         VALUE OF UNEXERCISED
                    UNDERLYING UNEXERCISED            IN-THE-MONEY
                          OPTIONS AT                   OPTIONS AT
                     DECEMBER 31, 2005(#)        DECEMBER 31, 2005($)(1)
                 ---------------------------   ---------------------------
                 (EXERCISABLE/UNEXERCISABLE)   (EXERCISABLE/UNEXERCISABLE)
                 ---------------------------   ---------------------------
Keith Brackpool         66,667 / 33,333           $633,337 / $316,664
 President and
 Chief Executive
 Officer

O'Donnell Iselin II     13,334 / 26,666           $ 56,670 / $113,331
 Chief Financial
 Officer and
 Secretary

Richard Stoddard        66,667 / 33,333           $633,337 / $316,664
 Chief Executive
 Officer Cadiz
 Real Estate LLC

-------------------------------

(1)  Using a stock price of $21.50 at December 31, 2005. This
     number is calculated by:
     -  subtracting the option exercise price from our December 31,
        2005 closing market price ($21.50 per share, as reported on
        the NASDAQ Global Market) to get the "average value per
        option," and
     -  multiplying the average value per option by the number of
        exercisable and unexercisable options.
    The amounts in this column may not represent amounts that will
    actually be realized by the named executive officers.

                           Page 15

EMPLOYMENT ARRANGEMENTS

     Mr. Brackpool is compensated under an Agreement Regarding
Employment pursuant to which Mr. Brackpool receives base
compensation of $250,000 per year, plus certain fringe benefits
including the use of a leased automobile and life and disability
insurance benefits funded by us. While this Agreement requires
Mr. Brackpool to perform his services in a satisfactory manner,
it does not require that his services be provided on a full-time
basis.  Although the initial term of the Agreement Regarding
Employment ended September 30, 2003, Mr. Brackpool continues to
provide services to us upon the terms and conditions set forth in
this Agreement.

     Mr. Stoddard is compensated in accordance with a Consulting
Agreement dated August 1, 2002, and extended on January 1, 2004,
pursuant to which he receives $20,833.00 per month and which
continues on a month to month basis until terminated by either
party. Under this agreement Mr. Stoddard serves as the Chairman
and CEO of the Board of Managers of Cadiz Real Estate LLC, the
subsidiary of Cadiz. The agreement also provides that Mr.
Stoddard will participate in the Management Equity Incentive Plan
and as a member of the key management team in any further equity
grants considered by the compensation committee of the Board of
Directors of Cadiz.

     Mr. Iselin is compensated under an Employment Agreement
pursuant to which he receives an annual base salary of $165,000.
Mr. Iselin is entitled to receive additional compensation in the
form of bonuses at the sole discretion of the Board of Directors
based on Mr. Iselin's performance. Mr. Iselin also received
options from Cadiz' Management Equity Incentive Plan to purchase
40,000 shares of Cadiz' common stock at an exercise price of
$17.25 per share, representing the fair market value of the
Company's common stock as of the date of the Employment
Agreement.  13,334 of the stock options vested upon commencement
of employment with 13,333 vesting upon the first anniversary of
Mr. Iselin's employment with the Company and 13,333 vesting upon
the second anniversary of his employment.

     Mr. Iselin's Employment Agreement further provides that
in the event of a termination of Mr. Iselin's employment by
reason of death or permanent disability (as defined in the
agreement), Mr. Iselin (or his estate, as applicable) would be
entitled to continued payments of base salary for 90 days in
addition to, and not in lieu of, any payments made pursuant to
any Company provided death or disability benefit plans.

     Mr. Iselin's Employment Agreement also provides that if his
employment is terminated due to a change of control of the
Company which occurs within 24 months of the commencement of his
employment, he is entitled to receive his base compensation and
all fringe benefits he received prior to such change of control
(to the extent such benefits can then be lawfully be made
available by the Company or the Company's successor in interest)
for a period of 12 months following the effective date of
termination as though he was continuing to provide services to
the Company.

     Mr. Iselin's Employment Agreement also provides that in the
event he terminates the Employment Agreement due to a material
breach by the Company of any term or condition of his Employment
Agreement or upon a material change in his job title or material
reduction in his duties and responsibilities, he is entitled to
receive his base compensation and all fringe benefits he received
prior to the termination (to the extent such benefits can then be
lawfully be made available by the Company) for a period of 180
days following the effective date of termination as though he was
continuing to provide services to the Company.


                    COMPENSATION OF DIRECTORS

     In the fiscal year 2005, Murray H. Hutchison received
cash compensation for his services as a director of Cadiz in the
amount of $32,500. $2,500 of this amount was for services
rendered in fiscal year 2004.

                           Page 16

     In the fiscal year 2005, Tim Shaheen received cash
compensation for his services as a director of Cadiz in the
amount of $45,000, $15,000 of this
amount was for services rendered in fiscal year 2004.

     In the fiscal year 2005, Raymond J. Pacini received cash
compensation for his services as a director of Cadiz in the
amount of $15,000.

     Mr. Brackpool does not receive any compensation for serving
as a director of Cadiz.  Mr. Arens and Mr. Ritchie did not
receive any compensation from Cadiz for serving as directors of
Cadiz during 2005.

     In fiscal year 2005, the Company commenced compensating its
non-employee directors for their services as directors for each
12 month period ending June 30 of each year, the amount of
$30,000, prorated for directors serving less than the full 12
months.  Payments are made in 4 quarterly installments of $7,500.
A director is entitled to a $7,500 fee for any quarter in which
services are rendered.


              EQUITY COMPENSATION PLAN INFORMATION

     The following table provides information as of December 31,
2005 with respect to shares of our common stock that may be
issued under our existing compensation plans:

                                                 NUMBER OF
                                                SECURITIES
                 NUMBER OF                       REMAINING
               SECURITIES TO     WEIGHTED-     AVAILABLE FOR
                 BE ISSUED       AVERAGE      FUTURE ISSUANCE
               UPON EXERCISE     EXERCISE      UNDER EQUITY
                    OF           PRICE OF    COMPENSATION PLANS
                OUTSTANDING    OUTSTANDING       (EXCLUDING
                 OPTIONS         OPTIONS,        SECURITIES
               WARRANTS AND    WARRANTS AND    REFLECTED IN
  PLAN           RIGHTS          RIGHTS          COLUMN (A))
CATEGORY            (A)            (B)             (C)
----------------------------------------------------------------
Equity                   0        $  0                0
compensation
plans approved
by stockholders

Equity             365,000(1)     $ 12.71        12,339(2)
compensation
plans not
approved by
stockholders(3)

Total              365,000        $ 12.71        12,339

---------------------

(1)  Represents 365,000 options outstanding as of 12/31/05 under
     Cadiz' Management Equity Incentive Plan.

(2)  Represents 12,339 shares underlying options under the
     Management Equity Incentive Plan.


    STOCK OPTION AND AWARD PLANS NOT APPROVED BY STOCKHOLDERS

     The purpose of Cadiz' stock option and award plans is to
provide incentives to attract, retain and motivate eligible
persons whose present and potential contributions are important
to the success of Cadiz and its subsidiaries and affiliates, by
offering them an opportunity to participate in Cadiz future
performance through awards of options, restricted stock grants
and other similar stock awards.  The following is a description
of the stock option plans and awards not approved by
stockholders.

                           Page 17

MANAGEMENT EQUITY INCENTIVE PLAN

     In December 2003 the Company's Board of Directors
authorized the adoption of a Management Equity Incentive Plan
(the "Incentive Plan"), under which a total of 1,472,051 shares
were authorized for issuance to key personnel at the direction of
the Company's allocation committee.  Under the terms of the
Incentive Plan, 1,094,712 shares were authorized for issuance by
direct grant and 377,339 shares were authorized for issuance by
way of the grant of stock options.  Both the direct grants and
option grants are subject to vesting schedules. All awards will
be subject to continued employment or immediate vesting upon
termination without cause. The Board formed allocation committees
made up of Messrs. Brackpool, Hutchison, and Stoddard, to direct
the allocation of these shares.

     In light of the nature of the Company's resource development
activities, the Company's compensation program for management is
weighted more heavily towards long-term incentives than is
typical of other companies with similarly sized asset portfolios.
Accordingly, the base salary component of the compensation
program is lower than that typically provided by similarly sized
companies, and the Incentive Plan is used by the Company to
provide long-term incentives and to incentivize management in a
manner that further aligns the interests of management with those
of the Company's stockholders.

     The Company's allocation committee has to date allocated
1,094,712 shares and 365,000 options under the Incentive Plan.
354,191 shares and 100,000 options were allocated to each of
Keith Brackpool, the Chief Executive Officer of the Company, and
Richard Stoddard, the Chief Executive Officer of the Company's
subsidiary, Cadiz Real Estate LLC.  107,605 shares were allocated
to Timothy Shaheen, a director of the Company, 40,000 options
were allocated to O'Donnell Iselin II, the Company's Chief
Financial Officer upon his appointment as Chief Financial
Officer, and 278,725 shares and 125,000 options were allocated to
other employees of the Company.

     On May 4, 2005, the Company filed a Registration Statement
on Form S-8 pursuant to which it registered for issuance all of
the shares and options authorized under the Incentive Plan. The
issuances of the shares and options allocated under the Incentive
Plan as described above followed the effectiveness of this
Registration Statement on Form S-8.

     The Company also registered for issuance in the Form S- 8
10,000 shares of common stock issuable under the Cadiz Inc. 2004
Management Bonus Plan.  These shares were immediately thereafter
issued to Keith Brackpool as a performance bonus.

2004 MANAGEMENT BONUS PLAN

     In December 2004, our Compensation Committee, with board
approval, adopted the Cadiz Inc. 2004 Management Bonus Plan (the
"Bonus Plan") pursuant to which a total of 10,000 shares of our
common stock, valued at $12 per share, were authorized for
issuance to Mr. Brackpool as a performance bonus along with a
cash bonus of $120,000.  As described above, these shares were
issued in 2005 immediately following the effectiveness of our S-8
Registration Statement.

1996 STOCK OPTION PLAN, 1998 STOCK OPTION PLAN AND 2000 STOCK OPTION PLAN

     The Board previously approved a 1996 Stock Option Plan (the
"1996 Plan"), a 1998 Stock Option Plan (the "1998 Plan") and a
2000 Stock Option Plan (the "2000 Plan)to provide grants of stock
options and stock awards to certain employees, consultants,
independent contractors, advisors of Cadiz or its subsidiaries and
affiliates, and directors of Cadiz.

     In fiscal year 2005, the Board terminated the 1996 Plan,
the 1998 Plan and the 2000 Plan (collectively, the "Plans").
Immediately prior to termination of the Plans, there were 26,750
options issued and outstanding under the Plans, all held by one
holder, at an exercise price determined by the Board to be
substantially above fair market value and therefore with no
reasonable prospect of being exercised.  The holder and the Company
entered into an agreement to terminate such holder's options
effective immediately.  The Plans were terminated concurrent with
the termination of such holder's options.

                           Page 18


   COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The Board of Directors has formed a Compensation
Committee which is responsible for reviewing and establishing the
compensation payable to Cadiz' executive officers, including the
Chairman and Chief Executive Officer. For executive officers
other than the Chairman and Chief Executive Officer, the
Committee establishes compensation levels based, in part, upon
the recommendations of the Chairman and Chief Executive Officer.
The Compensation Committee is composed of three members of our
Board of Directors identified elsewhere in this Proxy Statement.
See, "Meetings and Committees of the Board of Directors."


     COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     The Compensation Committee is currently composed of Murray
H. Hutchison, Raymond J. Pacini and Stephen J. Duffy.  For the
fiscal year ended December 31, 2005, the Compensation Committee
originally consisted of Gregory Ritchie, Geoffrey Arens and
Murray H. Hutchinson until the retirement from Mr. Ritchie from
the Company's Board of Directors on June 16, 2005 at which time
Mr. Pacini replaced Mr. Ritchie on the Board of Directors and the
Compensation Committee and served along with Mr. Hutchinson and
Mr. Arens for the duration of fiscal year 2005.

     The Compensation Committee has furnished the following
report on executive compensation:

     Cadiz' executive compensation programs are designed to
enhance operating performance and to maximize the long-term value
of Cadiz' assets and stockholder value, by aligning the financial
interest of the executive officers and management with those
of the stockholders. Such a compensation program helps to achieve
Cadiz' business and financial objectives and provide incentives
needed to attract and retain well-qualified executives in a
highly competitive marketplace. To this end, Cadiz has developed
a compensation program with three primary components: base
salary, performance-based cash awards and long-term incentives
through stock awards.

     BASE SALARY.  In light of the nature of Cadiz' resource
development activities, the Cadiz compensation program is
weighted more heavily towards long-term incentives than is
typical of other companies with similarly sized asset
portfolios.  Accordingly, the base salary component of the
compensation program is lower than that typically provided by
similarly sized companies.  No specific or set formula has been
used to tie base salary levels to precise measurable factors;
rather, current base salaries have been established by
agreement between Cadiz and its key executives.

     Where applicable, the Compensation Committee may also
consider the past performance of the officer, both in adjusting
base salary levels and in determining additional incentive
compensation, such as the cash awards and long term incentives
discussed below.

     As Chairman and Chief Executive Officer of Cadiz, Mr.
Brackpool is charged with the overall responsibility for the
performance of Cadiz.  Mr. Brackpool is compensated pursuant to a
written agreement effective as of February 1, 2003.  This
agreement was entered into following a breach by Cadiz of Mr.
Brackpool's prior employment agreement and the effective
termination of such prior employment agreement.  At the time,
Cadiz and Mr. Brackpool agreed that, because of Mr. Brackpool's
experience and background, particularly at a critical juncture of
Cadiz' operations, Cadiz had and continues to have a need for Mr.
Brackpool's services.  In light of then existing circumstances
(i.e. Metropolitan's actions in 2002, the January 2003
bankruptcy filing of Cadiz' Sun World subsidiary and the
consequent uncertainty concerning Cadiz' ability to continue with
the development of its water programs), the employment agreement
entered into with Mr. Brackpool effective as of February 1, 2003
reduced his base salary to 50% of its previous amount but also
allowed Mr. Brackpool to provide services to Cadiz on a non-
exclusive basis.

     PERFORMANCE-BASED CASH AWARDS.  The Compensation Committee
believes that incentives should be offered to executives which
are related to improvements in performance that yield increased
value for stockholders.  Although the Compensation Committee
relies primarily upon the grant of incentive stock options or
other stock awards to reward executive performance (see "Long-
Term

                           Page 19

Incentives" below), under certain circumstances, the Compensation
Committee will utilize performance-based cash awards from time
to time to provide additional incentives.  No such cash awards
were made in 2005 as the Compensation Committee determined that
the long-term incentives provided appropriate compensation for
2005.

     LONG-TERM INCENTIVES.  The primary form of incentive
compensation offered by Cadiz to executives consists of long-term
incentives in the form of stock options or other stock awards.
This form of compensation is intended to help retain
executives and motivate them to improve Cadiz' long-term
performance and hence long-term stock market performance. Stock
options and other stock awards are granted at the prevailing
market value and will only have added value if Cadiz' stock price
increases.

     The Compensation Committee views the grant of stock awards
as both a reward for past performance and an incentive for future
performance. Stock options or other stock awards granted by Cadiz
may vest immediately upon grant, with the passage of time, at the
discretion of the Board, and/or upon the achievement of certain
specific performance goals.  Where performance is not readily
measurable, the vesting of performance based options or other
stock awards may be dependent upon the satisfaction of subjective
performance criteria.

     Due to the difficult circumstances which Cadiz and its
subsidiaries have faced subsequent to Metropolitan's actions in
2002 with respect to the Cadiz water program, all stock options
granted under the three then existing stock option plans became
virtually worthless and a majority subsequently expired without
exercise.  In 2005 these three plans were terminated.

     In December 2003, the Compensation Committee, the Board of
Directors, management and our senior secured lender agreed to
implement a Management Equity Incentive Plan (the "Incentive
Plan"), under which, as supplemented by further board action in
December 2004, a total of 1,472,051 shares were authorized for
issuance to key personnel at the direction of the Company's
allocation committee.  Under the terms of the Incentive Plan,
1,094,712 shares were authorized for issuance by direct grant and
377,339 shares were authorized for issuance by way of the grant
of stock options.  Both the direct grants and option grants are
subject to vesting schedules. All awards are subject to continued
employment or immediate vesting upon termination without cause.
The Board formed allocation committees made up of Messrs.
Brackpool, Hutchison, and Stoddard, to direct the allocation of
these shares.

     The Company's allocation committee has to date allocated
1,094,712 shares and 365,000 options under the Incentive Plan.
354,191 shares and 100,000 options were allocated to each of
Keith Brackpool, the Chief Executive Officer of the Company, and
Richard Stoddard, the Chief Executive Officer of the Company's
subsidiary, Cadiz Real Estate LLC.  107,605 shares were allocated
to Timothy Shaheen, a director of the Company, 40,000 options
were allocated to O'Donnell Iselin II, the Company's Chief
Financial Officer upon his appointment as Chief Financial
Officer, and 278,725 shares and 125,000 options were allocated
to other employees of the Company.

     On May 4, 2005, the Company filed a Registration Statement
on Form S-8 pursuant to which it registered for issuance all of
the shares and options authorized under the Incentive Plan. The
issuances of the shares and options allocated under the Incentive
Plan as described above followed the effectiveness of this
Registration Statement on Form S-8.

DEDUCTIBILITY OF CERTAIN EXECUTIVE COMPENSATION EXPENSES
UNDER FEDERAL TAX LAWS

     The Compensation Committee has considered the impact of
provisions of the Internal Revenue Code of 1986, specifically
Code Section 162(m). Section 162(m) limits to $1 million Cadiz'
deduction for compensation paid to each executive officer of
Cadiz, which does not qualify as "performance based".

     The shares of stock issued to executives under the
Management Equity Incentive Plan will not qualify as performance-
based compensation and, therefore, the portion of the
compensation expense related to the Management Equity Incentive
Plan that exceeds the $1 million limit will not be deductible.

                           Page 20

CONCLUSION

     Through the programs described above, a very significant
portion of Cadiz' executive compensation is linked to share price
appreciation and corporate performance. The Compensation
Committee intends to implement this policy of linking executive
compensation to corporate performance and the market value of
Cadiz common equity in order to continue to align the interest of
executives with those of Cadiz' stockholders.

                               THE COMPENSATION COMMITTEE

                               Murray H. Hutchison, Chairman
                               Raymond J. Pacini
                               Stephen J. Duffy


                     AUDIT COMMITTEE REPORT

     The Audit Committee is currently composed of Raymond J. Pacini
and Stephen J. Duffy.  Prior to the annual meeting, the Board
intends to appoint a third director to the Audit Committee.  For
the fiscal year ended December 31, 2005, the Audit Committee
originally consisted of Gregory Ritchie, Geoffrey Arens and
Murray H. Hutchinson until the retirement from Mr. Ritchie from
the Company's Board of Directors on June 16, 2005 at which time
Mr. Pacini replaced Mr. Ritchie on the Board of Directors and the
Audit Committee and served along with Mr. Hutchinson and Mr.
Arens for the duration of fiscal year 2005.

     Each member of the Committee is an independent director as
defined under the listing standards of the NASDAQ Global Market.
The Committee operates under a written charter that is reviewed
on an annual basis.  During fiscal 2005, the Audit Committee
performed all of its duties and responsibilities under its
charter.  The purpose of the Audit Committee is to assist the
Board of Directors in its oversight of management's condos of
Cadiz financial reporting process.

     Management is responsible for the preparation, presentation,
and integrity of Cadiz' financial statement, accounting and
financial reporting principles, internal controls, and procedures
designed to ensure compliance with accounting standards,
applicable laws and regulations.  The Audit Committee reviews
Cadiz' accounting and financial reporting process on behalf of
the Board of Directors.  In that regard, the Committee met four
times in 2005 and two times in 2006 to exercise its
responsibilities related to the Company's quarterly and annual
financial statements for fiscal 2005 and management's assessment
of the effectiveness of Cadiz' internal controls over financial
reporting as of December 31, 2005.  During these meetings, the
Committee reviewed and discussed with management and
PricewaterhouseCoopers LLP, Cadiz' independent registered public
accounting firm, Cadiz' consolidated financial statements,
including its audited consolidated financial statements for the
year ended December 31, 2005, and financial reporting process,
including the system of internal controls over financial
reporting and significant accounting policies applied by Cadiz.

     The Audit Committee also reviewed the report of management
contained in Cadiz' Annual Report on Form 10-K for the fiscal
year ended December 31, 2005, filed with the Securities and
Exchange Commission, as well as PricewaterhouseCoopers LLP's
Report of Independent Registered Public Accounting Firm included
in Cadiz' Annual Report on Form 10K related to its audit of: (i)
the consolidated financial statements, (ii) management's
assessment of the effectiveness of internal control over
financial reporting and (iii) the effectiveness of internal
control over financial reporting.  The Audit Committee continues
to oversee Cadiz' efforts related to its internal control over
financial reporting and management's preparations for the
evaluation of fiscal 2006.

     The Committee is directly responsible for the appointment,
compensation, retention and oversight of the work of
PricewaterhouseCoopers LLP. The Committee regularly meets in
executive session with PricewaterhouseCoopers LLP, without
management present, to discuss the results of their examinations,
evaluations of Cadiz' internal controls and the overall quality
of Cadiz' financial reporting.

                           Page 21

     Cadiz' independent registered public accounting firm are
responsible for performing an independent audit of the
consolidated financial statements of Cadiz and expressing an
opinion on the conformity of Cadiz' financial statements with
U.S. generally accepted accounting principles. The Committee
discussed with Cadiz' independent registered public accounting
firm the scope and plan for its audits including the review of
internal controls prescribed in Section 404 of the Sarbanes-Oxley
Act of 2002. The Committee has discussed with PricewaterhouseCoopers
LLP the matters that are required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees).
PricewaterhouseCoopers LLP has provided the Committee with the
written disclosures and the letter required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Committee discussed with PricewaterhouseCoopers
LLP its independence from Cadiz. The Committee also considered the
nature and scope of the non-audit services provided by
PricewaterhouseCoopers LLP to Cadiz and the compatibility of
these services with PricewaterhouseCoopers LLP's independence.
The Committee pre-approves all audit and permitted non-audit
services to be performed by Cadiz' independent registered public
accounting firm pursuant to the terms of the Committee's written
charter.

     In reliance on the reviews and discussions referred to above,
the Committee recommended to the Board of Directors, and the
Board of Directors has approved, that the audited financial
statements be included in Cadiz' Annual Report on Form 10-K for
the year ended December 31, 2005. The Committee also appointed
PricewaterhouseCoopers LLP as Cadiz' independent registered
public accounting firm for 2006, and has recommended that such
appointment be submitted to Cadiz' stockholders for ratification
at the 2006 Annual Meeting of Stockholders.

                                THE AUDIT COMMITTEE
                                Raymond J. Pacini, Chairman
                                Stephen J. Duffy


             PRINCIPAL ACCOUNTANT FEES AND SERVICES

     For the fiscal years ended December 31, 2005 and 2004,
professional services were performed by PricewaterhouseCoopers
LLP. Cadiz' audit committee annually approves the engagement of
outside auditors for audit services in advance. The audit
committee has also established complementary procedures to
require pre-approval of all audit-related, tax and permitted non-
audit services provided by PricewaterhouseCoopers LLP, and to
consider whether the outside auditors' provision of non-audit
services to Cadiz is compatible with maintaining the independence
of the outside auditors. The audit committee may delegate pre-
approval authority to one or more of its members. Any such fees
pre-approved in this manner shall be reported to the audit
committee at its next scheduled meeting. All services described
below were pre-approved
by the audit committee.

     All fees for services rendered by PricewaterhouseCoopers LLP
aggregated $242,900 and $313,000 during the fiscal years ended
December 31, 2005 and 2004, respectively, and were composed of
the following:

     Audit Fees.  The aggregate fees billed for the audit of the
annual financial statements during the fiscal years ended
December 31, 2005 and 2004, for reviews of the financial
statements included in the Company's Quarterly Reports on Form
10Q, and for assistance with and review of documents filed with
the SEC were $232,900 for 2005 and $313,000 for 2004.

     Audit Related Fees.  No audit-related fees were billed by
PricewaterhouseCoopers LLP to Cadiz during the fiscal years ended
December 31, 2005 and 2004.

     Tax Fees.  Fees billed for tax services during the fiscal
years ended December 31, 2005 and 2004 were $10,000 and $0,
respectively.

                           Page 22

     All  Other Fees.  No other fees were billed by
PricewaterhouseCoopers LLP to Cadiz for services other than as
discussed above during the fiscal years ended December 31, 2005
and 2004.


         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Between August 2005 and February 2006 one of our
stockholders, Morgan Stanley, engaged in numerous public
purchases and sales of our common stock.  Subsequent to these
trades Morgan Stanley determined that it was, at the time of the
trades, the beneficial holder of more than 10% of our outstanding
equity securities and therefore subject to the requirements of
Section 16(b) of the Securities Exchange Act of 1934.  Several of
these trades resulted in automatic short swing profit liability
pursuant to Section 16(b). Following the determination of its
liability Morgan Stanley paid to us the sum of $349,625.40,
representing all short swing profit liability owed as a
consequence of these trades.

                           Page 23


                           PROPOSAL 2

    APPROVAL OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     The Board of Directors is recommending the ratification of the
Audit Committee's selection of PricewaterhouseCoopers LLP as
Cadiz' independent certified public accountants to audit the
financial statements of Cadiz for the 2006 fiscal year.  In the
event stockholders do not approve PricewaterhouseCoopers LLP as
Cadiz' independent certified public accountants for the 2006
fiscal year, the Board will select another firm to audit Cadiz'
financial statements. PricewaterhouseCoopers LLP has advised
Cadiz that neither it nor any of its partners or associates has
any direct or indirect financial interest in or any connection
with Cadiz other than as accountants and auditors.  A
representative of PricewaterhouseCoopers LLP is expected to be
present and available to answer appropriate questions at the
annual meeting, and will be given the opportunity to make a
statement if desired.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
PROPOSAL 2.

                           Page 24


                           PROPOSAL 3

       ADOPTION OF THE OUTSIDE DIRECTOR COMPENSATION PLAN

     The Board of Directors has adopted, subject to approval at
the Annual Meeting, the Outside Director Compensation Plan (the
"Plan"). The purpose of the Plan is to enable the Company to
adequately compensate its outside directors by providing such
individuals with a combination of cash compensation and
equity-based long-term incentive compensation awards.

PRINCIPAL PROVISIONS OF THE PLAN

     The following summary of the Plan, as adopted by the Board
of Directors subject to stockholder approval, is qualified by
reference to the full text of the Plan, which is attached as
Exhibit A to this Proxy Statement.

GENERAL PROVISIONS

     The Plan authorizes the granting of awards in the form of
cash compensation and shares of Deferred Common Stock. Awards may
be granted to directors who are not employees or officers of the
Company or any of the Company's subsidiaries("Outside
Directors"). The Plan provides for the automatic grant to Outside
Directors of cash compensation in the amount of $30,000 per
annum, prorated for directors serving less than the full 12 month
period, and a Deferred Stock award consisting of shares of the
Company's common stock with a value equal to $20,000.

     Administration. The Plan may be administered by the Board
of Directors or the Compensation Committee. (The Board of
Directors and the Compensation Committee, in their respective
roles, are referred to as the "Granting Authority.").  The
Granting Authority designates the persons to be granted awards
from among those eligible and the type and amount of awards to be
granted and has authority to interpret the Plan, adopt, alter and
repeal administrative regulations, and determine and amend the
terms of awards.

     Eligibility. Awards under the Plan may only be made to
Outside Directors.  Outside Directors are automatically granted
cash compensation and Deferred Stock having the terms specified
in the Plan.

AUTOMATIC AWARDS TO OUTSIDE DIRECTORS

     The Plan provides for the automatic grant of cash
compensation and Deferred Stock to Outside Directors on the
following terms.

     ANNUAL AWARDS.  Each Outside Director shall, on June 30th
of every year, receive payment of annual compensation consisting
of (i) Cash Compensation of $30,000 and (ii) a Deferred Stock
award consisting of shares of the Company's common stock with a
value equal to $20,000 (calculated with reference to the average
closing price of the Company's common stock for the month
preceding the annual award date).  Any Outside Director who has
not served as a director of the Company for the full 12 months
preceding any June 30th, shall be entitled to receive one-quarter
of the annual compensation award for each three months (or
portion thereof) served by such director, so that, by way of
example, a director whose service commenced on February 1 of a
year would be entitled to $15,000 in cash and $10,000 in stock as
of June 30th, inasmuch as such director will have served for one
full three month period and one partial three month period as of
that date.

     VESTING OF DEFERRED STOCK.  The Deferred Stock so issued
under the Plan shall be in the form of shares of common stock
subject to vesting conditions, with such common stock vesting
automatically upon the January 31 which first follows the June 30
with respect to which such Deferred Stock is awarded (e.g.
January 31, 2007 for Deferred Stock awarded with respect to
services provided for the twelve months ended June 30, 2006).

                           Page 25

     PRIOR SERVICE.  In order to provide compensation for Outside
Directors providing services to the Company for the 12 month
periods ending June 30, 2003, 2004 and 2005, respectively, such
Outside Directors shall receive the following, with the number of
shares to be issued calculated as the award value for the
applicable 12 months period divided by the average closing price
of the Company's common stock for the month ending June 30 of
each applicable year, and with such Deferred Stock vesting as of
the date all conditions to the effectiveness and implementation
of the Plan are satisfied:

12 MONTHS ENDED JUNE 30, 2003:
------------------------------

   DIRECTOR           AWARD VALUE   AVG. CLOSING PRICE   NO. OF SHARES
   --------           -----------   ------------------   -------------

   Murray Hutchison     $20,000           $ 3.64             5,495


12 MONTHS ENDED JUNE 30, 2004:
------------------------------

   DIRECTOR           AWARD VALUE   AVG. CLOSING PRICE   NO. OF SHARES
   --------           -----------   ------------------   -------------

   Murray Hutchison     $20,000           $ 8.53             2,345


12 MONTHS ENDED JUNE 30, 2005:
------------------------------

   DIRECTOR           AWARD VALUE   AVG. CLOSING PRICE   NO. OF SHARES
   --------           -----------   ------------------   -------------

   Murray Hutchison      $20,000          $17.46             1,145
   Timothy Shaheen       $20,000          $17.46             1,145
   Raymond J. Pacini     $ 5,000          $17.46               286


12 MONTHS ENDED JUNE 30, 2006:
------------------------------

   DIRECTOR           AWARD VALUE   AVG. CLOSING PRICE   NO. OF SHARES
   --------           -----------   ------------------   -------------

   Murray Hutchison      $20,000          $16.35             1,224
   Timothy Shaheen       $20,000          $16.35             1,224
   Raymond J. Pacini     $20,000          $16.35             1,224
   Gregory Preston       $10,000          $16.35               613

OTHER PROVISIONS

     Amendments. The Board of Directors may amend the Plan
without stockholder approval, unless such approval is required by
law or other regulatory requirements. Amendment or
discontinuation of the Plan cannot adversely affect any award
previously granted without the award holder's written consent.

BENEFITS UNDER THE PLAN

     The stock awards under the Plan are equal to such amount of
the Company's common stock that equates to a value of $20,000 per
Outside Director calculated with reference to the average closing
price of the Company's common stock for the month preceding the
annual award date.  Thus the precise number of shares that will
be received by our Outside Directors for 2006 cannot be
determined at this time.  The following table sets forth the
aggregate number of shares of our Common Stock that would be
retroactively granted to our Outside Directors under the terms of
the Plan, the value of the 2006 grant (and each annual grant
thereafter), and the estimated aggregate number of shares that
would be awarded in 2006 and thereafter to our Outside Directors
pursuant to the terms of the Plan.

                           Page 26


                     NEW PLAN BENEFITS TABLE
                           CADIZ INC.
               OUTSIDE DIRECTOR COMPENSATION PLAN


                                                        RESTRICTED
                                                          SHARES
                                                    -------------------
12 MONTH PERIOD ENDED    POSITION                    NUMBER      VALUE
---------------------    --------                    ------      -----
6/30/03                  Non-executive directors     5,495      $20,000
                          (1 person)
6/30/04                  Non-executive directors     2,345      $20,000
                          (1 person)
6/30/05                  Non-executive directors     2,576      $45,000
                          (3 persons)
6/30/06 and each 12      Non-executive directors     4,703      $80,000
 month period             (4 persons)
 thereafter


STOCKHOLDER APPROVAL OF COMPENSATION PORTION OF THE PLAN

     The NASDAQ Global Market rules require prior stockholder
approval of the stock compensation portion of the Plan, and the
Company seeks that approval.  If the stockholders do not approve
the Plan, the Outside Directors will not receive the stock
compensation, but the Board will continue to provide them cash
compensation.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
PROPOSAL 3.

                           Page 27


                           PROPOSAL 4

     APPROVAL OF ISSUANCE OF SHARES UPON CONVERSION OF LOAN
                    IN EXCESS OF EXCHANGE CAP

SUMMARY

     On June 26, 2006 we, and our wholly-owned subsidiary Cadiz
Real Estate LLC, entered into a $36,375,000 Credit Agreement (the
"Credit Agreement") with Peloton Multi-Strategy Master Fund and
Milfam II L.P., as lenders, and Peloton Partners LLP as
Administrative Agent, under which the lenders invested $36.375
million in a five year zero coupon secured convertible loan (the
"Loan").  The Loan bears 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.  The Loan is secured by
substantially all of our assets.  Approximately $26.7 million of
the proceeds of the Loan were used by us to retire our previously
existing secured credit facility with ING Capital LLC.  The
remainder will be used to supplement our working capital.  The
transactions contemplated by this Credit Agreement, including the
issuance of the Loan, closed on June 29, 2006.

     At the lenders' option, $10 million of principal and accrued
interest thereon may be converted into our common stock at $18.15
per share, and $26.375 million of principal and accrued interest
thereon may be converted into our common stock at $23.10 per
share.  These conversion prices are set for the entire term of the
loan, subject only to normal adjustments in the event of stock
splits, stock dividends and other recapitalization events, and
subject to further adjustment in the event of a change in control
of the company (whereupon the conversion price will be adjusted
pursuant to a formula which takes into account the amount of time
that the loan has been outstanding, but in no event shall the
adjusted conversion price be less than $16.50 per share).

     We are not allowed to prepay the Loan, except under limited
circumstances which would allow the lenders to convert the Loan,
should they desire to do so, prior to our prepayment.  In
addition, for so long as any portion of the Loan remains
outstanding, we will not (subject to limited exceptions) issue any
of our capital stock without first offering to sell to the lenders
such capital stock at the same price and on the same terms and in
such quantity as will enable the lenders to maintain their
percentage ownership on a fully-diluted basis with respect to
their conversion shares.

     The Credit Agreement contains a provision that prohibits any
lender from converting the Loan into shares of our common stock to
the extent that after such conversion the lender would own more
than 19.99% of the amount of our common stock outstanding prior to
the Loan (the "Exchange Cap") unless we shall have obtained the
prior approval of our stockholders to the issuance of conversion
shares in excess of the Exchange Cap.  This Proposal is being
submitted in order to obtain such stockholder approval.

     In the event that stockholders approve this Proposal, the
lenders will be able to convert the entire principal balance of
the Loan and all accrued interest thereunder into shares of our
common stock, even if the amount of shares so converted exceeds
the Exchange Cap.  If this Proposal is not approved, the ability
of the lenders to convert the Loan will continue to be limited by
the Exchange Cap, and we will be required to repay to the lenders
any principal and accrued interest not so converted as and when
required by the terms of the Credit Agreement.

NEED FOR STOCKHOLDER APPROVAL

     Our common stock is listed on the Nasdaq Global Market and
as such is subject to the Nasdaq Marketplace Rules.  Marketplace
Rule 4350(i)(1)(B) requires us to obtain stockholder approval
prior to certain issuances with respect to common stock or
securities convertible into common stock which will result in a
change of control of the issuer.  This rule does not specifically
define when a change in control of an issuer may be deemed to
occur; however, Nasdaq suggests in its guidance that a change of
control would occur, subject to certain limited exceptions, if
after a transaction a person or an entity will hold 20% or more of
the issuer's then outstanding capital stock.  For the purpose of
calculating the holdings of such person or entity, Nasdaq would
take into account, in addition to the securities received by such
person or entity in the

                           Page 28

transaction, all of the shares owned by such person or entity
unrelated to the transaction and would assume the conversion of
any convertible securities held by such person or entity.

     Peloton Multi-Strategy Master Fund ("PMSMF") is the holder
of 90% of the Loan.  PMSMF was, prior to the Loan, the holder of
1,046,640 shares of our outstanding common stock, representing
approximately 9.2% of the 11,330,402 shares outstanding
immediately prior to the Loan.  The immediate conversion by PMSMF
of the $26,375,000 in principal under the Loan held by PMSMF would
result in the issuance of 1,523,464 shares of our common stock,
and the conversion of up to $10,234,161 in interest which may
accrue over the five year term of the Loan with respect to the
PMSMF portion of the loan would result in the issuance of an
additional 476,255 shares of our common stock, for a total of
1,999,719 shares potentially issuable to PMSMF upon conversion of
the Loan.  In the event that all or part of the Loan is converted
prior its final maturity date, a full five years of interest will
not have accrued on the Loan and therefore the number of shares
that will actually be issued will be less than the number which
would have been issued with respect to interest accrued over the
full five year term of the Loan.

     In order to comply with Marketplace Rule 4350(i)(1)(B), the
Credit Agreement contains a provision that prohibits any lender
from converting the Loan into shares of our common stock to the
extent that after such conversion the lender would own more than
19.99% of the amount of our common stock outstanding prior to the
Loan (the "Exchange Cap") unless we shall have obtained the prior
approval of our stockholders to the issuance of conversion shares
in excess of the Exchange Cap.  The Exchange Cap is equal to
2,264,947 shares (i.e. 19.99% of our 11,330,402 shares outstanding
immediately prior to the Loan).  The number of shares potentially
issuable to PMSMF upon conversion of the Loan, when added to the
number of shares held by PMSMF prior to the Loan, exceeds the
Exchange Cap.  Therefore, pursuant to the Exchange Cap, PMSMF
cannot be issued more than 1,218,307 shares upon conversion of the
Loan unless and until stockholder approval is obtained to such
issuances.  We are therefore seeking stockholder approval for the
issuance of securities upon conversion of the Loan in excess of
the Exchange Cap.

     As required under the Marketplace Rule, shares issuable to
PMSMF upon conversion of the Loan may not be voted on this
proposal.  As of the date hereof, PMSMF has not converted any part
of the Loan.

     Stockholders should note that a change of control as
described under Marketplace Rule 4350(i)(1)(B) applies only with
respect to the application of such Marketplace Rule.
Notwithstanding this Marketplace Rule, we do not deem the Loan to
have resulted in an actual change in control.

CONSEQUENCES OF APPROVAL OF POTENTIAL ISSUANCE OF SHARES IN
EXCESS OF EXCHANGE CAP

     If Proposal 4 is approved, we would be allowed to issue
shares in excess of the Exchange Cap pursuant to the Credit
Agreement upon conversion of the Loan.

     CONVERSION TERMS.

     $10,000,000 in principal amount of the Loan ("Tranche A")
(including $9,000,000 held by PMSMF) and accrued interest thereon
is convertible at any time into shares of our common stock at a
conversion price of $18.15 per share.  The remaining $26,375,000
in principal amount of the Loan ("Tranche B") (including
$23,737,500 held by PMSMF) and accrued interest thereon is
convertible at any time into shares of our common stock at a
conversion price of $23.10 per share.

     These conversion prices are set for the entire term of the
loan, subject only to normal adjustments in the event of stock
splits, stock dividends and other recapitalization events, and
subject to further adjustment in the event of an actual change in
control of the company.  In the event of an actual change of
control, the lenders would be able to elect to either require us
to repay the Loan or to have the Loan converted into shares of our
common stock.  If the Loan is converted, the otherwise applicable
conversion price will be adjusted pursuant to a formula which
takes into account the amount of time that the loan has been
outstanding.  As to Tranche A, the adjustment formula is $16.50 x
[1 + ((.1) x (number of days between the closing date of the Loan
and the change in control date/number of days between the closing
date of the Loan and the maturity date of the Loan))].  As to
Tranche B, the adjustment formula is $16.50 x [1 + ((.4) x (number
of days between the closing date of the Loan and the change in
control date/number of days

                           Page 29

between the closing date of the Loan and the maturity date of the
Loan))].  By way of example only, if the change of control event
occurs on the 4th anniversary of the closing date of the Loan
(i.e. on day 1460 of an 1825 day loan), then in the case of
Tranche A the adjusted Tranche A conversion price would equal
$16.50 x 1.08, or $17.82, and in the case of Tranche B the
adjusted Tranche A conversion price would equal $16.50 x 1.32,
or $21.78.

     DILUTIVE EFFECT.

     If Proposal 4 is approved, our stockholders immediately
prior to the issuance of any shares in excess of the Exchange Cap
could incur dilution in their percentage ownership of our common
stock.  Although the actual number of shares that may be issued
upon conversion of the Loan is not certain, assuming that all
outstanding principal and accrued interest is converted upon the
five year maturity of the Loan, a total of 2,221,909 shares of our
common stock would be issued, of which 1,999,719 would be issued
to PMSMF.  Pursuant to the Exchange Cap, PMSMF cannot be issued
more than 1,218,307 shares upon conversion of the Loan unless and
until stockholder approval is obtained to such issuances.  If
Proposal 4 is approved, PMSMF will be able to convert the Loan in
full, which would result in additional dilution to our
stockholders.  However, any conversion of the Loan would at the
same time relieve us of our obligation to repay principal and
accrued interest so converted.

     The number of shares of our common stock actually issued in
excess of the Exchange Cap may be more or less than would be
issuable upon full conversion of the Loan as a result of the anti-
dilution adjustment provisions of the Loan, as described above.

     The number of shares issuable to the Loan's other lender,
Milfam II L.P. ("Milfam") upon conversion of the Loan would not,
when combined with shares held by Milfam, result in Milfam owning
more than 19.99% of the amount of our common stock outstanding
prior to the Loan.  Therefore, the issuance of shares of common
stock to Milfam upon conversion of the Loan will not exceed the
Exchange Cap and accordingly such shares may be issued upon
conversion of the Loan by Milfam whether or not Proposal 4 is
approved.

CONSEQUENCES OF FAILURE TO OBTAIN APPROVAL OF POTENTIAL ISSUANCE
OF SHARES IN EXCESS OF EXCHANGE CAP

     If Proposal 4 is not approved, we will not be able to issue
shares of common stock in excess of the Exchange Cap to PMSMF.
Accordingly, we estimate that approximately $18 million of
principal and accrued interest under the Loan may not be
convertible by PMSMF into common stock, assuming that PMSMF
converts  Tranche A in full before converting any part of Tranche
B.  We will continue to be obligated to repay this principal and
accrued interest when due, thereby requiring us to obtain
additional funding for this purpose.  Under the Credit Agreement,
outstanding principal and accrued interest are payable June 29,
2011, subject to optional prepayment by us under limited
circumstances.  We cannot at this time provide any assurances as
to whether or how we will be able to obtain the funding needed to
repay outstanding principal and accrued interest under the Loan,
if required, and what the dilutive and other effects to our
stockholders resulting from any such funding would be.

     As noted previously, the issuance of shares of common stock
to Milfam upon conversion of the Loan will not exceed the Exchange
Cap and accordingly such shares may be issued upon conversion of
the Loan by Milfam whether or not Proposal 4 is approved.

ADDITIONAL INFORMATION

     The Credit Agreement and exhibits thereto entered into in
connection with the Loan are filed as exhibits to our Registration
Statement on Form S-3 filed with the Securities and Exchange
Commission on July 28, 2006.  This Form S-3 was filed in
connection with the satisfaction of certain registration
obligations arising under a Registration Rights Agreement entered
into by us with the lenders in connection with the Loan.  A form
of this Registration Rights Agreement is attached as an exhibit to
the aforementioned Credit Agreement.

     THIS SUMMARY OF THE TERMS OF THE LOAN IS INTENDED TO PROVIDE
YOU WITH CERTAIN MATERIAL INFORMATION CONCERNING THE LOAN
TRANSACTION.  YOU SHOULD ALSO REVIEW

                           Page 30

THE CREDIT AGREEMENT AND THE EXHIBITS THERETO, WHICH HAVE BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, IN THEIR ENTIRETY.
THIS SUMMARY SHOULD BE READ IN CONJUNCTION WITH SUCH DOCUMENTS.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
PROPOSAL 4.

                           Page 31


                          OTHER MATTERS

     The Board of Directors does not know of any other matters
that may come before the annual meeting. However, if any other
matter shall properly come before the annual meeting, the proxy
holders named in the proxy accompanying this statement will have
discretionary authority to vote all proxies in accordance with
their best judgment.


                      STOCKHOLDER PROPOSALS

     Any stockholder who wishes to present resolutions to be
included in the proxy statement for Cadiz' next annual meeting
(for the fiscal year ending December 31, 2006) must file such
resolutions with Cadiz no later than November 30, 2006.


                     ADDITIONAL INFORMATION

     This proxy statement is accompanied by Cadiz' Annual Report
on Form 10-K, as amended, for the year ended December 31, 2005.
Exhibits to the Form 10-K will be made available to stockholders
for a reasonable charge upon their written request to Cadiz,
Attention: Corporate Communications, 777 S. Figueroa Street,
Suite 4250 Los Angeles, California 90017.



                              By Order of the Board of Directors

Los Angeles, California
September _, 2006

                           Page 32

                                                  APPENDIX A


                   AUDIT COMMITTEE CHARTER

COMPOSITION OF THE AUDIT COMMITTEE:
-----------------------------------

     The Audit Committee of Cadiz Inc., a Delaware
corporation (the "Company") shall be comprised of at least
three directors, each of whom the Board has determined has
no material relationship with the Company and each of whom is
otherwise "independent" under the rules of the NASDAQ Global
Market (formerly, the NASDAQ National Market) and the
Sarbanes-Oxley Act of 2002 (the "2002 Act").  The Board
shall also determine that each member is "financially
literate", and that one member of the Audit Committee has
"accounting or related financial management expertise," as
such qualifications are interpreted by the Board of
Directors in its business judgment, and whether any members
of the Audit Committee are "financial experts" as defined by
the Securities and Exchange Commission (the "SEC") for
purposes of the 2002 Act.

     No director may serve as a member of the Audit Committee
if such director serves on the audit committees of more than
two other public companies unless the Board of Directors
determines that such simultaneous service would not impair
the ability of such director to effectively serve on the
Audit Committee, and discloses this determination in the
Company's annual proxy statement.  No member of the Audit
Committee may receive any consulting, advisory or other
compensatory fee from the Company other than (i) director's
fees, which may be received in cash, stock options or other
in-kind consideration ordinarily available to directors;
(ii) a pension or other deferred compensation for prior
service that is not contingent on future service; and
(iii) any other regular benefits that other directors
receive.

     Members shall be appointed by the Board based on
nominations recommended by the Company's Nominating Committee,
and shall serve at the pleasure of the Board and for such term
or terms as the Board may determine.

     The Board shall designate one member of the Audit
Committee as its chairperson.  In the event of a tie vote
on any issue, the chairperson's vote shall decide the issue.

PURPOSES OF THE AUDIT COMMITTEE:
--------------------------------

     The purposes of the Audit Committee are to:

     *  assist Board oversight of (i) the integrity of the
        Company's financial statements, (ii) the Company's
        compliance with legal and regulatory requirements,
        (iii) the independent auditors' qualifications and
        independence, and (iv) the performance of the
        independent auditors;

     *  oversee the accounting and financial reporting
        processes of the Company and the audits of the
        financial statements of the Company; and

     *  prepare the report required to be prepared by the
        Audit Committee pursuant to the rules of the SEC for
        inclusion in the Company's annual proxy statement.

     The function of the Audit Committee is oversight.  The
independent auditors for the Company are accountable to the
Board and the Audit Committee, as representatives of the
stockholders.  The Audit Committee is directly and solely
responsible for the appointment, compensation and oversight
of the work of the independent auditors (including resolving
disagreements between management and the auditors regarding
financial reporting).  The Audit Committee has the authority
and responsibility to appoint, retain and terminate the
Company's independent auditors (subject, if applicable, to
stockholder ratification).  The independent auditors shall
report directly to the Audit Committee.

     The independent auditors shall submit to the Audit Committee
annually a formal written statement (the "Auditors'
Statement") describing:  the auditors' internal quality-
control procedures; any material issues raised by the most
recent internal quality-control review or peer review of the
auditors, or by any inquiry or investigation by governmental
or professional authorities, within the preceding five
years, respecting one or more independent audits carried out
by the auditors, and any steps taken to deal with any such
issues; and (to assess the auditors' independence) all
relationships between the independent auditors and the
Company, including each non-audit service provided to the
Company and the matters set forth in Independence Standards
Board No. 1.

     The independent auditors shall submit to the Audit Committee
annually a formal written statement of the fees billed for
each of the following categories of services rendered by the
independent auditors: (i) the audit of the Company's annual
financial statements for the most recent fiscal year and the
reviews of the financial statements included in the
Company's Quarterly Reports on Form 10-Q for that fiscal
year; (ii) information technology consulting services for
the most recent fiscal year, in the aggregate and by each
service (and separately identifying fees for such services
relating to financial information systems design and
implementation); and (iii) all other services rendered by
the independent auditors for the most recent fiscal year, in
the aggregate and by each service.

MEETINGS OF THE AUDIT COMMITTEE:
--------------------------------

     The Audit Committee shall meet at least four times a year,
or more frequently if circumstances dictate, to discuss with
management the annual audited financial statements and
quarterly financial statements, as applicable.  The Audit
Committee should meet separately periodically with
management, and the independent auditors to discuss any
matters that the Audit Committee or any of these persons or
firms believe should be discussed privately.  The Audit
Committee may request any officer or employee of the Company
or the Company's outside counsel or independent auditors to
attend a meeting of the Audit Committee or to meet with any
members of, or consultants to, the Audit Committee.  Members
of the Audit Committee may participate in a meeting of the
Audit Committee by means of conference call or similar
communications equipment by means of which all persons
participating in the meeting can hear each other.

DUTIES AND POWERS OF THE AUDIT COMMITTEE:
----------------------------------------

     To carry out its purposes, the Audit Committee shall have
the following duties and powers:

     1.  review and approve all related-party transactions
         between the Company and directors, officers, employees,
         consultants, and any of their family members.

     2.  with respect to the independent auditors,

         (i)  to appoint, retain and terminate the
              independent auditors (subject, if applicable,
              to stockholder ratification), including sole
              authority to approve all audit engagement fees
              and terms;

        (ii)  to pre-approve all audit and non-audit services
              to be provided by the independent auditors, and
              to consider whether the outside auditors'
              provision of non-audit services to the Company
              is compatible with maintaining the independence
              of the outside auditors;

       (iii)  to ensure that the independent auditors
              prepare and deliver annually an Auditors'
              Statement (it being understood that the
              independent auditors are responsible for the
              accuracy and completeness of this Statement),
              and to discuss with the independent auditors
              any relationships or services disclosed in this
              Statement that may impact the quality of audit
              services or the objectivity and independence of
              the Company's independent auditors;

        (iv)  to obtain from the independent auditors in
              connection with any audit a timely report
              relating to the Company's annual audited
              financial statements describing all critical
              accounting policies and practices used, all
              alternative treatments of financial information
              within generally accepted accounting principles
              that have been discussed with management,
              ramifications of the use of such alternative
              disclosures and treatments, and the treatment
              preferred by the independent auditors, and any
              material written communications between the
              independent auditors and management, such as
              any "management" letter or schedule of
              unadjusted differences;

         (v)  to review and evaluate the qualifications,
              performance and independence of the lead
              partner of the independent auditors;

        (vi)  to discuss with management the timing and
              process for implementing the rotation of the
              lead audit partner and  reviewing partner
              (which rotation must occur not less than once
              every five years for the lead and concurring
              partner, and not less than once in every seven
              years for other audit partners), consider
              whether there should be a regular rotation of
              the audit firm itself;

       (vii)  to take into account the opinions of
              management and the Company's internal auditors
              in assessing the independent auditors'
              qualifications, performance and independence;
              and

      (viii)  to instruct the independent auditors that the
              independent auditors are ultimately accountable
              to the Board and the Audit Committee, as
              representatives of the stockholders;

     3.  with respect to financial reporting principles and
         policies and internal audit controls and procedures,

         (i)  to advise management and the independent
              auditors that they are expected to provide to
              the Audit Committee a timely analysis of
              significant financial reporting issues and
              practices;

        (ii)  to consider any reports or communications (and
              management's responses thereto) submitted to
              the Audit Committee by the independent auditors
              required by or referred to in SAS 61 (as
              codified by AU Section 380), as it may be
              modified or supplemented, including reports and
              communications related to:

             *  deficiencies noted in the audit in the design
                or operation of internal controls;

             *  consideration of fraud in a financial statement
                audit;

             *  detection of illegal acts;

             *  the independent auditors' responsibility under
                generally accepted auditing standards;

             *  any restriction on audit scope;

             *  significant accounting policies;

             *  significant issues discussed with the national
                office respecting auditing or accounting issues
                presented by the engagement;

             *  management judgments and accounting estimates;

             *  any accounting adjustments arising from the
                audit that were noted or proposed by the auditors
                but were passed (as immaterial or otherwise);

             *  the responsibility of the independent auditors
                for other information in documents containing
                audited financial statements;

             *  disagreements with management;

             *  consultation by management with other
                accountants;

             *  major issues discussed with management prior to
                retention of the independent auditors;

             *  difficulties encountered with management in
                performing the audit;

             *  the independent auditors' judgments about the
                quality of the entity's accounting principles;

             *  reviews of interim financial information
                conducted by the independent auditors; and

             *  the responsibilities, budget and staffing of
                the Company's internal audit function;

      (iii)  to meet with management and the
             independent auditors:

             *  to discuss the scope of the annual audit;

             *  to discuss the annual audited financial
                statements and quarterly financial statements,
                including the Company's disclosures under
                "Management's Discussion and Analysis of Financial
                 Condition and Results of Operations";

             *  to discuss any significant matters arising from
                any audit, including any audit problems or
                difficulties, whether raised by management or the
                independent auditors, relating to the Company's
                financial statements;

             *  to discuss any difficulties the independent
                auditors encountered in the course of the audit,
                including any restrictions on their activities or
                access to requested information and any
                significant disagreements with management;

             *  to discuss any "management" or "internal
                control" letter issued, or proposed to be issued,
                by the independent auditors to the Company;

             *  to review the form of opinion the independent
                auditors propose to render to the Board of
                Directors and stockholders; and

             *  to discuss, as appropriate: (a) any major
                issues regarding accounting principles and
                financial statement presentations, including any
                significant changes in the Company's selection or
                application of accounting principles, and major
                issues as to the adequacy of the Company's
                internal controls and any special audit steps
                adopted in light of material control deficiencies;
               (b) analyses prepared by management and/or the
                independent auditors setting forth significant
                financial reporting issues and judgments made in
                connection with the preparation of the financial
                statements, including analyses of the effects of
                alternative GAAP methods on the financial
                statements; and (c) the effect of regulatory and
                accounting initiatives, as well as off-balance
                sheet structures, on the financial statements of
                the Company;

       (iv)  to inquire of the Company's chief executive officer and
             chief financial officer as to the existence of any
             significant deficiencies in the design or operation of
             internal controls that could adversely affect the Company's
             ability to record, process, summarize and report financial
             data, any material weaknesses in internal controls, and any
             fraud, whether or not material, that involves management or
             other employees who have a significant role in the Company's
             internal controls;

        (v)  to discuss guidelines and policies governing the
             process by which senior management of the Company and the
             relevant departments of the Company assess and manage the
             Company's exposure to risk, and to discuss the Company's
             major financial risk exposures and the steps management has
             taken to monitor and control such exposures;

       (vi)  to obtain from the independent auditors assurance that
             the audit was conducted in a manner consistent with
             Section 10A of the Securities Exchange Act of 1934, as
             amended, which sets forth certain procedures to be followed
             in any audit of financial statements required under the
             Securities Exchange Act of 1934;

      (vii)  to discuss with the Company's Counsel any
             significant legal, compliance or regulatory matters that may
             have a material effect on the financial statements or the
             Company's business, financial statements or compliance
             policies, including material notices to or inquiries
             received from governmental agencies;

     (viii)  to discuss earnings press releases;

       (ix)  to discuss the types of financial information and
             earnings guidance provided, and the types of presentations
             made, to analysts and rating agencies, if any;

        (x)  to establish procedures for the receipt, retention and
             treatment of complaints received by the Company regarding
             accounting, internal accounting controls or auditing
             matters, and for the confidential, anonymous submission by
             Company employees of concerns regarding questionable
             accounting or auditing matters; and

       (xi)  to establish hiring policies for employees or former
             employees of the independent auditors.  These policies shall
             provide that no former employee of the independent auditors
             may become the chief executive officer, controller, chief
             financial officer or chief accounting officer (or serve in a
             similar capacity) if such person participated in any
             capacity in the Company's audit within the one-year period
             preceding the date of initiation of the audit;

     4.  with respect to reporting and recommendations,

        (i)  to prepare any report or other disclosures,including
             any recommendation of the Audit Committee, required by
             the rules of the SEC to be included in the Company's
             annual proxy statement;

       (ii)  to review this Charter at least annually and recommend
             any changes to the full Board of Directors;

      (iii)  to report its activities to the full Board of Directors
             on a regular basis and to make such recommendations with
             respect to the above and other matters as the Audit Committee
             may deem necessary or appropriate; and

       (iv)  to prepare and review with the Board an annual
             performance evaluation of the Audit Committee, which
             evaluation must compare the performance of the Audit
             Committee with the requirements of this charter.  The
             performance evaluation by the Audit Committee shall be
             conducted in such manner as the Audit Committee deems
             appropriate.  The report to the Board may take the form of
             an oral report by the chairperson of the Audit Committee or
             any other member of the Audit Committee designated by the
             Audit Committee to make this report.

DELEGATION TO SUBCOMMITTEE:
---------------------------

     The Audit Committee may, in its discretion, delegate all or
a portion of its duties and responsibilities to a
subcommittee of the Audit Committee.  The Audit Committee
may, in its discretion, delegate to one or more of its
members the authority to pre-approve any audit or non-audit
services to be performed by the independent auditors,
provided that any such approvals are presented to the Audit
Committee at its next scheduled meeting.

Resources and Authority of the Audit Committee:
-----------------------------------------------

     The Audit Committee shall have the resources and authority
appropriate to discharge its duties and responsibilities,
including the authority to select, retain, terminate, and
approve the fees and other retention terms of special or
independent counsel, accountants or other experts and
advisors, as it deems necessary or appropriate, without
seeking approval of the Board or management.


                                                  APPENDIX B



                         CADIZ INC.

            OUTSIDE DIRECTOR COMPENSATION PLAN


SECTION 1. PURPOSE

     Cadiz Inc. (the "Company") believes it is in the
best interest of the Company to adequately compensate its
Outside Directors (as defined in Section 5) for their
services to the Company and further believes that, in light
of the nature of the Company's resource development
activities, it is best that such compensation emphasize long-
term incentives.  The purpose of the Cadiz Inc. Outside
Director Compensation Plan (the "Plan") is to provide a
program where annual compensation for Outside Directors is
established in the form of a combination of cash ("Cash
Compensation") and equity securities of the Company
("Deferred Stock"). For purposes of the Plan, the term
"Stock" shall refer to the common stock of the Company, par
value $.01 per share.

SECTION 2. TYPES OF AWARDS

     Awards under the Plan shall be a combination of
Cash Compensation and Deferred Stock.

SECTION 3. ADMINISTRATION

     3.1 The Plan shall be administered (i) by the
Compensation Committee ("Committee") of the Company's Board
of Directors (the "Board") or (ii) by the Board.

     3.2 For purposes of this Plan the term "Granting
Authority" shall mean (i) the Board of Directors and/or (ii)
the Committee. The Granting Authority shall have the
following authority with respect to awards under the Plan
within its jurisdiction: to grant such awards to persons
eligible to receive them under the Plan; to adopt, alter and
repeal such administrative rules, guidelines and practices
governing the Plan as it shall deem advisable; to interpret
the terms and provisions of the Plan and any award granted
by it under the Plan; and to otherwise supervise the
administration of the Plan.

SECTION 4. STOCK SUBJECT TO PLAN

     Stock awarded under the Plan shall consist of
authorized but unissued shares of the Company's Stock.

SECTION 5. ELIGIBILITY

     Awards under the Plan shall be made solely to
Outside Directors, which term shall mean any director of the
Company other than one who is an employee of the Company or
any of its subsidiaries.

SECTION 6. AUTOMATIC AWARDS OF CASH AND STOCK GRANTS FOR
OUTSIDE DIRECTORS

     Outside Directors shall automatically be granted
Cash Compensation and Deferred Stock as follows:

     6.1 ANNUAL AWARDS.  Each Outside Director
shall, on June 30th of every year, receive payment of annual
compensation consisting of (i) Cash Compensation of $30,000
and (ii) a Deferred Stock award consisting of shares of the
Company's common stock with a value equal to $20,000
(calculated with reference to the average closing price of
the Company's common stock for the month preceding the
annual award date).  Any Outside Director who has not served
as a director of the Company for the full 12 months
preceding any June 30th, shall be entitled to receive one-
quarter of the annual compensation award for each three
months (or portion thereof) served by such director, so
that, by way of example, a director whose service commenced
on February 1 of a year would be entitled to $15,000 in cash
and $10,000 in stock as of June 30th, inasmuch as such
director will have served for one full three month period
and one partial three month period as of that date.

     6.2 VESTING OF DEFERRED STOCK.  The Deferred
Stock so issued under the Plan shall be in the form of
shares of common stock subject to vesting conditions, with
such common stock vesting automatically upon the January 31
which first follows the June 30 with respect to which such
Deferred Stock is awarded (e.g. January 31, 2007 for
Deferred Stock awarded with respect to services provided for
the twelve months ended June 30, 2006).

     6.3 PRIOR SERVICE.  In order to provide
compensation for Outside Directors providing services to the
Company for the 12 month periods ending June 30, 2003, 2004
and 2005, respectively, such Outside Directors shall receive
the following, with the number of shares to be issued
calculated as the award value for the applicable 12 months
period divided by the average closing price of the Company's
common stock for the month ending June 30 of each applicable
year, and with such Deferred Stock vesting as of the date
all conditions to the effectiveness and implementation of
the Plan are satisfied:

12 MONTHS ENDED JUNE 30, 2003:
------------------------------

   DIRECTOR           AWARD VALUE   AVG. CLOSING PRICE   NO. OF SHARES
   --------           -----------   ------------------   -------------

   Murray Hutchison     $20,000          $ 3.64              5,495


12 MONTHS ENDED JUNE 30, 2004:
------------------------------

   DIRECTOR           AWARD VALUE   AVG. CLOSING PRICE   NO. OF SHARES
   --------           -----------   ------------------   -------------

   Murray Hutchison     $20,000          $ 8.53              2,345


12 MONTHS ENDED JUNE 30, 2005:
------------------------------

   DIRECTOR           AWARD VALUE   AVG. CLOSING PRICE   NO. OF SHARES
   --------           -----------   ------------------   -------------

   Murray Hutchison     $20,000          $17.46              1,145
   Timothy Shaheen      $20,000          $17.46              1,145
   Raymond J. Pacini    $ 5,000          $17.46                286


12 MONTHS ENDED JUNE 30, 2006:
------------------------------

   DIRECTOR           AWARD VALUE   AVG. CLOSING PRICE   NO. OF SHARES
   --------           -----------   ------------------   -------------

   Murray Hutchison     $20,000          $16.35              1,224
   Timothy Shaheen      $20,000          $16.35              1,224
   Raymond J. Pacini    $20,000          $16.35              1,224
   Gregory Preston      $10,000          $16.35                613


SECTION 7. AMENDMENTS AND TERMINATION

      The Board may discontinue the Plan at any time
and may amend it from time to time. No amendment or
discontinuation of the Plan shall adversely affect any award
previously granted without the award holder's written
consent. Amendments may be made without stockholder approval
except as required to satisfy Section 422 of the Code,
Section 162(m) of the Code, or other NASDAQ, stock exchange,
or regulatory requirements.

SECTION 8. GENERAL PROVISIONS

      8.1 Each award under the Plan shall be subject to
the requirement that, if at any time the Granting Authority
shall determine that (i) the listing, registration or
qualification of the Stock subject or related  hereto upon
any securities exchange or under any state or federal law,
or (ii) the consent or approval of any government regulatory
body or (iii) an agreement by the recipient of an award with
respect to the disposition of Stock is necessary or
desirable (in connection with any requirement or
interpretation of any federal or state securities law, rule
or regulation) as a condition of, or in connection with, the
granting of such award or the issuance, purchase or delivery
of Stock thereunder, such award shall not be granted or
exercised, in whole or in part, unless such listing,
registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions
not acceptable to the Granting Authority.

      8.2 Nothing set forth in this Plan shall prevent
the Board from adopting other or additional compensation
arrangements. Neither the adoption of the Plan nor any award
hereunder shall confer upon any Outside Director any right
to continued service as a director.

      8.3 No member of the Board or the Committee, nor
any officer or employee of the Company acting on behalf of
the Board or the Committee, shall be personally liable for
any action, determination or interpretation taken or made
with respect to the Plan, and all members of the Board or
the Committee and all officers or employees of the Company
acting on their behalf shall, to the extent permitted by
law, be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation.

SECTION 9. EFFECTIVE DATE OF PLAN

      The Plan was adopted by the Company's Board of
Directors on August 3, 2005, and shall be effective as of
such date, subject to the approval of the Plan by the
Company's stockholders at the 2006 Annual Meeting of
Stockholders and with respect to awards of Deferred Stock
under the Plan, the filing by the Company of a Registration
Statement on Form S-8 registering the Deferred Stock to be
issued under the Plan.



         FOLD AND DETACH HERE AND READ THE REVERSE SIDE


                            PROXY
                         CADIZ INC.
SOLICITED ON BEHALF OF THE COMPANY AND APPROVED BY THE BOARD
                        OF DIRECTORS

The undersigned hereby constitutes and appoints Keith
Brackpool and O'Donnell Iselin II, and each of them, as
attorneys and proxies of the undersigned, with full power of
substitution, for and in the name, place, and stead of the
undersigned, to appear at the fiscal 2006 Annual Meeting of
Stockholders of Cadiz Inc. to be held on the 25th day of
October 2006 (pursuant to the Notice of Annual Meeting dated
September  __, 2006 and accompanying proxy statement), and
at any postponement or adjournment thereof, and to vote all
of the shares of Cadiz Inc. that the undersigned is entitled
to vote with all the powers and authority the undersigned
would possess if personally present in accordance with the
following instructions.

                 (Continued on reverse side)




                         CADIZ INC.
VOTING BY TELEPHONE OR INTERNET IS QUICK, EASY AND
IMMEDIATE.  As a Cadiz Inc. stockholder, you have the option
of voting your shares electronically through the Internet or
on the telephone, eliminating the need to return the proxy
card. Your electronic vote authorizes the named proxies to
vote your shares in the same manner as if you marked,
signed, dated and returned the proxy card. Votes submitted
electronically over the Internet or by telephone must be
received by 6:00 p.m., Eastern Standard Time, on October 24,
2006.

VOTE YOUR PROXY ON THE INTERNET:
-------------------------------
www.continentalstock.com.
Have your proxy card available when you access the website.
Follow the prompts to vote your shares.

VOTE YOUR PROXY BY PHONE:
------------------------
Call 1 (866) 894-0537.
Use any touch-tone telephone to vote your proxy. Have your
proxy card available when you call. Follow the voting
instructions to vote your shares.

       PLEASE DO NOT RETURN THE PROXY CARD IF YOU ARE
              VOTING ELECTRONICALLY OR BY PHONE
VOTE YOUR PROXY BY MAIL:
-----------------------
Mark, sign and date your proxy card and return it in the
postage-paid envelope provided.

       FOLD AND DETACH HERE AND READ THE REVERSE SIDE


THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, WILL BE VOTED "FOR" PROPOSALS 1, 2, 3, 4 AND 5.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS,
WHICH RECOMMENDS A VOTE FOR THE PROPOSALS.


1.  ELECTION OF DIRECTORS             FOR         WITHHOLD
                                                 AUTHORITY
(TO WITHHOLD AUTHORITY TO VOTE        [ ]           [ ]
FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT
NOMINEE'S NAME IN THE LIST
BELOW)

01.  Keith Brackpool
02.  Murray H. Hutchison
03.  Timothy J. Shaheen
04.  Stephen J. Duffy

2.  Ratification of                   FOR    AGAINST    ABSTAIN
    PricewaterhouseCoopers LLP as     [ ]      [ ]        [ ]
    independent auditor.


3.  Approval of Outside Directors     FOR    AGAINST    ABSTAIN
    Compensation Plan.                [ ]      [ ]        [ ]


4.  Approval of the issuance of       FOR    AGAINST    ABSTAIN
    shares of Cadiz common stock      [ ]      [ ]        [ ]
    upon conversion of the Peloton
    Loan in an amount in excess of
    the 19.99% "Exchange Cap"
    provided for in the Peloton
    Credit Agreement.


5.  In their discretion, the           FOR    AGAINST    ABSTAIN
    Proxies are authorized to vote     [ ]      [ ]        [ ]
    upon such other business as may
    properly come before the
    meeting.



                           COMPANY ID:
                          PROXY NUMBER:
                         ACCOUNT NUMBER:


Signature(s)____________________Signature(s)____________________Date_________
Please sign exactly as name appears hereon.  When shares are held by joint
owners, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.