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Press Release · November 17, 2015

Reforms Would Improve the Way California Allocates Water

Changes Urged in Oversight of Water Rights, Trading, Envirnomental Uses

SAN FRANCISCO, November 17, 2015—A set of legal and policy reforms would improve California’s water allocation and water rights systems and strengthen the state’s ability to weather droughts and a changing climate, according to a report released today by the PPIC Water Policy Center.

The reforms include streamlining state oversight of water rights, clarifying the allocation of water for environmental uses, and facilitating water trading.

The drought has underscored weaknesses that California needs to address to better prepare for future droughts and become more resilient in a changing climate. The state’s system for allocating water to residents, businesses, and ecosystems is fragmented, inconsistent, and lacking in transparency and clear lines of authority. While calls for a complete overhaul of water rights have been on the rise, the report calls for less sweeping reforms to improve water allocation.

“The common thread in these reforms is increasing transparency, efficiency, and flexibility, while protecting water right-holders and public values,” said Ellen Hanak, director of the PPIC Water Policy Center and a coauthor of the report.

The report proposes a reform package to:

  • Streamline water rights: The state has an unusually complex seniority-based system of surface water rights, characterized by fragmented and unclear oversight authority. Bringing all surface water users under the State Water Board’s permitting system would enable more efficient and transparent real-time management of water, including water trading. It would also reduce uncertainty for all rights holders. Other reforms include clarifying rules on groundwater pumping in key at-risk groundwater basins and improving the state’s water accounting system.
  • Clarify allocation of water for environmental uses: The drought has caused an environmental crisis for native fish and waterbirds, which was aggravated in some places by the relaxation of environmental standards to allow for an increase in water for cities and farms. The report proposes a process to support ecosystems and species. The state water board would assign an environmental water budget for each river and stream system, and local water users would develop procedures to meet and potentially modify these requirements. The report also recommends that the state encourage environmental water trading and that water users pay into an ecosystem fund when they benefit from a relaxation in environmental standards.
  • Facilitate water trading: The volume of trading barely increased during the two most recent droughts, despite especially high demand from water users facing shortages. Several steps can be taken to reduce barriers to trading—including reforming the state’s complex and often opaque set of trading rules, and improving information needed to make trades easier. Flexibility can also be improved by consolidating permitting so that agencies in the same region no longer need multiple layers of review by multiple agencies each time they want to share water. Some types of temporary water transfers could be pre-authorized because they are unlikely to cause harm—for example, those below a specific size threshold. And a water transfer clearinghouse could make information about transactions and trading opportunities publicly available.

“Implementing these reforms will require some adaptation. But it won’t require a complete overhaul of the state’s water rights system either,” said coauthor Brian Gray, an adjunct fellow at the PPIC Water Policy Center and professor emeritus of UC Hastings College of the Law. “Indeed, by increasing flexibility and transparency while also reducing uncertainty, these reforms should strengthen water rights and improve the ability to transfer water and invest in groundwater replenishment.”

The report, Allocating California’s Water: Directions for Reform, was supported with funding from the S. D. Bechtel, Jr. Foundation. In addition to Hanak and Gray, the coauthors are Richard Frank, director of the UC Davis California Environmental Law and Policy Center; Richard Howitt, adjunct fellow at the PPIC Water Policy Center and professor emeritus of the UC Davis Center for Watershed Sciences; Jay Lund, adjunct fellow at the PPIC Water Policy Center and director of the UC Davis Center for Watershed Sciences; Leon Szeptycki, executive director of Water in the West at Stanford University; and Barton “Buzz” Thompson, director of the Woods Institute for the Environment at Stanford University.


The PPIC Water Policy Center spurs innovative water management solutions that support a healthy economy, environment, and society—now and for future generations. It connects timely, objective, nonpartisan research to real-world water management debates, with the goal of putting California water policy on a sustainable and construc­tive path. The center was launched in April 2015.


PPIC is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research on major economic, social, and political issues. The institute was established in 1994 with an endowment from William R. Hewlett. PPIC does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office.