Independent, objective, nonpartisan research
Report · November 2015

Allocating California’s Water: Directions for Reform

Ellen Hanak, Jay Lund, Richard Howitt, Brian Gray, Barton “Buzz” Thompson, Richard Frank, and Leon Szeptycki

This research was supported with funding from the S. D. Bechtel, Jr. Foundation.




California’s system for allocating water prevents it from meeting the state’s diverse needs, especially in times of scarcity. It is fragmented, inconsistent, and lacking in transparency and clear lines of authority-all problems highlighted during the latest drought.

To more effectively serve the 21st century economy, society, and environment, this water allocation system needs an upgrade.

We propose an interlinked set of legal and policy reforms that would significantly strengthen California’s ability to address future droughts, climate variability, and shifting economic demands for water. Our proposals focus on three areas where the water allocation system is especially weak: water rights administration, allocation of water for the environment, and water trading. The common thread in these reforms is to increase coherence, transparency, and flexibility, while protecting water right-holders and public values.

Although our proposals would change a number of key decision making processes, they leave in place the existing priority system that defines and governs water rights. Proposed reforms include streamlining oversight of water rights, improving accuracy and transparency of information, clarifying the rules regarding environmental flows, and facilitating both water sharing and water storage for future droughts. These changes will reduce uncertainty, lower administrative costs, and enable more nimble water management. And they will be less disruptive and easier to implement than a major overhaul of the state’s complex water rights system.

This reform package does not address all of California’s water challenges, but it provides important foundations for more efficient, anticipatory, and effective management of this valuable and essential resource.


Drought Freshwater Ecosystems Water Supply Water, Land & Air