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2
Scarcity:
The Challenges of Water and
Environmental Management
in the Delta and Beyond
INTRODUCTION
Ecological rehabilitation in the delta faces many challenges, reflected
in the long and difficult history surrounding the delta and ongoing politi-
cal and legal controversies. The challenges include the reluctance of many
interested parties to confront several crucial facts. These include the reality
that water is scarce; the many biological and physical changes that have
occurred in the delta; the presence of many policy and legal directives that
have independent and conflicting objectives; and the inherent uncertainty
regarding future socioeconomic, climate, biological, and other changes, and
our consequent inability to plan for them in a comprehensive manner. In
this chapter, we discuss these challenges, but because the historical context
is critical to understanding the challenges, we begin with it.
THE HISTORICAL SETTING
The modern history of California has been characterized by steady
and occasionally explosive population growth. During the 20th century
the state's population grew more than 20-fold, from 1.5 million in 1900 to
almost 34 million in 2000. There were two periods of astonishingly rapid
growth. Between 1900 and 1930 population grew by 382 percent and be-
tween 1940 and 1970 it grew by 289 percent (U.S. Bureau of the Census
1996). Almost all of this growth occurred in the southern three-quarters of
the state, most of which is arid or semiarid and has a Mediterranean climate
with a wet season between November and April followed by a dry season
35
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36 SUSTAINABLE WATER MANAGEMENT IN THE DELTA
from May through October. The climate is unfavorable to development
in the sense that water demands for irrigated agriculture, air condition-
ing, outdoor domestic uses, and recreational purposes tend to peak in the
warm dry season. However, precipitation throughout California is gener-
ally unreliable, and California is subject to persistent and sometimes severe
droughts, even in the seasons when precipitation is expected.
The combination of rapid population growth and general aridity led
to a 20th-century water resources development program punctuated by
the construction of major water storage and conveyance projects. The Los
Angeles and San Francisco metropolitan areas, the foci of urban settlement,
outstripped local water supplies early on and began to import supplemental
supplies from remote locations. Most famously, the City of Los Angeles
acquired land and water resources in the Owens Valley on the eastern side
of the Sierra Nevada and constructed conveyance facilities to bring the
water to the Los Angeles basin (Kahrl 1983). At about the same time, San
Francisco developed a storage and conveyance project to the east in the
Tuolumne River basin, which drains a portion of the west side of the Sierra
Nevada. There followed, in 1929, further development of the Mokelumne
River basin, also a western Sierra drainage, to supply the growing demands
of the East San Francisco Bay region and, in 1939, the Colorado River
Aqueduct to bring water from the Colorado River to support growth
throughout the South Coast basin of southern California (Hundley 2001).
During the 20th century, California also became the largest agricultural
state in the nation. Although there had been extensive rain-fed ("dry-
land") farming in the late 1800s, it thrived only during an exceptionally
wet period, and most subsequent agriculture was irrigated. Early irrigation
communities relied on water from neighboring streams and groundwater.
Dating back at least as early as 1855, California recognized the "prior
appropriation doctrine" for the allocation of surface-water rights. This
system, which follows the maxim "first in time, first in right," allows the
first water users (known as "senior" appropriators) on a stream system to
divert their entire allotment before the chronologically next water user is
entitled to divert a single drop. Because water rights are of theoretically
infinite duration, many senior irrigators in California could argue that
they hold more secure water rights than later-initiated uses, such as the
application of water for the protection of the natural environment. Re-
cent court decisions, combined with the state constitution, the developing
public trust doctrine, and legislation have combined to create in practice a
more rational method of allocation. The construction of large storage and
conveyance projects, which began with the federal Central Valley Project
(CVP) in the 1930s and 1940s, allowed the expansion of agriculture in
both the Sacramento and San Joaquin valleys and offset, to some degree,
the significant groundwater overdraft that was present in the San Joaquin
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SCARCITY 37
valley. Subsequently, in the 1960s and 1970s, the state of California built
its own State Water Project (SWP), which served agricultural users in the
San Joaquin valley and urban users in both the San Francisco Bay Area and
the South Coast basin (Hundley 2001). Both the CVP and the SWP use the
SacramentoSan Joaquin Delta to move water from the Sacramento River
and other waterways draining into the delta to the pumps at the southern
end of the delta for conveyance to users located to the south. Figure 2-1 is
a water-balance table for California.
All of these water projects were constructed in response to increasing
concerns about the local or regional scarcity of water supplies to support
the large population and economic growth and in anticipation of more such
growth. An important consequence of the pattern of increased demands
followed by new water storage and conveyance projects was that it created
the assumption that with investment more water could be made available to
support such growth. This assumption continues to be true except that for
a variety of reasons the cost of additional supplies has risen dramatically.
FIGURE 2-1 California water balance.
SOURCE: California Department of Water Resources (2005).
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38 SUSTAINABLE WATER MANAGEMENT IN THE DELTA
Increasing commitment to water conservation, including more efficient and
more productive use,1 and economic changes, particularly in the urban sec-
tor, have resulted in reductions of per capita water use. Improvements in
agricultural efficiency have occurred to some degree but more is expected.
In recent decades, new increments of water supply, exclusive of what has
been conserved, have become more costly and the reliability of sources has
decreased for all uses. In California and the arid southwest, urban waste-
water reuse for golf course and public landscape irrigation has become
common. Agricultural reuse that entails recycling of surface runoff from
irrigation is also found with increasing frequency. There has been little rec-
ognition in recent and current planning for the delta that water is a scarce
resource and that modern management plans should be tailored to manage
scarcity (NRC 2011).
The historic strategy of developing storage and conveyance facilities in
response to growth in water demand is being replaced with a variety of sup-
ply- and demand-management alternatives, including conservation. Com-
petition for water for all purposes, including recreation, fishery resources,
protecting water quality, and ecological functioning, will remain intense.
Fewer high-yielding source areas and storage sites are available now than
formerly, because most such areas and sites have already been developed.
Nonetheless, they should be considered during objective comparison of al-
ternatives for improving streamflow and meeting water-supply needs. This
would include consideration of environmental effects.
Water impoundment and transfer facilities can result in significant en-
vironmental damage, by altering streamflow regimes (Junk et al. 1989, Poff
et al. 1997), blocking the migration paths of anadromous fish and altering
their life cycles (Andersson et al. 2000, Dudgeon 2000, Jansson et al. 2000,
Morita et al. 2000), damaging downstream habitats (Kondolf 1997), and
modifying water temperatures and impairing water quality (Clarkson and
Childs 2000, Walks et al. 2000). These environmental costs, although usu-
ally not monetized, are real costs that must be counted together with the
other costs of construction for a full accounting.
Storage facilities in the SacramentoSan Joaquin system were designed
based on precipitation and streamflow data of the historical period of
record (since the late 1800s). The assumption that past climate is a reason-
able approximation of the future is no longer valid (NRC 2007, Milly et al.
2008). Sound planning now requires consideration of a much wider range
of assumptions regarding rainfall and runoff. Most projections suggest
that there will be an increase in the frequency and intensity of droughts
1 In general, the committee uses the term "conservation" as shorthand for "conservation
and more productive and more efficient water use." See Gleick et al. (2003, 2011) for a dis-
cussion of these terms.
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and floods. Testing previous assumptions, developing new ones, and test-
ing them against various alternative management scenarios is necessary
to provide an informed basis for future public investments and will be an
essential part of future water resources and environmental planning. The
results of such analyses might be that water supplies will be reduced, and
the magnitude of scarcity increased.
A more uncertain and variable water future will require water planning
and management for the delta that is anticipatory as well as adaptive. It will
require plans and operations that include suites of techniques and technolo-
gies designed to manage a highly variable and uncertain waterscape. Most
important, the future will require planning and management that specifi-
cally acknowledge and take into account that there is not enough water to
meet all desired uses in California with the required degree of reliability
everywhere and all the time.
DIMENSIONS OF SCARCITY
The standard economic definition of scarcity is an insufficient quantity
of some resource or commodity to satisfy all wants for it (Baumol and
Blinder 2011), and it is used by the committee here. These wants include
water for urban, agricultural, and industrial water use and for the aquatic
environment. They can change as we gain better understanding of natural
processes, multiple stressors, and changes in climate, and in response to
changes in public priorities regarding environmental investments, changes
in technology, and changing economic, regulatory, and legal conditions.
Water scarcity has long existed in much of California, save, perhaps, for
exceptionally wet years. The magnitude or intensity of scarcity has grown
over time and it continues to grow. Symptoms of this scarcity include legal
rulings that require increased allocation of water to support fisheries and
environmental flows, demands for more reliability of water supplies from
agricultural and domestic diverters, and concerns about the ecological
condition of the delta itself and differing positions about how delta waters
should be allocated.
While some Californians have increasingly recognized the scarcity of
water, not everyone has. The failure of plans for water management in the
delta to acknowledge scarcity has greatly hindered the ability of agencies to
craft and implement water plans and policies that will be widely accepted.
The management of delta water by court decisions reflects in part the lack
of adequate water resource planning that takes scarcity into account.
Historically, scarcity has been acknowledged mainly during times of
drought. The primary means of coping with scarcity has been the rationing
of supplies, and through penalties as well as short- and long-term increas-
ing block ratesrates that increase as use increases. A drought water bank
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40 SUSTAINABLE WATER MANAGEMENT IN THE DELTA
was established and functioned effectively in the later stages of the drought
of 1987-1992. It had the advantage of allocating water from lower- to
higher-valued uses. It served to mitigate potentially disastrous impacts and
also allowed the state to develop carryover supplies to help mitigate the ef-
fects of a continuation of the drought (Carter et al. 1994). These measures
were short-term, one-time efforts to manage supplies that were temporarily
short. Thus, beyond the occasional drought, the concept of long-term scar-
city has not figured prominently in delta water plans, or water-management
regimes, or the state's approach to water transfers.
Evidence for the existence of water scarcity in California can also be
found through an examination of the extent to which the waters of Cali-
fornia have already been legally allocated by California water law. Under
Water Code §§ 1205-1207 (2012), the State Water Resources Control
Board has designated numerous stream systems "fully appropriated" year-
round or during specific months including many stream segments in the
bay-delta region. This means that the state has approved a total volume of
water rights that equals (or even exceeds) the surface supplies available in
an average year, although there is no mathematically precise calculation for
this allocation. The California Water Code simply required the State Water
Resources Control Board to determine that the "supply of water in the
stream system is being fully applied to beneficial uses" and that "no water
remains available for appropriation."
Under limited circumstances the board may continue to grant water
rights, even if the source is fully appropriated. Indeed, some degree of
overappropriation is common in the western states. In the case of agricul-
tural projects, for example, the Water Board's historic practices called for
approving new water rights as long as water was available in at least some
of the years (in low-water years appropriative water rights in California are
satisfied on a first-come first-served basis in order of application priority
until the supply runs out). This practice, together with other current and
historic factors, has caused some stream systems to be overappropriated,
at least in dry years. In such cases, according to the State Water Resources
Control Board, the face value of legal water rights exceeds the volume of
water hydrologically available for use. According to the Water Board's 2008
estimate for the Central Valley Watershed, for example, appropriative water
rights in the watershed have a face value of 245 million acre-feet, as com-
pared to an average annual runoff of 29 million acre-feet. In other words,
in some basins, the Water Board has overallocated available supply by more
than 800 percent (measuring supply as average annual runoff) (SWRCB
2008). In evaluating the significance of overappropriation, sequential return
flows and reuse of both agricultural and urban right holders' waters must
be considered. Overappropriation is mitigated by reusing water as it flows
downstream from the source toward the ocean (agricultural runoff is added
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to the downstream users' supply), and water is increasingly intentionally
reused (double use) for agricultural and urban purposes. Although the
specific amounts needed and diverted for agricultural use are not generally
accurately measured, they probably should be in the future.
These calculations consider only human water users and do not incor-
porate estimates of the volume of water necessary to sustain the natural en-
vironment (which itself raises difficult questions concerning the meaning of
"to sustain" and "natural environment"). If environmental needs are added
to the sum of other allocations, then the volume of water necessary to
fully satisfy all water rights and environmental needs would exceed supply
by an even greater multiplier. In 2009, the Sacramento-San Joaquin Delta
Reform Act required the State Water Board to develop new "flow criteria"
to protect public trust resources of the delta ecosystem (Cal. Water Code
§ 85086). On August 3, 2010, the State Water Board issued its final report,
Development of Flow Criteria for the Sacramento-San Joaquin Delta Eco-
system. The report concluded "the best available science suggests that cur-
rent flows are insufficient to protect public trust resources" and "[r]estoring
environmental variability in the Delta is fundamentally inconsistent with
continuing to move large volumes of water through the Delta for export."
The Water Board noted that its recommendations lack binding le-
gal effect unless they are implemented through adjudicative or regulatory
proceedings. The recommendations were intended, in part, to inform the
development of the Bay Delta Conservation Plan (BDCP) (see Chapter 1).
The presence of intensifying scarcity of delta water means that the
planning for and the management of the delta's water resources in the
future must differ from the planning and management of the past. The
changes required respond not only to scarcity but also to the fact that
many of the extensive human-caused changes to the delta's physical and
aquatic environment are essentially irreversible. Such irreversibility must
also be accommodated in future water planning and management regimes.
The improvement of the bay-delta ecosystem must recognize the limits
imposed by and variations represented in historical, current, and likely fu-
ture conditions. But at the same time, the maintenance of current channel
configurations and island uses should be reconsidered if planning is to be
comprehensive.
It should be widely understood that recovering ecosystems to histori-
cal conditions is highly problematic because baselines have shifted in re-
sponse to significant changes in the larger landscape itself, in climate, and
in ecological conditions. Indeed, restoration of ecosystems to a historical
baseline is no longer possible in many areas--almost certainly including
the delta--and is constrained in most areas by human pressures on the en-
vironment (NRC 1996). Given the dramatic declines in salmon and smelt
populations, the fundamental shifts that have already occurred in the delta
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42 SUSTAINABLE WATER MANAGEMENT IN THE DELTA
ecosystem, current policies and societal values, and the projected changes
for the system, including rising sea level, levee failure, and changes in the
timing and volumes of runoff, realistic visions for the future of the delta will
not directly match or may not even closely resemble any specified historical
baselines (Nichols et al. 1986, NRC 1996).
California's "Two Co-equal Goals"
Contemporary planning for water management in the bay-delta region
is directed at two co-equal goals: providing a more reliable water supply
for California and protecting, restoring, and enhancing the delta ecosystem.
"The co-equal goals shall be achieved in a manner that protects and en-
hances the unique cultural, recreational, natural resource, and agricultural
values of the delta as an evolving place" (Cal. Water Code § 85054). There
are positive attributes of having established these goals. Any planning
exercise needs to have clear goals. Making environmental protection a co-
equal goal, instead of its more historical position as an afterthought, has the
potential to change the way people plan for and manage water use. Mak-
ing the goals co-equal from the outset should force planners to consider
trade-offs between water supply and environmental protection. Specifying
the co-equal goals in legislation is educational because the goals necessarily
become part of the public discourse about water.
But despite the positive attributes of specifying the co-equal goals, their
potential value cannot be fully realized until some additional conditions
are met. For example, in practice, it is not clear what co-equal means.
Does it mean that any additional water will be allocated half-and-half to
support each goal? Or does co-equal imply some proportional allocation?
Or does it mean that water for support of one goal should not be avail-
able at the expense of water to support attainment of the other? Yet if the
attainment of either or both goals requires more water than is currently
available, and additional water is unavailable because of scarcity, then the
co-equal goals cannot be attained. Even though California has adopted the
policy of decreasing reliance on the delta,2 in practice the evidence suggests
that demand for the delta's water has been increasing, and it might well
continue to increase. For example, as Isenberg (2011) pointed out, major
urban water users are required by the 2009 legislative package to reduce
2 "The policy of the State of California is to reduce reliance on the Delta in meeting Califor-
nia's future water supply needs through a statewide strategy of investing in improved regional
supplies, conservation, and water use efficiency. Each region that depends on water from the
Delta watershed shall improve its regional self-reliance for water through investment in water
use efficiency, water recycling, advanced water technologies, local and regional water supply
projects, and improved regional coordination of local and regional water supply efforts" (Cal.
Water Code § 85021).
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their water use by 20 percent by the year 2020, while agriculture--which
uses three times as much water as all other human users in California--is
not required to achieve any specified reduction in water use. In short, the
lack of a specific definition of "co-equal" means that the co-equal goals
have not been operationalized in a fashion that would permit an objective
assessment of how well different water management alternatives for the
delta would attain them.
Current planning efforts for the bay-delta region and the studies they
are based on do little more than assert that the goals are co-equal. Ef-
forts are needed to address different degrees of goal achievement so that
resources committed to achieving each goal can be balanced; otherwise,
how can the constitutional requirement of reasonable beneficial use be
met? Without such efforts how can the best action alternatives be selected?
A fundamental problem is how to allocate scarce water. By positing the
co-equal goals without specifically defining them, the legislature has given
planners the opportunity to create the necessary balance. Yet, this has not
been the focus of planning so far. It appears to be assumed that additional
water will have to be found to serve the co-equal goals. When water is
scarce, it is not possible to allocate water to support one without reducing
the allocation for the other. Of course additional water can always be found
by reallocating water from some other use that is independent of the uses
envisioned by the co-equal goals, but in California, that simply moves the
problem of scarcity to another locus.
The first public (November 2010) draft of the BDCP reviewed by the
National Research Council (NRC 2011) and other planning documents
do not adequately--and certainly do not explicitly--address the degree
to which allocated water is available to support the co-equal goals. Back-
ground documents and the goal in legislation of reducing reliance on delta
water implicitly acknowledge water scarcity, but the details need to be ad-
dressed, clarified, and made specific, because they are at the heart of the
planning process. Only when the goals are made specific and operational
will the trade-offs required become apparent, and the trade-offs will require
policy judgments about priorities, acceptable risks, and acceptable costs.
Such judgments should be informed by science.
Future water planning requires that estimates of water availability
based on past hydrologic patterns be augmented with anticipated variabil-
ity in the location, magnitude, timing, and type (e.g., rain versus snow) of
precipitation (see Chapter 4). As scarcity intensifies, alternative scenarios
of restoration and reliability should be created to ameliorate environmen-
tal damage and rehabilitate habitats. Restoring aquatic habitats to some
previous baseline condition will rarely if ever be practical, especially if that
condition is far in the past, because of all the changes that have already oc-
curred and the likely cost (Chapter 4). In the face of all of these ecological
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44 SUSTAINABLE WATER MANAGEMENT IN THE DELTA
and environmental constraints, an effective system of planning and man-
agement will need to consider a broader array of alternatives and options
for managing water than has been characteristic of the past. Perhaps more
importantly, all delta and export water users will need to more generally
acknowledge that water scarcity is a fact of life.
Water Planning to Manage Scarcity
As the effects of water scarcity become more pronounced, success-
ful water planning and management will require widespread public ac-
ceptance of a set of principles to avoid the struggles to achieve consensus
among competing interests in the past. In addition, the NRC's review of
the first public (November 2010) draft of California's BDCP suggests that
improvements are needed in the planning process itself, including specify-
ing responsibilities and improving organization. Possible approaches to
developing these improvements are discussed in Chapter 5. In addition,
regulatory improvements and principles are needed to ensure more robust,
comprehensive, and accountable planning. They include application of
constitutional provisions and the public trust doctrine, more comprehensive
water conservation, inclusion of groundwater in statewide planning, and
formalizing a long-term water-market system.
Among these new principles are the following:
· Recognize that not all uses of water are always compatible with
each other. It is not always possible, for example, to provide reliable
and high-quality water supplies while simultaneously protecting all
aquatic species and aquatic ecosystems. The current planning objec-
tive that all listed species will be protected, that levees and land use
will be maintained, and that the reliability and volume of water sup-
plies will be maintained, all while maintaining flood protection, is
not tenable or even realistic in an era of varying and hard-to-predict
water scarcity. Therefore, planning efforts that acknowledge these
difficulties are more likely to lead to lasting and effective outcomes
than those that pretend the difficulties do not exist.
· Provide better definition of competing uses; acknowledge, specify,
and account for trade-offs in planning and decision making. With
competing uses, more water for one use implies less for another.
Trade-offs normally require a balancing of uses, but frequently the
need to balance, the terms of the trade-offs, and the implications
for different uses are obscure. For instance not all delta islands can
survive in the future; a variety of circumstances (Chapter 3) may
cause smelt numbers to continue to decline; delta drinking water
may require more treatment to protect public health, reduce undesir-
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able taste and odor, and meet EPA water-quality standards; regulated
and future contaminants of concern in upstream municipal waste
discharges must be removed; and agricultural drainage may require
remanagement. If the trade-offs and alternatives are addressed spe-
cifically and transparently, outcomes are likely to be more effective
and agreements more long-lasting.
· Modify practices that do not reflect the scarcity value of water.
They include pricing that is determined only by the costs of capture,
storage, transport, and treatment of water, which implies that water
is not scarce at all. By assigning to water a scarcity value of zero,
many current policies signal consumers that water is available with-
out limit, even while the limits imposed by scarcity are intensifying.
As a result, more water is used than would be the case if its price
reflected scarcity. Although they do not include an actual scarcity
value for water, many California water utilities such as the East Bay
Municipal Utility District and the Marin Municipal Water District
use increasing block rates (higher prices at higher use rates) in an
effort to mimic marginal cost pricing. Careful consideration should
be given to proposals to include a scarcity premium in the price of
water to signal users that water is not freely available (Zilberman
and Schoengold 2005). Such values can be estimated with some ac-
curacy and they can also be determined on a trial-and-error basis
if prices are established and imposed administratively (Baumol and
Oates 1979). They can be determined as part of contract negotia-
tions or renegotiations, or they can be altered from time to time, as
appropriate, by water wholesalers. One method of achieving this is
through a continuing state market for transferring supplemental wa-
ter, which would establish a scarcity premium. This premium could
be projected into the future for varying climate conditions. The cost
of water to users should reflect its scarcity, and allocation should
be based on analysis that allows for informed decision making.
In pricing water it is important to recognize that costs are not always
paid in terms of dollars and cents. The concept of opportunity cost (e.g.,
Stiglitz 1986) is both pertinent and important. Simply, an opportunity cost
is the value of the most desirable opportunity forgone as a consequence of
a specific allocative decision. A decision to divert water for some consump-
tive use entails an opportunity cost in terms of the environmental services
and amenities forgone by not continuing to allocate water to instream en-
vironmental purposes. Historically, such opportunity costs were either low
or perceived to be low. However, there is evidence, some of it controver-
sial, that environmental opportunity costs may no longer always be small
or negligible (Costanza et al. 1997, Safriel 2011). The growth in the real
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46 SUSTAINABLE WATER MANAGEMENT IN THE DELTA
value (i.e., adjusted for inflation) of water in alternative uses is a symptom
of growing scarcity. As the population of California grows and as the state
continues to develop economically it seems likely (although not inevitable;
Hanak et al. 2011) that water scarcity will continue to grow. This should
be reflected in an analysis of alternatives, including improvements in water-
use technology, reuse technology, economizing on water use, and various
degrees of long-term species protection.
The magnitude and intensity of future scarcity will make allocative
decisions harder as the values of all uses grow and as the opportunity costs
of uses forgone also grow. This means that decisions to reallocate water
away from one use to another will intend to involve higher and higher
stakes. Paralysis in the face of these high stakes will enhance the prevail-
ing tendency to lock water into existing uses. The danger in such paralysis
will likely be that Californians will be using their water less efficiently and
productively--and maybe substantially less--than could be the case if wa-
ter were reallocated from existing low-valued uses to higher-valued ones.
Consequently, it will be important to develop new, innovative institutions
to develop the tools that will facilitate the reallocation of water among uses
as a response to intensifying scarcity.
Some uses are not monetized in terms of dollars and cents. Environ-
mental goods and services [e.g., the provision by the environment of food,
fiber, and shelter for humans; see Constanza et al. (1997) and Daily (1997)]
and environmental amenities are examples. These uses tend to be public
goods in the sense that the services and amenities cannot be withheld from
persons who refuse to pay for them. They have value nevertheless, and
because of their public-good nature they complicate the allocation process.
They can be protected in several ways, including making administrative
allocations of water to service environmental uses, taxing water trades and
water consumption, and the use of environmental water accounts. [See
Booher and Innes (2010) and Appendix F of this report for discussions of
California's Environmental Water Account.] That does not mean it could
not be improved. A forward-looking plan for managing environmental
scarcity should consider alternative ways to protect environmental services
and other water-based public goods.
A number of measures to address scarcity are already available. They
are either weakly enforced or not enforced at all in California, although
they are incorporated into California water law. Use of these measures is
consistent with the principles enunciated above. They are consistent with
the proposition that exclusive reliance on supply augmentation measures
"encourages a simplistic and sometimes counter productive attitude" that
we have to "get more" (Hanak et al. 2010). The fact of water scarcity does
not means that the state is "running out of water." Although most surface
flows have been fully allocated or overallocated, the state can use a num-
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ber of tools that optimize the use of existing supplies. As described below
there are several tools currently available for use within existing legal
authority. Other tools, which could be combined in a prioritized program
to increase net benefits from public and private investments, may require
additional legislative authorization.
· Enforce the constitutional prohibition against nonbeneficial, unrea-
sonable, and wasteful water use. The California Constitution, article
10, § 2, limits all water rights to "such water as shall be reasonably
required for the beneficial use to be served, and such right does not
and shall not extend to the waste or unreasonable use or unreason-
able method of use or unreasonable method of diversion of water."
The ideal way to implement this fundamental tenet is through sound
water planning of the type recommended in this report. That will
require significant changes in responsibilities, organizations, and
commitment to a traditional but not recently applied principal of
independent objective planning.
This constitutional provision restricts the types of uses allowed to those
that are deemed "beneficial," a determination that depends on the facts
and circumstance of each case, and that may change over time to reflect
societal values. For example, in 1935 some farmers claimed that winter
irrigation constituted a beneficial use because it simultaneously benefitted
their alfalfa crops and drowned gophers living in their fields. The California
Supreme Court rejected the argument because it was "self-evident" that
the use of water solely to eradicate pests was not a beneficial use (Tulare
Irrigation District v. Lindsay-Strathmore Irrigation District, 1935). Today
recognized beneficial uses include domestic uses, fire protection, fish and
wildlife, industrial uses, irrigation, mining, municipal uses, power produc-
tion, recreation, and other uses (SWRCB 2010).
The constitutional provision also restricts the amount of water that
can be applied for a specified beneficial use, such as irrigation. One Cali-
fornia court, for example, allowed a lawsuit to go forward claiming that
direct diversion of water from the Napa River to protect vineyards from
frost was an unreasonable use or unreasonable method of diversion (State
Water Resources Control Board v. Forni, 1976). More recently (2011),
the State Water Resources Control Board restricted use of Russian River
water for the purpose of frost protection and ruled that diversion outside
their demand management program was an unreasonable use of the water
(SWRCB 2011).
Thus, although water rights are a protected form of property in Cali-
fornia, the scope of the right does not include nonbeneficial, unreasonable,
or wasteful uses of water (Gray 2002). The California Water Code § 275
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48 SUSTAINABLE WATER MANAGEMENT IN THE DELTA
authorizes the department and board to "take all appropriate proceedings
or actions . . . to prevent waste, unreasonable use, unreasonable method of
use, or unreasonable method of diversion of water in this state." Under this
provision, the constitutional prohibitions can be enforced through several
mechanisms. First, before approving an application for water rights, the
Water Board must determine that the proposed use will be reasonable and
beneficial (Central Delta Water Agency v. State Water Resources Control
Board, 2004). Moreover, even after water rights have been issued, water
users and citizens can challenge existing water uses as unreasonable. Hanak
et al. (2010) suggest that the state has a wide range of authority:
A property right in water wholly depends on its reasonable use. The state
has authority to declare a variety of water practices unreasonable, even
if they were considered acceptable in the past. These may include exces-
sive evaporative and conveyances losses, inefficient irrigation techniques,
failure to adopt or to implement best management practices, and perhaps
other profligate uses such as the irrigation of water-intensive crops and
landscaping, failure to install low-flow water appliances, and continued
reliance on imported water, instead of using cost-effective alternatives
such as demand reduction, use of recharged groundwater, and recycling
reclaimed wastewater.
· Protect values recognized under the public trust doctrine. California
water rights are inherently limited by the public trust doctrine. In
its seminal decision of 1983, the California Supreme Court made
clear that the state's navigable lakes and streams are subject to the
public trust to protect navigation, commerce, fishing, recreational,
ecological, and other public values (National Audubon Society v.
Superior Court, 1983). According to the court, the state possesses
both the power and the duty to protect trust assets. In the case of
water rights, the Supreme Court explained: "the state has an af-
firmative duty to take the public trust into account in the planning
and allocation of water resources and to protect public trust uses
whenever feasible." Even after the Water Board issues water rights,
according to the court, the state retains "the power to reconsider
allocation decisions" and in some cases that power "extends to the
revocation of previously granted [water] rights." If state agencies fail
to act, members of the public can bring a court action to enforce the
public trust (Center for Biological Diversity, Inc. v. FPL Group, Inc.,
2008).
· Improve water conservation (including using water more efficiently
and productively). In 2009, the California legislature set new con-
servation requirements for urban water use requiring a 20 percent
reduction in per capita use by December 31, 2020 (Water Code
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SCARCITY 49
10608.16(a), 2009). Urban water suppliers have a suite of options
that can be used to achieve targeted reductions. They include (1) wa-
ter recycling and reuse; (2) appropriate pricing structures in which
prices reflect the scarcity value of water as well as delivery costs and
feature tiers which are constructed so that the price of water rises as
the volumes used by consumers increase; (3) water rationing, where
appropriate; (4) restrictions on outdoor uses of water; and (5) edu-
cational programs [see Gleick et al. (2003, 2011) for discussion of
examples].
The legislature did not establish a parallel requirement for agricultural
uses even though such uses account for 77 percent of consumptive use
statewide in California (Hanak et al. 2010). Instead, the legislature re-
quired agricultural water users to implement "efficient water management
practices by July 31, 2012," but generally limited them to measures that
are "locally cost effective and technically feasible" (Water Code 10608.48,
2009). Agricultural water users also have an array of options for reducing
and economizing on the use of water. The options include (1) irrigation
scheduling and management of soil moisture in which the timing and vol-
ume of irrigation applications are linked to the moisture requirements of the
crop (Eching 2002); (2) tiered pricing structures similar to those available
to urban users but tailored for agriculture; (3) the substitution of closed-
conduit irrigation systems--drip, micro, and sprinkler--which may allow
more precise management of irrigation water (Heermann and Solomon
2007); (4) tailwater (excess irrigation water) recycling; and (5) regulated
deficit irrigation in which the timing of moisture stress is carefully con-
trolled so as to reduce water applications with minimized impacts on yield
(Fereres and Soriano 2006).
These techniques cannot be effectively used to economize on water
everywhere all the time. Thus, for example, the careful timing of irrigation
applications and active management of soil moisture, as well as tiered pric-
ing, are difficult to use when water deliveries are not available on demand.
Similar conclusions hold for regulated deficit irrigation. Closed-conduit irri-
gation systems work best in circumstances where the infiltration properties
of the soil are highly variable. Recycling of surface runoff from agriculture
is most effective on soils with low infiltration rates.
The result is that conservation techniques must be applied and operated
on a local basis and account for local circumstances. Blanket prescriptions
for achieving agricultural water conservation on a statewide basis are un-
likely to be successful (Gleick et al. 2011, Hanak et al. 2011). One excep-
tion to the inapplicability of blanket prescriptions is the need to measure
water deliveries and applications and devise consistent procedures for ac-
counting for water deliveries and use. Water deliveries and applications are
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50 SUSTAINABLE WATER MANAGEMENT IN THE DELTA
not widely or consistently measured in California agriculture, and account-
ing practices are not consistent either. Thus, while it may be inappropriate
to require the agricultural sector to reduce water use by some fixed volume
or proportion, the availability of conservation opportunities and the need
to measure and account for water use suggest that there are opportuni-
ties to improve water management in agriculture and achieve significant
water savings (Cooley et al. 2008). Christian-Smith et al. (2010) document
through case studies a number of successful efforts by California growers
to increase the productive and efficient use of water. These documented
successes underscore the possibilities and opportunities for further improve-
ments in water use in agriculture.
· Groundwater monitoring and regulation. There is no comprehen-
sive permit system for the regulation of groundwater in California,
although groundwater accounts for approximately one-third of the
state's water usage in an average year. However, there are local
and regional avenues for management (Nelson 2011). Of the 431
groundwater basins in California, 22 have been adjudicated through
the court system and are the subject of management under court
supervision (CDWR 2009). In most other areas, overlying land-
owners can freely withdraw the percolating groundwater (that is,
groundwater that does not flow as an underground stream) beneath
their property for reasonable and beneficial use. There is no state
regulation of such withdrawals and there is no comprehensive re-
quirement for groundwater management. One result of this situation
is that groundwater underlying the southern Central Valley of Cali-
fornia has almost certainly been persistently overdrawn (Faunt 2009,
Famiglietti et al. 2011). Continuation of unsustainable, persistent
overdraft would likely have serious consequences for the economic
and food and water security of the United States (Famiglietti et al.
2011).
"Rights" to extract groundwater are subject only to the "correlative"
rights of other overlying landowners withdrawing from the same source. As
one California court complained in 2006: "California is the only western
state that still treats surface water and groundwater under separate and
distinct legal regimes" (North Galilee Water Co. v. State Water Resources
Control Board, 43 Cal. Rper 3d 821, 831 [Cal. App. 2006]). Rather than
acknowledge the connection between surface and subsurface supplies, the
court explained, California depends on water classifications "that bear little
or no relationship to hydrological realities." In 2009, the legislature enacted
modest reform by requiring the monitoring and reporting of groundwater
elevations (Water Code § 10920). However, the legislature could provide
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SCARCITY 51
additional tools to address water scarcity by joining other western states
in recognizing the interconnection of surface and groundwater [see, for
example, Thompson (2011) and a 2006 congressional hearing on this topic
(U.S. Congress 2006)]; by enacting more stringent water-use measurement
and reporting requirements; and by considering mechanisms to extend the
surface-water permit system to groundwater withdrawals. These mecha-
nisms would likely be politically unpopular, but they would provide the
state with a comprehensive mechanism to ensure that extracted groundwa-
ter meets the constitution's reasonable and beneficial use standard.
Water Markets
Under some circumstances, water markets can be helpful in allocating
water among competing uses to achieve economically efficient use. Mar-
kets have the advantage of being strictly voluntary because they rely on
the willing participation of buyers and sellers. In market transactions, the
buyer will typically be motivated because the water is available through
market exchange more cheaply than through any other method. Similarly
the seller is motivated because the water can be sold for more money than
could be realized by using it in any other available opportunity. This means
that successful exchanges benefit both seller and buyer. Markets are simple
and straightforward and lead to economically efficient allocations so long
as there are not significant adverse third-party impacts and as long as en-
vironmental uses are appropriately accounted for. Exchanges that involve
agricultural-to-urban short-term transfers in the delta have been increasing
in recent years (Macaulay 2009). Virtually any water-market scheme will
need to accommodate environmental uses and other instream uses. Exam-
ples of techniques for accommodating environmental uses of water include
funding mechanisms such as taxes to buy water for environmental purposes
and administrative allocations that ensure that some level of environmental
flow is protected (NRC 1991). Accommodating environmental uses and
accounting for third-party impacts may entail large transaction costs in con-
nection with management of delta waters. A principal example is the state
of Oregon, which uses a combination of implicit taxes on water trades and
administrative allocations to ensure that appropriate quantities of water
are left in place for environmental purposes. Such transaction costs should
be assessed in any consideration of the desirability of adopting market or
market-like arrangements to resolve delta water problems.
There are different types of water markets. There are markets in water
rights in which the right to use some specified amount of water in perpetuity
is exchanged. There are lease-like markets in which specified quantities of
water are exchanged for use over a specified period of time with no transfer
of rights. This type of market exchange was used for a 2-year period during
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52 SUSTAINABLE WATER MANAGEMENT IN THE DELTA
the drought of 1987-1992 in California to mitigate shortages that would
have had very high cost impact. The resulting exchanges had large net ben-
efits and averted severe drought impacts (Carter et al. 1994). There are also
spot markets where water can be purchased in some specified amount for
use immediately. This kind of market tends to be informal. Finally there are
markets for options wherein a potential buyer pays a potential seller for the
right to take a specified amount of water in a dry year. The buyer also pays
for the water if and when it is transferred. Where water markets have been
used extensively, they illustrate a common pattern in that the vast majority
of exchanges do not entail the trade of water rights. Long-term transfer
of water from willing agricultural sellers to the state that in turn could
make it available for instream uses or supplemental supplies, particularly
south of the delta, offer a significant opportunity for better management
of California's waters consistent with the state constitutional provision.
Water markets are but one tool that can be used to manage scarcity.
Given that they are particularly suited to managing scarcity, they should
be given careful consideration in the development of future water plans.
The need to acknowledge scarcity in planning for the delta's water future
encompasses the need to include in the array of alternatives some consid-
eration of institutional arrangements that are particularly well adapted to
managing scarcity. The methods should include information about changes
in the degree of scarcity that users could respond to, should encourage
water conservation (i.e., discourage excessive use), and if possible should
include information about the value of water. Prices and markets are two
examples.
Care must be taken in designing and regulating water markets. Where
markets have been used successfully, the market arrangements in ques-
tion did not involve "free-market" transactions (Dellapenna 2000, Sinden
2007). The transfer of water rights, for example, almost always entails a
change in the place of use, the season of use, the type of use, or the pattern
of return flows. Moreover, almost every type of water exchange has the
potential to impose adverse impacts on third parties other than the buyer or
the seller. For transfers in excess of 1 year, the California Water Resources
Control Board provides public notice and opportunity for comments and
evaluates petitions for transfer to ensure that they "would not result in sub-
stantial injury to any legal use of water and would not unreasonably affect
fish, wildlife or other instream beneficial uses (Cal. Water Code §§ 480-84,
1825-1745).
The potential for third-party effects underscores that markets, whatever
their type, may not work in all situations. Some regulation of such markets
is required. Indeed, the best documented market arrangement in recent
history, which entailed the development of the California Drought Water
Bank, involved a clear and transparent set of rules and was carefully super-
OCR for page 53
SCARCITY 53
vised by the state which acted, in effect, as a water broker. The resulting
short-term or lease market, administered by the California Department of
Water Resources, led to large monetary benefits for those who purchased
water and also resulted in positive impacts on statewide employment. Even
in that case there were adverse third-party impacts, although the costs of
those impacts amounted to only a small fraction of the total benefits that
accrued from the Drought Water Bank (Carter et al. 1994).
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