water plan update 2018 draft reviewer’s guide - update 2013 also included detailed reports on...

California Water Plan Update 2018

Working Draft

Chapters 1–4

— For Discussion Only —

December 7, 2017

Water Plan Update 2018 Draft Reviewer’s Guide

December 7, 2017

This document is presented as a preliminary draft of the full California Water Plan Update 2018 document. Supporting information, details, data, and full references will also be documented and available, but will not be contained in this primary document. Comments received on this draft by December 21, 2017, may be used to inform the February 2018 Public Review Draft of Update 2018.

How to CommentSend comments to: [email protected]: Paul MasseraFax: 916-651-9289

What to ReviewThe Publications staff has not yet fully edited content for grammar, punctuation, style, consistency, accuracy, or other issues relating to readability or quality. The document will be edited for these issues by the Publications staff prior to the release of the Public Review Draft in February 2018. Recommendations for what to focus on during your review are listed below.

Please focus on:

Relevance and Effectiveness: Do you see your perspectives, issues, and challenges in the document? Does the Water Plan speak to your constituents/members? Do the recommendations in Chapter 3 provide solutions that address your issues and challenges?

Completeness of information: In general, does the text say all it should say? Is all information present that an average reader might need — and presented appropriately?

Factual accuracy: Is anything in the text incorrect? Does any information need additional attribution to a specific source?

Logical consistency: Does the narrative build in a logical way and effectively tell the right story?

Please do not focus on:

Grammar, punctuation, spelling, capitalization, or stylistic consistency (unless any of these relates to clarity or factual accuracy).

Margins, fonts, layout, spacing, etc. Formatting will be reviewed again during the copy-editing phase after your comments have been incorporated.

Clutter/wordiness/efficiency of text. Tone/voice consistency

Content

mailto:[email protected]

WORKING DRAFT – For use at December 7 Meeting Only

sChapter 1. Envisioning Water Resource Sustainability..........................................................................1

Setting the Context for Update 2018.......................................................................................................1

Managing Water Resources for Sustainability.........................................................................................3

Importance of State and Regional Alignment......................................................................................4

Long-term Vision and Priorities for Water Resource Sustainability.........................................................5

Leveraging Accomplishments and Delivering on Commitments........................................................7

Chapter 2. Sustainability Outlook........................................................................................................9

Water Management in California Today..................................................................................................9

Mandated State Responsibilities.........................................................................................................9

California Water Resource Conditions and Infrastructure.................................................................10

Historical Investment in Water Management.......................................................................................12

California State Water Management Plans and Initiatives................................................................14

Challenges to Sustainability...............................................................................................................14

Evaluating Water Resource Sustainability.............................................................................................18

Sustainability Outlook: The Four Societal Values...............................................................................18

Sustainability Outlook: Guiding Principles for Balancing the Four Societal Values............................19

Sustainability Outlook: Development Process...................................................................................19

Sustainability Outlook: Methodology................................................................................................20

Piloting the Sustainability Outlook........................................................................................................22

Sustainable Water Management Profile............................................................................................22

Russian River Watershed...................................................................................................................22

Multi-Benefit Investment Strategies Project, Santa Ana Watershed.................................................22

Moving Forward to 2023 and Beyond...................................................................................................23

Chapter 3. Actions for Sustainability...................................................................................................24

State Leadership....................................................................................................................................24

Recommended Actions..........................................................................................................................26

Improve Alignment of Agencies’ Initiatives and Governance.......................................................26

Improve Regulatory Framework to Reconcile Environmental Needs and Human Activities.....29

Provide Resources, Knowledge, Skills, and Tools Water Managers Need for Data-Driven Decision-Making...............................................................................................................................30


Modernize and Rehabilitate Water Resource Management Systems...........................................36

Provide Sufficient and Sustainable Funding...................................................................................40

Summary Table of Recommendations...................................................................................................42

Chapter 4: Investing in Water Resources Sustainability.......................................................................45

Setting and Scope..................................................................................................................................45

Funding Mechanisms.............................................................................................................................48

Funding Scenarios..................................................................................................................................51

Findings.................................................................................................................................................52

Chapter 5: Implementation Plan and Funding Scenarios (Under Development)......................................


Chapter 1. Envisioning Water Resource Sustainability

For generations, the word “California” has represented much more than a place. To this day, it invokes images of exceptionally satisfying ways of life and well-being coupled with enduring, world-class natural resources. It has offered seemingly endless opportunity for recreation; diverse personal, professional, and cultural fulfillment; and economic prosperity. The abundant ecosystems of its vast and varied landscapes — from its southern deserts, to its fertile central valley, to its northern rivers — have provided many of these opportunities and the state’s prosperity.

Yet today, the people and ecosystems of California are living a tale of two extremes — drought and flood. The intensity of these extremes and their impacts is expected to increase over time because of climate change and changes in land- and water-use patterns. As these trends worsen, California may no longer provide the benefits, opportunities, or resources for which it has been known around the world. Although all Californians must contribute to a sustainable future, water managers have significant responsibility for ensuring that beneficial conditions and resources endure. Water managers also must coordinate to ensure that the state is positioned to adapt to extreme events, and to reconcile repeated negative impacts with current societal demands.

Since California Water Plan Update 2013 (Update 2013), extreme events and their consequences have been experienced to varying degrees across the state. While nearly every Californian has been affected, directly or indirectly, certain disadvantaged communities, often those least equipped to withstand impacts, have borne the brunt. To help reduce the consequences of longer and deeper droughts and more intense runoff, Californians must utilize and manage the state’s water resources by taking a more holistic approach with the long view in mind. Water users, planners, managers, and policy-makers must collectively plan and manage California’s water systems proactively, to keep our water systems resilient to changing conditions and able to adapt nimbly and dynamically to challenges. The focus must shift from reacting to extreme events as emergencies to preparing for them in advance. Only proactive, strategic planning and adaptation at local, regional, and statewide levels can secure a sustainable future for California.

California Water Plan Update 2018 (Update 2018) reaffirms the State’s commitment to a sustainable future and describes how the State needs to support and empower local and regional entities to make the vision of sustainable water resource management a reality.

Setting the Context for Update 2018Since Update 2013, California has suffered through an unprecedented multi-year drought that threatened the water supplies of communities and residents; devastated agricultural production in many areas; worsened groundwater overdraft and subsidence that is affecting the integrity and security of essential water, transportation, and other utility infrastructure; and harmed fish, animals, and their ecosystems. The drought was followed by the wettest year on record, emergency incidents at the Lake

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Oroville spillway facilities, and flooding around the state. These events have called attention to the vulnerability of the state’s aging flood and water management infrastructure.

Californians responded to these challenges by making substantive changes in water resource management. These important initiatives, along with others, are steering California toward managing its complex water systems more sustainably.

On February 24, 2017, Governor Edmund G. Brown Jr. announced a four-point plan to bolster dam safety and flood management: 1) invest $437 million in near-term flood management and emergency response actions, totaling $50 billion over the next few decades; 2) require emergency action plans and flood inundation maps for all dams; 3) enhance California’s existing dam safety inspection program; and 4) seek prompt regulatory action and increased funding from the federal government to improve dam safety.

The California Water Action Plan (Water Action Plan), released by Governor Brown’s administration in January 2014 and updated in January 2016, describes a set of essential actions intended to “lay the foundation for sustainable water management in the coming decades” (California Natural Resources Agency et al. 2016).

The Sustainable Groundwater Management Act of 2014 (SGMA) set in motion a foundational transformation of the governance, planning, and management of groundwater basins in California. This significant new policy takes a long-term, outcome-driven approach to groundwater management, and closes the loop on California’s water cycle. Inherent in this approach is the understanding that it will take years to contribute toward sustainable groundwater basins, and proactive management will need to continue for generations to keep delivering the intended outcomes.

Proposition 1 — the Water Quality, Supply, and Infrastructure Improvement Act of 2014 — was passed by the voters in 2014 and made available $7.5 billion to finance safe drinking water and water-supply reliability programs for California. The water bond provides public funding for public benefits associated with new surface water and groundwater storage projects; regional water-supply reliability; sustainable groundwater management and cleanup; water recycling; flood management; water conservation; and safe drinking water, including specific allocation of funds for disadvantaged communities. The overwhelming success of Proposition 1 at the polls indicated that Californians are willing to invest in water management system improvements.

These important initiatives complement the significant physical improvements in water resource systems and in system management over the past few decades, including substantial investments in conservation, storage, and new water supply and conveyance. Yet, some Californians still face unacceptable risks from flooding; unreliable or unsafe water supplies; and undesirable conditions from groundwater overdraft, habitat degradation, and species declines. Many of California’s ecosystems have become dysfunctional, and much of our water supply and flood protection infrastructure are no longer functioning as intended or have exceeded their design life. Californians are still dependent on many outdated World War II-era investments and innovations. If these trends continue, our future prosperity will be vulnerable to the consequences of such societal catastrophes as droughts, floods, environmental degradation, and species extinctions.

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California’s systems for using and managing water are extremely complex and subject to continually changing natural and human-made conditions. Moreover, water resources provide critical support for the success of other dynamic systems: our ecosystems, social systems, and economic and market systems. Because of this complexity, making further improvements is complicated by several key issues and challenges.

In many parts of the state, people and property are still at risk for catastrophic flooding. One in five Californians live in a floodplain, and more than $580 billion in assets (i.e., crops, property, and public infrastructure) are at risk (California Department of Water Resources 2013 [Flood Futures]).

Ecosystems continue to decline, and several species are on the brink of extinction. Groundwater overdraft, lack of access to clean water in some communities, and unreliable

water supplies persist in some regions. Often, water management efforts focus on reactive or short-term actions without considering

how the actions might contribute to long-term desired outcomes, such as resiliency to changing conditions and sustainability.

Climate change is having a profound impact on California’s water resources, such as changes in the timing and amount of snowpack, sea level, and river flows. The potential change in weather patterns will exacerbate flood risks and add additional challenges for water supply reliability.

The State of California has no durable process for prioritizing and funding public benefits and local/regional assistance associated with water management and ecosystem protection.

These important challenges cannot be addressed by just tweaking the current system. Public policy must move from stopgap measures to water resource strategies for the generations. This requires rigorous tracking of effectiveness, learning from what works, and adapting ineffective practices and behaviors expeditiously.

Managing Water Resources for SustainabilityUpdate 2018 promotes a common understanding of what it means to manage and measure water resources for sustainability. Sustainability should become the goal of every Californian because we all benefit from the state’s natural resources. Sustainability is not an end point but an ongoing, resilient, and dynamic balance between four societal values — public health and safety, a healthy economy, ecosystem vitality, and opportunities for enriching experiences. Dynamic balancing is necessary because the relative importance of societal values changes over time. Sustainably managing water resources statewide, based on principles that support effective planning and foster trust, is an effective way to dynamically balance basic societal values. (See “Sustainability Outlook: Guiding Principles for Balancing the Four Societal Values” in Chapter 2.)

Governor Brown’s Water Action Plan emphasizes the need to respond to changing conditions and establishes three goals of “more reliable water supplies, the restoration of important species and habitat, and a more resilient, sustainably managed water resource system (water supply, water quality, flood protection, and environment) that can better withstand inevitable and unforeseen pressures in the

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coming decades” (California Natural Resources Agency et al. 2016). Further, all the changes mandated by SGMA are designed to support the more sustainable use of water.

Importance of State and Regional AlignmentStatewide sustainability is the aggregate of local conditions. To effectively and sustainably manage water resources throughout the state, most of the work must happen at local and regional scales. The value of regional management is that it utilizes localized systems approach to planning, where multiple objectives are considered and the net benefits and impacts on the region are evaluated. A primary focus of Update 2018 is describing how State government can support and empower water planning and management practices at the regional scale. Regional and local water agencies and organizations have extensive knowledge of their watersheds, ecosystems, and groundwater basins, even as those regional entities look to the State to fulfill its leadership role.

Given the complexity of the state’s water systems (e.g., watersheds, interregional infrastructure, integrated regional water management [IRWM] and regional flood planning areas, groundwater sustainability planning areas) and Californians’ strong emphasis on local control, the most effective water management scale reflects local planning priorities and systemic conditions. State-regional communication and engagement at this scale must be the root of any near-term management. It must also serve as the foundation for any prospective changes to existing planning areas or alignment of regional governance over the long term. Additionally, interactions among regions can increase mutual benefits within California’s interconnected water resource systems. Effective regional water management means that strategic planning occurs in an integrated manner across all relevant sectors of water management and geographic scales.

Examples of various water sectors and existing planning scales that must be aligned include:

Fish habitat and flood management at a watershed scale. Groundwater use and recharge at an aquifer scale. Terrestrial and migratory waterfowl habitat at an ecoregion scale. Land and water use at city and county scales. Statewide and interstate systems at interregional and interstate scales.

This sector/scale complexity and interconnectivity underscores the importance of IRWM, SGMA, municipalities, and other local/regional entities to successfully align efforts at a hydrologically based scale (watershed). The determination of the appropriate geographic scale should consider the interdependent physical (especially hydrologic), biological, economic, and social processes and functions within each basin. Currently, in many areas of the state, regional water management groups (RWMGs) tend to be well-positioned to work with State government to align ongoing and near-term initiatives. These groups are also well-positioned to collaboratively plan for long-term regional governance strategies. The lessons learned from IRWM, SGMA implementation, and other regional partnerships must also be applied to effectively align planning and implementation at a watershed scale.

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Long-term Vision and Priorities for Water Resource SustainabilityUpdate 2018 provides a long-term vision that is aspirational and generational to inspire and guide future policies and investments toward a common vision of California’s long-term water future. Managing for sustainability means that water managers must invest in actions that meet today’s needs and societal values, without compromising the long-term capacity of the water system to provide for future generations and the natural environment. Water use and management of California’s water systems require significant focus on actions and outcomes that support sustainability. The focus must shift toward defining shared outcomes with clear intent and monitoring how, and to what extent, our actions contribute to sustainability. Moving toward sustainability requires long-lasting commitment; collaboration among State, federal, tribal, and local agencies; and significant financial resources.

Update 2018 envisions a California benefitting from increasingly effective water policy and investment rooted in what Californians value. Over the Update 2018 planning horizon (through 2050), Californians experience less flooding, more-reliable water supplies, reduced groundwater depletion, greater habitat and species resiliency, and other desirable conditions. These types of outcomes will require innovative, foundational changes to the way decisions are made, water is regulated, investments are funded, and progress is tracked.

In this vision of sustainable management, decisions are proactive and based on long-term planning. Taking a long-term view, planners and managers synthesize and integrate plans and actions. They also implement actions that are resilient to changing conditions. Water sustainability is more commonly understood in terms of the four societal values. Water resource considerations are appropriately integrated across all State and regional planning processes. Water management investment increasingly results in desired outcomes that are well-articulated before implementation and tracked after implementation. The funding needed by State government to fulfill its roles and responsibilities is more stable, based on a State investment plan, and reflects shared intent between State government and California’s diverse local governments.

Update 2018 aspires for a future where:

All Californians are protected from health and safety threats and emergencies. California’s economy is healthy and all Californians will have opportunities for economic

prosperity. Ecosystems in the state are thriving. All Californians have opportunities for enriching experiences.

Update 2018 provides recommended State actions to address foundational gaps and urgent needs to advance these five priorities of Update 2018:

1. Improve Alignment of Agencies’ Initiatives and Governance. 2. Improve Regulatory Framework to Reconcile Environmental Needs and Human Activities.3. Provide Resources, Knowledge, Skills, and Tools Water Managers Need for Data-Driven Decision-

Making.4. Modernize and Rehabilitate Water Resource Management Systems.

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5. Provide Sufficient and Sustainable Funding.

Improve Alignment — Shared intent is identified and governments are aligned behind regionally appropriate investments. State government supports alignment and empowers local and regional water management. State government ensures that regional entities have the incentives, knowledge, tools, authority, and guidance to develop, implement, and enforce water resource management practices for sustainability by:

Assisting regional entities with building capacity to strengthen governance; establishing collaborative management of resources; and providing regional government agencies the necessary data, tools, models, and processes to conduct regional water sustainability assessments.

Providing technical and facilitation assistance to regions for sustainably managing water resources at the proper scale, and identifying the types of investments and actions needed to realize those desired changes.

Ensuring assistance to under-represented and economically disadvantaged communities and tribes. These communities are fully embedded in regional water sustainability planning. Traditional/tribal ecological knowledge (TEK) is considered in watershed planning processes.

Recognizing local knowledge and empowering local agencies to manage their water resource sustainably.

Improve Regulation — More cost-effective and successful delivery of intended benefits and services are occurring. Restored ecosystems, enhanced water reliability, and reduced flood risk result from regulations being tied to planning and long-term system management. Consistent with “Streamline and Consolidate Permitting,” from Action 8 of the Governor’s Water Action Plan, a dialogue among federal, tribal, State, and local agencies results in reconciliation and alignment of various regulatory frameworks and statues. Regulatory incentives, discretion, and alternative compliance pathways are used to accomplish intended outcomes. Reducing uncertainty in this way provides more incentive for investment in built infrastructure (grey) and natural infrastructure (green), with the latter supporting vital ecosystem services.

Provide Knowledge and Data — More productive policy conversations and shared understanding are occurring. Local, regional, and State governments use a consistent and comprehensive method for assessing sustainability and tracking the effectiveness of policy and investment. Information and data gaps are significantly reduced, thus increasing desired outcomes and return on investments. State government is equipped to provide stewardship of public funding and consistently reports return on investment.

Modernize Water Management Systems — All Californians enjoy the benefits of increases in water supply reliability, more abundant and sustainable nature resources, and improved health and safety when ecosystems and infrastructure (including natural infrastructure and ecosystem services) are functioning and sustainable. This is accomplished by assessing and prioritizing restoration and rehabilitation needs, and then investing in a manner consistent with priorities. Water resource

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infrastructure is maintained, rehabilitated, or modernized to perform effectively. Such structures are more resistant to impacts from inter-annual hydrologic variability and other uncertainties.

Provide Funding — Sufficient and stable funding sustains public benefits from past investments by maintaining and modernizing infrastructure. Sufficient funding for data, planning, regulation, governance, and technologies helps achieve the desired outcomes of future water policy and investment. It includes public cost-share for rehabilitation, modernization, and operations and maintenance of water resource management systems.

Implementing actions based on these priorities sets the stage for Californians to enjoy a more sustainable water future through 2050 and beyond.

Leveraging Accomplishments and Delivering on CommitmentsBuilding on accomplishments and delivering on commitments is a fundamental planning strategy of Update 2018. Building on accomplishments is the most direct strategy for helping to ensure consistency, efficiency, and ultimately effectiveness of water policy and investment. Adhering to, and delivering on, commitments, such as the recommendations in Update 2013 or sustaining engagement with local and regional partners, is the most direct strategy for maintaining trust and building on investments in time and relationships. It also minimizes stranded investment resulting from abrupt changes in direction, or abandonment of existing partnerships and governance structures. Delivering on commitments is the best way to earn and sustain the trust necessary for fruitful partnerships — the foundation of integrated water management.

Update 2018 is the twelfth in a series of California Water Plans prepared since 1957. Update 2018 builds on Update 2013, which was encyclopedic in its coverage of water management in California. At more than 3,500 pages, Update 2013 covered a variety of information, from detailed descriptions of current and potential regional and statewide water conditions, to a detailed “Roadmap For Action” that identified potential actions to support 17 objectives. Update 2013 also included detailed reports on each of California's hydrologic regions and overlay areas. Those “state of the region” reports focused on watersheds, groundwater aquifers, ecosystems, floods, climate, demographics, land use, water supplies and uses, and governance. Update 2013 provided an integrated water management toolbox in the form of more than 30 resource management strategies. Discussed were strategies to reduce water demand, increase water supply, improve water quality, practice resource stewardship, improve flood management, and recognize people’s relationship to water.

The comprehensive, detailed nature of Update 2013 informs Update 2018’s more concise call for collaborative, integrated action. Specifically, Update 2018 frames the State of California’s need for:

More inclusive, integrated, and aligned water planning processes to prioritize and fund long-term, sustainable State/public investment in water resource management.

Consistent, timely, and practical ways to measure progress and return on public investments over the long term.

Effective water resource management as an ongoing activity that is continuously evaluated using a cyclic planning and implementation process of:

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o Setting shared intent/outcomes.o Assessing past gains and deficiencies.o Taking action.o Measuring effectiveness.o Adapting as needed.o Repeating the cycle.

Update 2018’s approach to managing California’s water resources more sustainably will require time and increased rigor in tracking effectiveness, learning from what is working, and nimbly adapting based on lessons learned.

Successive Water Plan updates will build on Update 2018 by periodically reevaluating the intended outcomes, consistently tracking and reporting on the effectiveness of public and private investments, and revising and refining State policies and investment priorities. This will include conducting annual assessments of the water management system and the actions taken to support managing water resources for sustainability. It will provide the water community the opportunity to adjust course if the intended outcomes are not being achieved by past investments and actions.

In this era of two extremes — drought and flood — the word “California” must continue to signify the promise of satisfying ways of life, well-being, and enduring natural resources. Whether the state effectively adapts to and even reduces these extremes will depend on the choices all Californians make. The recommended actions, funding mechanisms, and implementation plan presented in Update 2018 are intended to guide these choices.

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Chapter 2. Sustainability Outlook

Water is our most basic resource in California. Managing water for sustainability is critical to dynamically balancing four societal values — public health and safety, healthy economy, ecosystem vitality, and enriching experiences. It is about being mindful of not wasting water, and as complex as predicting and planning for the next drought or flood. Every Californian is responsible for doing his or her part, every day. But how can Californians know how well they are doing and whether their actions are moving the state in the right direction?

One long-standing basic challenge to water resource resilience and reliability in California is the lack of a consistent and practical method for assessing current and future sustainability. Productive conversations and planning for sustainability require a mutual understanding of resource limitations, management deficiencies, and shared intent in identifying policy priorities.

California Water Plan Update 2018 (Update 2018) presents a major improvement in the way water policy and management priorities can be developed and coordinated at local, regional, and State levels. The Sustainability Outlook, described in this chapter, provides a well-organized and consistent approach.

When applied at a watershed scale, the Sustainability Outlook can increase the effectiveness of State water policies and investments. This chapter underscores the urgency and rationale for “Actions for Sustainability” (Chapter 3), as well as the importance of follow-through by those who would implement those actions, as identified in the “Funding and Implementation Plan” (Chapter 5).

Update 2018 advocates that managing for sustainability needs to be rooted in those things Californians value. Through the lens of four societal values, the Sustainability Outlook will help identify desired water management outcomes and indicators that can be used to gauge current status and progress toward sustainability. Because sustainability is not something achieved once and forever, the Sustainability Outlook will help water resource managers adapt to changing circumstances and lessons learned. Early implementation of the Sustainability Outlook means looking back at recommended actions in California Water Plan Update 2013 (Update 2013) to assess what has been accomplished and make the adjustments necessary to move toward a sustainable future.

Water Management in California TodayCalifornia is a land of extreme diversity and variability. This diversity has played a significant role in the state’s history and development. This is particularly true of California’s water resource systems, as well as its social, institutional, and planning factors. Effective integrated water management (IWM) planning and implementation can reduce variability and uncertainty pertaining to water supply, ecosystems, and public safety. This section provides a description of the geophysical and water use conditions that affect water resource management and IWM planning.

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Mandated State ResponsibilitiesState government water policy and responsibilities have evolved and expanded over generations. This growth and change occurred as decision-makers gained an increased understanding of water, ecosystems, and the impacts of past actions (and inaction) on those resources. Today, a changing climate, changing societal values and priorities, and many other geophysical, economic, and cultural factors drive change. The State’s roles and responsibilities are outlined in the State Constitution and case law; codified in statutes, such as the California Water Code; specified through regulations and contractual obligations, such as State Water Project contracts; and articulated through other types of policies, proclamations, and mandates. To begin building a complete and common understanding of the culmination of all current State responsibilities, Update 2018 includes an inventory of all existing State government water-related obligations and mandates. Table 2-X summarizes these responsibilities and their estimated cost ranges.

The inventory illustrates the framework under which State government currently supports statewide water resource sustainability. The inventory will be used to help identify opportunities to improve effectiveness and efficiency. For example, various mandates have required the State to implement an overly limited scope of solutions or to rigidly enforce statutes, rather than focus on achieving desirable outcomes. Update 2018 promotes a more holistic and flexible, as well as long-term, approach to State water policy and investment. State mandates must be reviewed, aligned, and adjusted to effectively adapt to a dynamic water resource environment. This inventory provides basic data, and the Sustainability Outlook provides a method, for articulating the need to update or eliminate State mandates. A recommendation to evaluate the necessity and efficacy of existing mandates is presented in Chapter 3.

Insert inventory of existing statutory, contractual, constitutional and other mandated State government responsibilities and a range of costs.

California Water Resource Conditions and InfrastructurePrecipitation, specifically snowpack and snowmelt from the High Sierra, is the primary source of water supply in California, and it varies from place to place, season to season, year to year. The timing, quantity, and location of precipitation in California are largely misaligned with agricultural and urban water uses. Efforts to align the timing, quantity, and location with those uses have contributed to California’s growth and unintended ecosystem degradation. In any given year, the state can experience extreme hydrologic events: In times of drought there is not enough water to meet all uses, and during floods the excess of water threatens human lives, property, and economic well-being. In either case, crafting of effective policy and regulations has required regular updates of place-specific information and tradeoff analyses, as well as adaptive decision-making.

The 20th century was marked by the development of infrastructure, institutions, and regulations to manage the disparities between precipitation in the winter and lack of precipitation in the summer, as well as the geographic disparity between water availability and water demands. State, federal, and local agencies vastly expanded the state's system of reservoirs, canals, pumps, and pipelines to capture and

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move water when it was available, store it for when it was not, and deliver it to agricultural and urban users when and where needed. Significant investments were also made in the state's flood protection system, including levees and bypasses. Because of these infrastructure improvements, California’s water systems have increasingly served multiple purposes, and today they provide an array of benefits to the state and its people. Yet, in many cases, those improvements resulted in unintended consequences to the natural environment.

Water Supply Reliability. The state relies on its watersheds and groundwater basins to provide clean and sufficient water supplies. Healthy surface water and groundwater are essential to public health and safety, California’s ecosystems and economic future, and enriching experiences. Surface water and groundwater have largely been managed as separate resources when they are, in fact, a highly interdependent system of watersheds and groundwater basins. This historical separation in managing these resources has resulted in negative effects across the four societal values and missed opportunities to progress toward sustainability.

There have been significant investments made in local water-supply projects, including water recycling and desalination. Recycled water and desalination, which were once cost prohibitive, are now becoming more viable sources. Consistent with integrated regional water management planning principles and the Governor Brown’s California Water Action Plan, local projects have helped increase regional self-reliance and resiliency.

The statewide water balance (Figure 2-1) demonstrates the state’s variable water use and water supply in the face of annual hydrologic extremes. Water uses depict how applied water was used by urban and agricultural sectors and dedicated to the environment. Water supplies depict where the water came from each year to meet those uses.

Figure 2-1. California Water Balance by Water Year, 2005–2015 <to be added>

Environment and Ecosystems. In addition to managing water resources for domestic, industrial, and agricultural uses, California’s water is also managed for the needs of the environment and its ecosystems. Healthy ecosystems and watersheds provide benefits to the people of California, such as better air quality, enriching recreational opportunities, flood attenuation, groundwater recharge, and natural water filtration. Although a considerable amount of water is required to be dedicated to the maintenance and restoration of aquatic and riparian ecosystems, the current required flows for ecosystem needs may not be sufficient to prevent negative impacts on the environment. Studies of the streamflow requirements of aquatic life, mainly represented by salmon, reveal that flows in many California rivers and streams too often fall below minimum desirable levels (California Department of Water Resources 2013).

Fish species in California’s waterways have generally declined over time in response to changing habitat and flows, as well as from both planned and accidental introductions of non-native species. As an example, of the more than 50 species of fish in the Sacramento-San Joaquin Delta (Delta) today, more than half, including the most successful, are nonnative (Delta Stewardship Council 2013). Climate change

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will exacerbate these issues in the long term, and native species may be disproportionately affected (Moyle et al. 2012).

Flooding. California is at risk for catastrophic flooding that has wide-ranging impacts because of the size of its economy and the number of people residing in the state. Flooding occurs in all regions of the state in different forms and at different times. Every county in California was declared a Federal disaster area at least once for a flooding event in the last 20 years. On the other hand, flooding in California can produce beneficial effects and support natural functions (for example, replenishing ecosystems with sediment and nutrients, and helping to recharge groundwater aquifers). Flooding and floodplains also can provide beneficial habitat conditions; however, as people and structures have moved into floodplains, the need for flood management for all beneficial uses – people and the environment – has increased greatly.

Water Quality. Changes in land and water use have resulted in increased runoff of agricultural, industrial, and urban pollutants to both surface water and groundwater. Increased agricultural and urban wastewater discharges, as well as changes in commercial and recreational activities, have negatively affected water quality. Higher temperatures, increasing rainfall, wildfire and forest management practices, and ecosystem degradation have further diminished water quality.

Water and People. Federal agencies manage approximately 47 percent of California’s 100 million-plus acres. The U.S. Department of Agriculture Forest Service is the largest public land manager in the state. Federal- and State-owned lands, combined with other areas such as the Delta and coastal lands, offer numerous opportunities for water-related recreational activities (e.g., camping, boating, fishing, hiking, birding, hunting). In addition, all California Native American Tribes and tribal communities, have distinct cultural and spiritual practices, as well as environmental, economic, and public health interests, related to water.

Historical Investment in Water ManagementThe average total historical investment in capital and ongoing expenditures by local, State, and federal agencies have been approximately $30 billion per year from 2005 through 2015 (Figure 2-X2). Capital expenditures averaged approximately $5 billion per year during the same period, with most funds coming from local agencies. Capital expenditures have continued to be largely in reaction to emergencies and extreme events (the increase in spending in the late 2000s for flood management was in response to Hurricane Katrina, and the upward trend in spending starting in the mid-2010s was in response to extended drought conditions). The majority of annual expenditures has been for ongoing needs and has risen steadily since 2005, driven by an increase in administrative costs at the local agency level. State and federal spending has remained low.

Local agencies fund most water management in California, with capital and ongoing expenditures increasing to keep pace with the issuance of State grant programs. Although the State has funded capital improvements in disadvantaged communities, those areas often lack the ability to fund ongoing operations and maintenance. In addition, State expenditures from the general fund have decreased as

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bond issuance has increased. This shift has led to a reliance on bond funding for water management, an unstable source that is subject to the public’s perceptions and priorities.

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(a) Total Expenditures

(b) Capital Expenditures

(c) Ongoing Expenditures

Figure 2-X2. Historical Local, State, and Federal Expenditures (2005–2015)


California State Water Management Plans and InitiativesCalifornia’s arid climate and history of drought and flood have prompted a variety of programs, actions, and initiatives aimed at achieving greater water sustainability statewide. At the State level, a variety of planning efforts, funding programs, regulatory reforms, and policy directives are helping to address key water resource management concerns. Descriptions of these plans and initiatives are included in Appendix <add #>.

Challenges to SustainabilityCalifornia has realized many successes in water resource management over the past several decades, driven by State-level policy initiatives and programs, and local and regional actions. Nonetheless, strong evidence of vulnerability of the state’s water resources is occurring in nearly all regions, and conflicts in meeting ecological and human needs are increasing. Climate change, demographic changes, and other variables have underscored the need to improve the effectiveness of managing these valuable water resources for sustainability. Just as important as understanding the challenges the state faces today, is recognizing trends and the underlying causes of change. Doing so will allow all Californians to more effectively collaborate on increasing resilience and recovering from unforeseen, disruptive events.

During the previous five years, California experienced severe drought accompanied by accelerated groundwater depletion and overdraft; continued habitat and species declines; and economic hardship, particularly in communities that rely on imported water supplies. This dry period was then followed by the wettest year on record, with extreme hydrology causing catastrophic failure of some major infrastructure. Those failures threatened the lives and property of people living behind levees, and jeopardized tribal cultural resources in many areas. Although some communities throughout California showed great resilience under these adverse conditions, many communities were significantly affected by these extreme hydrologic events.

California’s interconnected systems for using and managing water are extremely complex and subject to continually changing natural and human-made conditions. Even with important statewide initiatives and significant improvements in water resource systems and in system management over the past few decades, California still faces unacceptable risks from both foreseeable and unanticipated threats to water resource sustainability. Because our water resource system is complex, the dilemma of making further improvements to support long-term sustainable management is complicated by several critical gaps and urgent needs (challenges).

Many challenges that regions and communities face are either foundational or more specific, even critical. Whether foundational or critical, the challenges (described below) are interlinked: The critical challenges cannot be adequately addressed unless stakeholders, water managers, legislators, and the public address the foundational ones. While local, regional, and State water managers tackle these challenges on a daily basis, they have varying degrees of control over them. What’s more, communities and regions cannot efficiently or cost-effectively address these challenges on their own. The State must empower community and regional entities to resolve these issues in a coordinated, collaborative, and cost-effective way, such that the solutions provide broad public benefits.

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Foundational Challenges

• Initiatives and Governance: The ability to efficiently and sustainably manage water resources at a watershed scale is often impaired by lack of coordination and of alignment of water and land management efforts among local, regional, State, and federal agencies and California tribes. Those efforts are sometimes inconsistent with current priorities related to dynamically balancing societal values. Those striving to implement projects must navigate and comply with California’s labyrinth of uncoordinated and at times conflicting laws, regulations, and jurisdictions — all of which can lead to project delays and increased planning and compliance costs. This is true for both small, relatively simple projects and large, statewide projects.

Efforts to effectively manage California natural resources will require unprecedented alignment and cooperation among public agencies, tribal entities, landowners, interest-based groups, and other stakeholders. Better agency alignment of plans, policies, and regulations is needed to improve and expedite implementation. Collaboration is required to prioritize actions and garner enough community support for sustained investment.

• Regulatory Framework: Regulations are an integral and important part of water management. The current regulatory framework does not readily allow for the reconciliation of both environmental needs and human activities. It does not take a systems-oriented approach, and is not directly tied to or informed by ongoing planning and implementation efforts.

A changing regulatory environment, combined with misaligned, complex, and often internally inconsistent government planning and policies, poses challenges for sustainably managing water resources and associated project development. This is further exacerbated by conflicting roles and responsibilities and often overlapping or narrow State authorities and governance structures. California’s diverse societal needs, priorities, and expectations — which evolve and sometimes conflict with one another — pose another challenge to establishing consistent State policy and directing funding where it is needed most.

• Capacity for Data-Driven Decision-Making: Water resource planners and managers often do not have access to adequate technical information, tools, and facilitation services to support regional efforts toward sustainable, integrated water management. Although this is a challenge statewide, the consequences are evident in under-represented and economically disadvantaged communities. For any given resource issue, data may be abundant statewide but are often collected, used, and stored by the individual agencies and not coordinated or shared.

Data management, planning, policy-making, and regulation must occur in a collaborative, regionally based manner. The ultimate product needs to be a composite of information and data from a wide variety of elected officials, opinion leaders, stakeholders, scientists, and subject experts. Sound outcomes rely on a blend of subject expertise and perspectives woven together (e.g., hydrology, climatology, engineering, earth sciences) into comprehensive policies and implementation decisions that are place-based and regionally appropriate.

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• Infrastructure: Water- and flood-related infrastructure is increasingly not operated, maintained, rehabilitated, or modernized to provide the intended outcomes.

Much of California’s water infrastructure is reaching the end of its design life. At the same time, costly maintenance and capital improvements have been deferred in some regions because of lack of funding or difficulty in meeting regulatory requirements. Combined with expected changes in the state’s climate, supply disruptions caused by earthquakes and flooding are likely to rise. This poses threats to public safety in terms of reduced water availability, degraded water quality, and flooding.

• Funding: Current methods used to fund State government are often inadequate and too unpredictable or inflexible to effectively fund all the existing mandates of State government (including local assistance and cost-sharing). Many other factors — such as changing public priorities, responses to declining ecosystems and catastrophic events, and deferred maintenance — have compounded today’s State funding needs. Other challenges to sufficient and stable funding that occur at all levels of government include competition for available resources with other public services, dependence on per unit charges that reduces revenue collection during periods of required conservation, legal constraints related to assessment increases (e.g., Proposition 218), and geographical limitations on use of funds.

Flood and ecosystem management faces additional funding challenges because they rely on public financing, including bonds and federal funding. Only 6 percent of total water resource funding is allocated to flood management and ecosystem functions (Public Policy Institute of California 2012). Sporadic funding that ebbs and flows with the occurrence of floods or droughts lacks the predictability and reliability required for effective long-term change. At the same time, levels of general obligation bond debt are near an all-time high.

California water resource management agencies have identified a need for approximately $XXX billion in infrastructure investment. Ongoing funding needs to support planning, data management, and State operations and maintenance have been estimated at $X.X billion annually.

Critical Challenges

• More extreme hydrologic events in the future: Severe drought conditions in the western United States, followed by extreme precipitation in 2017, have directly affected the health, well-being, and livelihoods of Californians. The wide swings in climatic conditions are exposing the vulnerability of the state’s water systems and ecosystems. Seasonal, year-to-year, and geographical variability among water sources and locations of water uses, particularly in disadvantaged communities, is also a complicating factor.

• Reduced access to clean, safe, and affordable water supplies: During the recent drought, many vulnerable communities were unable to provide stable, safe water supplies to their residents for household use. Nearly 700 communities have water systems that, prior to any treatment, rely

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on contaminated groundwater (State Water Resources Control Board 2013). Of the X public water systems in the state, more than 200 of those water systems are not in compliance with safe drinking water standards (State Water Resources Control Board 2016), and many more lack access to affordable and reliable water supplies. This often results from degraded surface water and groundwater quality.

• Increasing demands for water: California’s population is expected to increase from 39.4 million in 2016 to 51.1 million by 2060 (California Department of Finance 2016). Many communities are at risk of having their residential supplies disrupted or compromised in the future. This growth is likely to put more people at risk of flooding, while also increasing demands for water. Improving conservation and water use efficiency, along with shifts in agriculture to permanent crops, will make it more difficult to reduce consumption during droughts and periods of low supply (i.e., demand hardening). [Bring in Update 2013 water demand estimates.]

• Declining groundwater levels: Groundwater comprises nearly 40 percent of all water used in California, totaling more than 16 million acre-feet per year. This is 2 million acre-feet more per year than what is estimated to naturally recharge (i.e., groundwater overdraft). Driven by recent and extended drought, groundwater levels in many parts of the state are declining at rapid rates. This rapid decline has led to ground surface subsidence in some areas, causing costly damage to water supply, transportation, and flood infrastructure. Even in light of the recently implemented Sustainable Groundwater Management Act (SGMA), it will take significant investments and time to reverse historical groundwater lows and achieve more sustainable use of this critical resource. SGMA requires the development of Groundwater Sustainability Plans (GSPs) in high- and medium-priority basins, which are prioritized by the percentage of total state groundwater use and the percentage of overlying population in each basin. There are currently 43 basins classified as a high priority and 84 basins classified as a medium priority.

• Declining ecological conditions: Even with the recent focus on the connection between water and ecosystem health, much habitat remains disconnected from water supplies. Native species continue to decline and many are vulnerable to climate change. More than 150 individual species are listed as threatened or endangered in California (California Natural Diversity Database 2017).

• Unstable regional economies: As water supplies have become less reliable, local and regional economies are more volatile, especially in agricultural and rural communities. For example, direct agricultural costs statewide from the drought total more than $1.8 billion, with a loss of approximately 10,100 seasonal jobs (Howitt et al. 2015). Often these economic downturns disproportionately harm people who have the least capacity to respond to changes.

These issues place significant risks on public safety, unique ecosystems, and the vital California economy. Everyone in California is affected to some degree by these issues, and careful consideration of the risks they pose is an important aspect of managing water resources for sustainability. Progress

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continues at both the State and local levels, but these concerns are urgent and more needs to be done. Several strategies and actions are recommended, as described in Chapter 3, “Actions for Sustainability.”

Evaluating Water Resource SustainabilityThe Sustainability Outlook is a method of collecting, organizing, and standardizing data to evaluate the status and trends of water resource conditions in terms of the four societal values.

The Sustainability Outlook will enable Californians to:

Arrive at shared understanding of the statewide and regional water challenges and management needs.

Identify desired outcomes and indicators that can be used to gauge current status and progress toward sustainability.

Apply a single comprehensive and practical method for tracking and reporting on the effectiveness of actions (e.g., investments, regulations, policies, projects) to achieve desired outcomes.

The Sustainability Outlook is intended to present a snapshot of actual water and related resource outcomes (where California stands today). Information in the Sustainability Outlook can be used by individual Californians and water management decision-makers alike to foster greater understanding of how we manage our water resources and better inform our individual and societal actions.

Sustainability Outlook: The Four Societal ValuesUsing the Sustainability Outlook, Californians can effectively support sustainability in a coordinated, integrated way toward the following outcomes, as aligned with the four societal values listed below. Each outcome was heavily vetted across multiple entities and stakeholders. Appendix <add #> provides more background on the importance of each societal value.

Public Health and Safety.

o An adequate water supply for domestic needs, sanitation, and fire suppression.o Reduced number of people exposed to waterborne health threats, such as contaminants or

infectious agents.o Reduced loss of life, injuries, and health risks resulting from extreme hydrologic conditions,

catastrophic events, and/or system failures (including infrastructure).

Healthy Economy.

o Reliable water supplies of suitable quality for a variety of productive uses, and productive water uses are based on a reliable supply.

o Considerations of economic risks and rewards on floodplains, rivers, and coastal areas.o More economic benefits from productive water uses.o Reduced likelihood or occurrence of significant social disruption following a disaster.

Ecosystem Vitality.

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o Preserved or enhanced biodiversity throughout the state. o Resilient and sustained high-quality natural resources and habitats.

Enriching Experiences.

o Preserved or enhanced culturally or historically significant sites and communities, including continued and improved access to water and land used for sacred ceremonies or practices.

o Preserved and larger natural areas with aesthetic or intrinsic value. o Continued and improved access to resources that support education and learning.o Continued or enhanced recreational opportunities in waterways, reservoirs, and natural and

open spaces.

Sustainability Outlook: Guiding Principles for Balancing the Four Societal ValuesThe guiding principles listed below describe how water and resource managers can balance the societal values and thus better utilize the Sustainability Outlook to make decisions and do business. These principles support effective planning by fostering trust through integrity, accuracy, transparency, and proper use of information in decision-making.

Manage California’s water resource and management systems through an ongoing, resilient, and dynamic balance of four societal values.

Apply California’s longstanding principles of reasonable use and public trust, as the foundation for public policy-making, planning, and management decisions about California’s water resources.

Promote environmental justice — the fair and equal treatment of people of all races, cultures, and incomes.

Help establish shared intent for sustainability with long-view perspective for water resource management.

Strengthen partnerships and help enhance governance to improve and align at all levels of government for effective, integrated water resource management.

Promote regional planning and resource management on a watershed scale to increase regional self-reliance and effectiveness, and acknowledge each region’s unique perspectives, needs, and priorities.

Acknowledge future variability, risk and uncertainties, and cultivate learning and adaptation in the decision-making process.

Use science, best data, and local and traditional ecological knowledge in a transparent and documented process.

Invest with a long-term view toward substantial and predictable public funding to increase system flexibility and resiliency.

Sustainability Outlook: Development ProcessThe Sustainability Outlook builds on existing and ongoing sustainability measurement efforts in the state and nationwide. This includes sustainability assessment pilots conducted by DWR as part of Update 2013; watershed sustainability efforts by the State Water Resources Control Board; work by the

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California Department of Fish and Wildlife as part of the State Wildlife Action Plan; and work by other State agencies, non-governmental organizations, and academic institutions. DWR reviewed existing sustainability efforts and conducted numerous meetings and workshops with State agencies and the public to solicit input and feedback. This included identifying and proposing draft water-related outcomes tied to the four societal values; identifying potential data sources and information that could be used to assess sustainability; and considering different scales of application, from watershed to statewide.

DWR initially envisioned the Sustainability Outlook being applied periodically, at a statewide scale, to generate a simple “report card” for how well water was being sustainably managed in California. As the department explored different methodologies and received feedback, the vision for the Sustainability Outlook and its application evolved. During this process, DWR identified a number of success criteria for the Sustainability Outlook. It must be:

Easy to understand, for wide and timely adoption. Flexible, to allow for different conditions and issues in areas throughout this diverse state. Adaptable, for new requirements. Coordinated with, but not duplicative of, existing efforts. Able to account for data availability/accessibility and technical needs. Reasonable, implementable, and repeatable.

These criteria were foundational in developing the process and approach described herein, which now includes a basic method for assessing sustainability, a toolbox of data and information that can be applied, and a plan to apply the method, over time, in individual watersheds throughout California.

A detailed description of DWR’s process for developing the Sustainability Outlook — where it comes from, where it currently stands, and where it is going — is included in Appendix <add #>.

Sustainability Outlook: MethodologyThe Sustainability Outlook uses data (indicators) to help assess progress in achieving desired results (intended outcomes) linked to the four societal values.

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Intended outcomes articulate the desired results from managing California’s water resources in a manner that balances the four societal values. For example, the outcomes related to the societal value of Enriching Experiences consider the human relationship to water — in homes, in communities, and in the environment. The outcomes related to Ecosystem Vitality consider three important facets of a healthy and sustainable ecosystem: abundance, natural processes, and beneficial uses of water in the environment. The intended outcomes are considered long term, but they may change over time. For example, an outcome related to ecosystem vitality could continue to evolve as our understanding of ecological systems and the processes that sustain healthy ecosystems grows.

Indicators are the data and information that are used to measure what progress has been made in achieving the intended outcomes at a given point in time. California water management is complex and the interlying regions are diverse. Large volumes of data are already being collected throughout the state by local, regional, and State entities. Not all data are relevant to decision-making in all regions, and it is neither practical nor necessary to use all available data to assess water management sustainability. For these reasons, the Sustainability Outlook identifies a manageable set of indicators that apply statewide and can be used for conducting watershed-scale sustainability assessments.

An example indicator for the intended outcome related to “exposure of people to waterborne health threats” is the number of public water systems not in compliance with drinking water standards. These are data currently collected by the State Water Resources Control Board, and they can be reliably and repeatedly collected. When measured over time, and in combination with other indicators, they can provide good insight into whether Californians are being exposed to waterborne health threats.

Societal Value Intended Outcome Example IndicatorPublic Health and Safety Reduced number of people

exposed to waterborne health threats, such as contaminants or infectious agents

Number of public water systems not in compliance with drinking water standards

Applied at the state level, indicators are intended to be broad and cover differing conditions (e.g., coastal and inland areas; north and south of, as well as in, the Delta). At a watershed level, indicators will measure what is relevant to a specific area, which may or may not be the same as what is relevant on a statewide basis (e.g., specific areas of the state where the majority of the population is not served by a public water system; or flood safety improvements in upper watersheds, which would likely differ from those in valleys). Indicators may change as the ability to collect and interpret data changes, the conditions in the state and watersheds change, or the understanding of intended outcomes evolves.

In Update 2018, the Sustainability Outlook identifies the basics of how sustainability assessments will be conducted at a watershed scale. Conducting the assessments at a watershed scale will more clearly reveal trends, progress, and return on investments that would be difficult to discern at a statewide scale. Doing so will also allow for the introduction of additional indicators important to specific regions of the state. Through progressive application of the Sustainability Outlook, decision-makers will be able

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to identify needed analytical tools and data, expand on the information available to make good decisions, and build a common and transparent understanding of how individual and collective actions affect sustainable management of water resources.

Piloting the Sustainability OutlookDWR is actively engaged in ongoing and upcoming pilot programs, and intends to demonstrate how the Sustainability Outlook can be applied at a watershed scale. The goal is to measure progress and effectiveness of recommended actions to support long-term water resource sustainability. DWR has entered into partnerships, with California Forward and the Pacific Institute, to pilot the Sustainability Outlook with two efforts at a watershed scale and is working with the Water Foundation to incorporate lessons learned from its recently completed Sustainability Water Management Profile (SWM Profile) into those two pilots. It is anticipated each pilot study would use indicators described in Appendix <add #> to measure the progress and effectiveness of recommended actions for long-term water resource sustainability.

Sustainable Water Management ProfileIn 2016, the Water Foundation partnered with the Inland Empire Utilities Agency to pilot development of a SWM Profile, a mechanism to drive continual improvement toward long-term supply resilience and water resource stewardship at a regional (or watershed) scale in California. This pilot SWM Profile assessed how the water agency was performing by examining the water supplies upon which it directly or indirectly relied. Using simple metrics, the SWM Profile identified the vulnerability of its water systems to key stressors (also known as risks or threats) in the areas of environment, supply, demand, and finance. The SWM Profile evaluated management responses to these stressors by both the water agency and the broader region.

Russian River Watershed The Russian River watershed was selected as pilot area because of established relationships, as well as the innovative and participatory local entities with relatively few distinctive jurisdictions / agencies compared with other watersheds in the state. Work will be performed in alignment with California Forward’s and Sonoma County Water Agency’s sustainability planning when developing a framework for defining sustainability outcomes and metrics, align regulatory processes to achieve sustainable outcomes, improve governance and implementation efficiency, and identify funding and finance options and capacity across the four societal values. As planned, the work will apply the outcome-based planning concepts advanced by the Water Plan at a watershed scale. Additional work under this pilot will provide insight on policy development of watershed-based planning, regulation, governance, and funding and finance innovations.

Multi-Benefit Investment Strategies Project, Santa Ana WatershedIn collaboration with the Pacific Institute, Santa Ana Watershed Protection Authority, and other stakeholders in the watershed, this pilot project will develop a unifying framework for evaluating multi-benefits as an outcome from water investment projects. The framework will facilitate development of consistent tools that quantify benefits imbedded in specific water projects, while providing flexible application for a specific watershed, interest, or query. As planned, this pilot will work with both

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technical and practical experts in multi-benefit valuation of water projects to be sure that the unifying framework for evaluation of projects is useful and that there will be broad adoption. Overall, this project will allow for a better comparison between integrated and traditional (single purpose) projects to provide the necessary justification for cost-sharing among the beneficiaries of these projects.

Moving Forward to 2023 and BeyondThe initial results of the pilot projects will be included in the final draft of Update 2018. Subsequent results of the pilots will be used to test and refine the indicators, as well as the overall Sustainability Outlook approach. DWR intends to work with partners to develop appropriately scaled, watershed-based Sustainability Outlooks. Planning at a watershed scale will help water managers evaluate and consider the interdependencies among physical, biological, economic, and social processes, from headwaters to outlets, as well as interbasin interactions. It’s anticipated that these Watershed Sustainability Outlooks will be included in California Water Plan Update 2023, to support statewide planning and inform State investment priorities. DWR recognizes that most of the work to advance sustainable water resource management will occur at regional and local levels.

Moving forward, additional data and tools will be developed and employed to strengthen the Sustainability Outlook approach, evaluate trends, and assess current and future sustainability.

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Chapter 3. Actions for Sustainability

The state’s complex, interconnected water systems continue to support the values and aspirations that Californians hold in common. These systems were built based on the best available knowledge that existed generations ago. Since then, they have been continually subject to changing natural and human-made conditions. As a result, many Californians now face unacceptable risks from flooding and water quality, unreliable water supplies, continued depletion and degradation of groundwater resources, and habitat and species declines. Managing water resource systems for sustainability will require changing the status quo, addressing critical gaps and urgent needs, and strategically planning for the long-term.

First and foremost, the state must address the foundational challenges, described in Chapter 2, related to governance and alignment, the regulatory framework, institutional capacity, infrastructure, and funding. Addressing these foundational challenges will enable the state to build a clear and efficient path toward water resource sustainability. This chapter recommends actions that need to be initiated to address those foundational challenges and support water resource sustainability across water management sectors and across the state. The chapter also describes the role that State government is tasked with assisting water and resource managers in planning, implementing, monitoring, and funding their activities to ensure the state’s water resources are on a path toward sustainability.

State Leadership Given California’s complex water management systems and diffuse governance, State government must take the lead in sustainably managing water and related resources. Update 2018 focuses on State government’s leadership in improving the management, the adaptability, and the resilience of California’s water resources, with the aim of moving water resource systems toward sustainability. To that end, Update 2018 identifies the actions necessary for the State to facilitate and demonstrate progress toward water resource sustainability. The update emphasizes the State’s role in assisting and empowering regional water and resource managers and policy-makers to continuously manage for sustainability by:d

Setting intended outcomes and formulating actions. Evaluating whether actions produce their intended outcomes. Learning and adapting actions to produce intended outcomes.

The State will continue to lead in the following ways that support the four societal values:

Assisting regions to accomplish necessary water resource management services, such as helping to ensure that all Californians are provided with basic public health and safety. In some circumstances, the State serves as a provider of last resort and provide basic services when justified.

Addressing trans-boundary issues that extend beyond the unique geographical reach and jurisdictional authority of local, regional, interstate, tribal, federal, and international entities.

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Leveraging resources and providing economies of scale by tapping into the broad expertise and statewide geographical scale of State agency resources.

Implementing and providing financial assistance for activities that have broad public benefits and advance sustainability through public health and safety, ecosystem vitality, a healthy economy, and opportunities for enriching experiences.

Constructing, operating, and maintaining infrastructure (green and grey) it owns or is responsible for (e.g., the State Water Project, the State Plan of Flood Control, public waterways, recreation facilities).

The primary responsibilities of State government encompass the State’s leadership role in supporting the five priorities of Update 2018, as identified in Table 1.

Table 1. State Government Responsibilities in Supporting the Five Priorities of Update 2018

State Responsibilities

Update 2018 PrioritiesIm

prov

e Al

ignm

ent o

f Ag

enci

es’ I

nitia

tives

and

Go

vern

ance

Impr

ove

Regu

lato

ry

Fram

ewor

k to

Rec

onci

le

Envi

ronm

enta

l Nee

ds a

nd

Hum

an A

ctivi

ties

Prov

ide

Reso

urce

s,

Know

ledg

e, S

kills

, and

Too

ls W

ater

Man

ager

s Nee

d fo

r Da

ta-D

riven

Dec

ision

-Mak

ing

Mod

erni

ze a

nd R

ehab

ilita

te

Wat

er R

esou

rce

Man

agem

ent

Syst

ems

Prov

ide

Suffi

cien

t and

Su

stai

nabl

e Fu

ndin

g

Assisting regions to accomplish necessary water resources management services

X X X X X

Addressing international, interstate, or trans-boundary issues

X X X

Leveraging resources and providing economies of scale

X X X X

Implementing and providing financial assistance for activities that have broad public benefits and advance sustainability

X X X

Constructing, operating, and maintaining infrastructure

X X

Update 2018 recommends aligning delivery of State services related to water management around a shared, statewide definition of sustainability and consistent set of intended outcomes; and track actual outcomes over time. This Water Plan presents a vision of sustainably managing water resources and improves the foundation for the State to address the challenges and opportunities identified in Chapter 2 and the Governor’s California Water Action Plan (Water Action Plan).

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Update 2018 significantly contributes to the Administration’s objectives to provide a more reliable water supply for our farms and communities, restoring important wildlife habitat and species, and helping the state’s water systems and environment become more resilient. Specifically, this Update helps:

1. Make conservation a California way of life.2. Increase regional self-reliance and integrated water management across all levels of government.3. Achieve the co-equal goals for the Delta.4. Protect and restore important ecosystems.5. Manage and prepare for dry periods.6. Expand water storage capacity and improve groundwater management.7. Provide safe water for all communities.8. Increase flood protection.9. Increase operational and regulatory efficiency. 10. Identify sustainable and integrated financing opportunities.

Recommended ActionsThis section focuses on actions that the State will initiate over the next five years to support the long-term vision of managing water resources for sustainability, as described in Chapter 1. The recommended actions establish the foundation for addressing primary impediments to sustainability. The recommended actions are organized by the five priorities of Update 2018.

Improve Alignment of Agencies’ Initiatives and Governance — A successful transition to managing water resources for sustainability requires more coordinated and aligned efforts from local, regional, State, tribal, and federal levels of governance.

Improve Regulatory Framework to Reconcile Environmental Needs and Human Activities — Managing water resources for sustainability will require a regulatory framework designed to support achievement of the four societal values; tied to and informed by regional/watershed planning and implementation efforts, including active planning and investing to enhance ecosystem function and viability; based on an ecosystem conservation and reconciliation approach; and tailored for different locations.

Provide Resources, Knowledge, Skills, and Tools Water Managers Need for Data-Driven Decision-Making — Technical and facilitation assistance from the State to the regions is needed to strengthen relationships, deepen trust, share information, build institutional capacity, and assess system performance to support managing water resources for sustainability.

Modernize and Rehabilitate Water Resource Management Systems — Managing water for sustainability requires continuous investment in the rehabilitation, modernization, and operations and maintenance of existing and future infrastructure (including green and grey) to provide intended outcomes.

Provide Sufficient and Sustainable Funding — Managing water resources for sustainability requires funding (from local, regional, State, federal, and tribal sources) to develop and update

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high-quality regional and State plans and to implement priority actions identified in approved regional and State plans.

Improve Alignment of Agencies’ Initiatives and GovernanceTo improve alignment and governance, the following actions are recommended:

Align objectives of local, regional, State, and federal water and land-use management organizations and tribes to appropriate societal values.

o Societal Value Legislation. The Governor’s Office of Planning and Research (OPR) should evaluate the benefit of codifying the societal values identified in California Water Plan Update 2018 (Update 2018) for water resource management, as well as management of related resources, in statute.

Legislation would outline the necessity for California water planning and implementation efforts to incorporate societal values and track progress toward managing water resources for sustainability. The codified societal values would include public health and safety, a healthy economy, ecosystem vitality, and opportunities for enriching experiences as presented in Update 2018 and define sustainability as an ongoing, resilient, and dynamic balance among the societal values. State, regional, and local agencies should be left the flexibility to determine their own intended outcomes and performance metrics under the societal values, with the common pursuit of managing water resource sustainably.

o State Agency Alignment Around Sustainability. State agencies should realign governance structures, authorities, reporting, and strategic planning to improve the ability for all State agencies to collaborate, integrate, and invest in sustainable water management activities.

Aligning State agency efforts around sustainability would allow improved ability for cooperation, coordination, collaboration, integration, and investment in all the societal values, thus overcoming barriers that can be caused by narrow mission statements and authorities. For example, this could streamline financial assistance provided to local and regional agencies and tribes from State funding sources for multi-benefit, integrated water management projects. Further, State agencies should make recommendations to the Legislature on any changes to agency authorities that would better enable alignment and integration to support managing water resources for sustainability. To accomplish this alignment, agencies should work together through multi-disciplinary collaboration processes to strengthen the collective understanding of sustainability, the societal values, and State incentives for the regions to achieve shared desired outcomes which affords increased flexibility for regions to determine how best to achieve them.

Strengthen the alignment of government planning, processes, and tools with regional governance structures so goals and objectives, actions, and tradeoffs can be discussed and evaluated holistically at a regional scale. Focusing on watersheds supports the consideration of the unique and interdependent physical, biological, economic, and social processes and functions of California’s watersheds.

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o Regional Sustainability Planning Outreach and Recommendations. DWR will conduct a robust stakeholder outreach process with local, regional, State, and tribal representatives to develop a framework for successful sustainability planning statewide.

This effort would identify the lessons learned and build upon the successes of integrated regional water management and groundwater sustainability agency (GSA) development and implementation. This outreach would begin in 2019, and by 2021 DWR will develop an initial report to the governor and the Legislature of recommendations for empowering local and regional entities to:

Better align IRWM and GSA planning processes. Delineate sustainability planning boundaries based on hydrologic basins. Move toward hydrologically based planning; start by leveraging IRWM and SGMA. Develop sustainability plans at the appropriate planning scales with potential to reduce

number of other State-required plans. Establish stable and sufficient funding mechanisms for regional management. Support robust disadvantaged community (DAC) and tribal involvement. Link and consolidate regulations, environmental compliance, and permitting processes

to regional planning. Develop a framework for inter-regional coordination.

This outreach would begin implementation of the recommendations presented in DWR’s Stakeholder Perspectives: Recommendations for Sustaining and Strengthening Integrated Regional Water Management. Regional planning at the appropriate scale would be led and conducted by local and regional entities, with planning, technical, and financial assistance from the State to provide incentives for hydrologically-based, regional planning for sustainability. This recommendation is considered an initial step in this larger effort to develop more holistic regional sustainability plans, which may take decades to implement. Conducting this initial level of outreach and developing an implementation strategy for the recommendations would require authorization and funding from the Legislature.

Strengthen relationships with California Native American Tribes that acknowledge and respect tribes’ inherent rights to exercise sovereign authority and ensure that tribes are incorporated into planning and water resource decision-making processes in a manner that is consistent with their sovereign status.

o Lead Agency Definition. The Legislative Analyst’s Office should evaluate the potential for modifying the definition of “lead agency” under the California Environmental Quality Act (CEQA) in government code (State CEQA Guidelines Section 15367, Title 14 California Code of Regulations 15000 et seq.) to include recognized tribal governments.

o Tribal Involvement in Regional Planning Efforts. DWR, in coordination with the Tribal Advisory Committee and State Agency Steering Committee, will prepare recommendations to assure timely and meaningful communication with tribes and utilization of Traditional/Tribal Ecological Knowledge to inform water resource management at the appropriate scale.

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These recommendations will inform the next Water Plan update and improve understanding of traditional/Tribal Ecological Knowledge by local, regional, and State agencies. Through this effort, tribes and State agencies should work together to develop strategies and options for ensuring greater and early collaboration regarding water resource sustainability projects, as well as regional planning and management activities, especially where decisions affect tribal trust lands and/or traditional territories/homelands.

o State Contracting with Tribes. As permitted by statute, the California Department of General Services (DGS) should update the State Contracts Manual language and process to reconcile the sovereign status of tribes and the ability of tribes to receive State grants and loans. If required, DGS should make recommendations to the Legislature for amending statute.

Improve Regulatory Framework to Reconcile Environmental Needs and Human ActivitiesTo improve water resource management regulation, the following actions are recommended:

Expand regulatory focus to include a systems-oriented approach, rather than just avoiding or mitigating environmental impacts caused by discrete projects, for strategic environmental assessment that reconciles environmental needs and human activities through the dynamic balance among all four societal values.

o Programmatic Environmental Compliance Task Force. The California Natural Resources Agency and the California Environmental Protection Agency should jointly convene a task force of local, State, and federal resources and water management agencies and tribes to develop a programmatic environmental compliance process considering multiple project or activity types to balance ecosystem functions and human activity by replacing current site‐by‐site mitigation requirements, as well as expedite permitting of critical maintenance activities and water system improvement projects.

Establishing this task force would require authorization and funding from the Legislature. The task force should develop a report, summarizing its recommendations, for use by the Legislature and Governor in considering statutory, regulatory, and policy adjustments. The task force should be charged with developing recommendations to:

Reduce impediments to project implementation and transactional costs caused by regulations and processes.

Tie and consolidate regulations and permitting processes to ecoregional and regional planning, implementation efforts, and long-term system management for sustainability, which should include active planning and investment to enhance ecosystem function, viability, biodiversity, and resilience to pressures and stressors, including climate change.

Support existing regional conservation and regulatory tools, and improve existing tools and processes to address common challenges and concerns with the current regulatory framework to streamline the permitting process and move beyond traditional project-by-project mitigation. Other ideas to consider include delegation of regulatory authorities and consolidation of permitting efforts and responsibilities.

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Consider changes to allow more regionally focused approaches to regulation and investments for ecosystem reconciliation. Identify options that allow State and federal regulators to rethink and experiment with more holistic and place-based approaches.

Improve resourcing and coordination to address common challenges and concerns regarding current regulatory framework.

o Ecosystem Restoration Project Permitting. The California Department of Fish and Wildlife should evaluate permitting processes for ecosystem restoration and enhancement projects and make recommendations on potential statutory alterations to mitigation requirements for restoration projects.

Recommendations should consider agency resources, improvements to communication and coordination, funding, and how the small habitat retraction project CEQA exemption could be modified.

The evaluation should include a determination whether permitting for restoration projects could be considered on a separate track that allows credit for the restoration components of projects, such as by including them in regional conservation plans or strategies to develop mitigation credit agreements. Considerations should also include exempting projects that include a restoration component from additional mitigation requirements necessitated by the impacts of that restoration component.

o Delegation of Federal Permitting. State regulatory agencies should work with their federal permitting agency counterparts to seek delegation of authority to reduce the number agencies involved in the permitting process and improve coordination.

Precedent exists in the California Environmental Protection Agency and the California Department of Transportation (Caltrans). For example, Caltrans participated in the Surface Transportation Project Delivery Program, under which Caltrans may assume National Environmental Protection Act responsibilities of the U.S. Department of Transportation Secretary with respect to one or more highway projects in California (California Department of Transportation 2014).

o Cooperative Agreements. State regulatory agencies should prepare cooperative agreements for permit reviews among multiple regulatory agencies to increase efficiency by maximizing expertise and available resources.

Agencies should seek to reduce the number of regulatory agencies with which a project proponent must coordinate and enable sharing of limited resources, such as staff (this may require recommendations to the legislature). If agreements cannot be reached or are not feasible, regulatory agencies should consider development of web-based tools for “one-stop” permitting support for State permits to help project proponents.

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Provide Resources, Knowledge, Skills, and Tools Water Managers Need for Data-Driven Decision-Making To develop long-term capacity and support a culture of learning and adapting throughout California water management, the following actions are recommended:

Use best available science, data, tools, current scientific understanding of ecosystem function, traditional ecological knowledge, and when necessary, develop, promote, and implement new technologies and innovations, to support data-driven decision-making and policies to ensure water management stays on a sustainable path and investments are resilient.

o Inventory and Evaluation of State Government Responsibilities. In consultation with stakeholders, State water resource agencies will jointly inventory and evaluate the relevancy, effectiveness, costs, and necessity of all current statutory, contractual, and constitutional requirements that define State government’s role in water management.

The evaluation will be used to inform Update 2023 recommendations to update or remove existing mandates. The four societal values and the Sustainability Outlook’s outcomes and indictors will be used to scope the effort, articulate the current value (or lack thereof) of all mandates, and form recommendations.

o Climate Science and Monitoring Program. The California Natural Resources Agency, the California Environmental Protection Agency, and the Governor’s Office of Planning and Research, in partnership with federal agencies and academia, should jointly develop a Climate Science and Monitoring Program.

The program would support the monitoring, forecasting, and scientific understanding of the role of the climate system in extreme precipitation events and better inform water resource management during extreme events. Ongoing research collaborations including tracking atmospheric rivers, rain/snow trends, upland watershed monitoring, paleohydrology, sea-level rise, seasonal winter outlooks, and changes in streamflow and stream temperatures should be funded by this program. The program would also ensure that climate science and best available information are used to modernize the water resource management system. The program would require authorization and annual, long-term funding from the Legislature to ensure success. This program would help implement the actions recommended in the Governor’s Water Action Plan to “revise operations to respond to extreme conditions” and “provide essential data to enable sustainable groundwater management.”

o Comprehensive Water Resource Data Collection and Management Program. State water resource agencies should jointly develop a Comprehensive Water Resource Data Collection and Management Program to assist local and regional entities and build regional capacity by developing, monitoring, maintaining, and sharing information, data, models, and other tools.

State agencies should work with regions to determine data and data management needs. State agencies should publish and update quarterly State-held water and ecological datasets

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on a comprehensive and open data platform (as required under Assembly Bill 1755, California Water Code section 12410). State agencies should also maintain minimum protocols, as well as best practices, for data-sharing, documentation, quality control, public access, and promotion of open-source platforms and decisions support tools related to water and ecological data. This program would require authorization and annual, long-term funding from the Legislature to ensure success. This program would help implement the actions recommended in the Governor’s Water Action Plan to “provide essential data to enable sustainable groundwater management” and “prepare for the future through better technology and improved procedures.”

o Regional Sustainability Outlooks. DWR will engage regional stakeholders in developing and maintaining Regional Sustainability Outlooks (Outlooks), as introduced in Chapter 2, to provide a regional-scale snapshot and evaluation of the metrics or indicators demonstrating movement toward sustainability, including the status of water-related contributions to public health and safety, healthy economy, ecosystem vitality, and opportunities for enriching experiences.

The Outlooks should include an assessment of the efficacy of governance, regulations, and funding of water resource management activities statewide and for individual regions. The Outlooks should utilize Traditional/Tribal Ecological Knowledge. From this base of understanding of current conditions, DWR will work with regional stakeholders to define regional-scale intended outcomes and recommended actions to achieve them.

To enable effective collaboration around this effort, DWR will develop tools to allow collection of information needed to assemble the Outlooks. The Outlooks should be used to inform updates of the California Water Plan and future regional sustainability plans. Prior to Update 2023, the Outlooks will be developed for, and applied within, the 10 hydrologic regions. A determination will be made if subsequent applications of the Outlooks are needed at a more refined scale. This determination will be made based on input received during the Watershed Sustainability Planning Outreach and Recommendations action described above.

o State Water Management Sector Plans. The appropriate State agencies will develop and maintain the plans that define strategies and processes, as well as intended outcomes, to support sustainable water resource management at the water management sector level.

Water Management Sectors include flood management, water supply reliability, water quality, ecosystems, and people and water (i.e., recreation, social and cultural uses, and aesthetics). These plans should include statewide and regional overviews of the specific management area. Water Management Sector plans should be updated every five years and over time should incorporate information from future regional sustainability plans. These plans should provide an overview of statewide conditions, articulate policy priorities, and ensure intended outcomes for each water management sector are clearly identified. Previous efforts under DWR’s Statewide Flood Management Planning Program and CDFW’s State Wildlife Action Plan have made strides in initiating the plans in these water management sectors. Development of State Water Management Sector Plans would

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support development of watershed sustainability plans by providing overarching State priorities and intended outcomes for the water management sectors to inform and incent watershed planning and management efforts. These plans would be combined and aligned with the Water Plan to dynamically balance the four societal values. Development of these plans would require authorization and funding from the Legislature to ensure State resources are available.

o Plan Alignment. DWR will evaluate timing and opportunities to improve efficiencies and effectiveness of all legislatively mandated, water resource-related plans and make recommendations for modifying any legislatively mandated deadlines to ensure effective and efficient integration of information into the California Water Plan (Water Plan).

Ideally, all required State agency plans related to water management activities would be completed at least two years before the next Water Plan update. For example, the Central Valley Flood Protection Plan was released in 2017, as mandated by legislation, just months before the pubic draft of California Water Plan Update 2018. Staggering the release of required plans will allow better integration and application of the information at a statewide scale.

The State Water Management Sector plans recommended above should be completed at least two years before Water Plan updates, to ensure information from these plans is used to develop the Water Plan. Recommendations should specify that the timing of required local plans allow for efficient utilization of local information in required State plans. The recommendations should also ensure that local and regional plans be aligned and consolidated to reduce duplication and inconsistency, and help inform groundwater sustainability plans, integrated regional water management plans, and ultimately regional sustainability plans. This action is important to improve coordination and efficiency of multiple, at times uncoordinated, planning efforts at all levels of government and reduce duplication of information and data development, tracking, and reporting.

o Statewide Water Storage Program. DWR will establish an ongoing Statewide Water Storage Program to evaluate surface and groundwater storage opportunities in the state and provide technical support to local and regional water agencies and groundwater sustainability agencies.

As part of the program, DWR initially will prepare a statewide evaluation to identify the benefits, costs, hydrologic and engineering attributes, environmental attributes, and other tradeoffs and feasibility indicators regarding surface and groundwater storage opportunities. The evaluation should include optimal locations for groundwater recharge throughout California. Such an evaluation should inform the potential role of surface and groundwater storage in advancing recent and emerging State initiatives, future bonds/initiatives, and watershed sustainability.

The statewide storage evaluation should reflect 21st-century planning conditions and priorities that include seeking strategies that provide multiple benefits, taking a systemwide planning approach, planning transparency, changing societal values/goals, changing

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hydrology and water supply under a changing climate (including loss of snowpack), and improved assessment tools. This program should provide an assessment of feasible storage and recharge opportunities throughout the state and should be a companion to DWR’s System Reoperation Study and the Water Availability for Replenishment report. This program should also demonstrate State government leadership in the form of regional capacity-building and partnerships, since most local and regional entities do not have the resources or technical ability to conduct such an evaluation across jurisdictions. Activities should be designed to assist in implementing the Sustainable Groundwater Management Act statutes and Action 6 of the California Water Action Plan (Expand Water Storage Capacity and Improve Groundwater Management). This program would require authorization and annual, long-term funding from the Legislature to ensure success. This program would help implement the actions recommended in the Governor’s Water Action Plan to “revise operations to respond to extreme conditions” and “improve statewide groundwater recharge.”

o Regional Engagement in California Water Plan Update 2023. Through the California Water Plan Update 2023 (Update 2023) process, DWR will continue utilizing an enhanced regional planning process and regional forums to effectively engage and empower regional water management groups, groundwater sustainability agencies, and other existing regional and local entities foundational to effective regional planning and management.

DWR and participating local and regional entities will establish working groups and venues at regional scales for collective representation to State government. The local and regional entities should be large enough to effectively interface with State government, yet small enough to effectively plan, implement, and manage areas defined by unique hydrologic and ecosystem conditions. These regional working groups will shape Update 2023 recommendations for State actions and investments. The recommendations will be specific to each hydrologic region in the following areas:

Shared vision and values. Policy and investment priorities. Water management and investment needs. The Sustainability Outlook, as applied in each region. Exploration of opportunities to integrate and reconcile local plans and State statues

mutually supported by State and regional representatives (e.g., groundwater sustainability plans, urban water management plans, land use decision-making, and flood management).

Development of regional reports and/or an atlas for Update 2023, which will contain: Identification of State’s desired outcomes. Identification of shared State/regional desired outcomes. State Investment in shared outcomes for each area. Recommend State incentives and funding sources. Implementation plans.

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o Economic Benefits of Ecosystem Services. DWR, in coordination with the California Department of Fish and Wildlife, State Water Resources Control Board, academia, and other stakeholders, will develop guidance for calculating the economic benefits of ecosystem services to more accurately determine project benefits and economic feasibility.

Strengthen regional integrated water management planning, track program performance, and report intended versus actual outcomes on regular cycles to promote continuous learning and adaptation.

o State Agency Performance Tracking and Reporting. State agencies should develop, maintain, and make available data and information management systems needed to conduct the system performance assessments and to support integrated planning and implementation for sustainability, including water budgets, system assessment and performance, and ecosystem conditions.

State agencies should collect data and information needed describe how agency actions support sustainability, to update the Sustainability Outlooks as described in Chapter 2 on an annual basis, and develop the Regional Sustainability Outlooks as described above. Tracking and reporting efforts should support and improve the ability of State agencies to adaptively management water resource systems by establishing long-term trends and flagging when activities are not producing the desired outcomes.

o Reporting Requirements for State Funding. State agencies should require performance tracking and reporting for all projects funded or partially funded with State funds.

All planning and implementation efforts should address societal values and track progress toward managing water resources for sustainability. Additionally, State agencies should require performance tracking and reporting on the societal values and sustainability in grant program guidelines and proposal solicitation packages. Language should be standardized in grant program guidelines and proposal solicitation packages across programs, and in authorizing bond language, so links to sustainability and the societal values are consistent. Progress toward achieving sustainable management of water resources at a regional scale should be tracked and documented in Regional Sustainability Outlooks and future regional sustainability plans.

Provide technical and facilitation assistance and improve access to data and tools for under‐represented and economically disadvantaged communities to facilitate their participation in planning efforts at all planning scales.

o Disadvantaged Community Liaisons. State agencies should support disadvantaged community (DAC) involvement through technical, facilitation, and funding assistance to manage water resources sustainably. State agencies should engage proactively and consistently with different local, regional, State, and federal agencies and tribes to promote more effective integration and cooperation.

Appropriate State agencies should create DAC liaison positions to seek candidates that have adequate qualifications and understanding of DACs’ needs to support more effective

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integration. This Task Force would further the action recommended in the Governor’s Water Action Plan to “provide assistance to disadvantaged communities.”

o Disadvantaged Community Engagement in Integrated Regional Water Management Groups. State government should provide noncompetitive base-level funding, subject to State accountability requirements, for IRWM regions to support stakeholder engagement; coordination and collaboration; IRWM plan updates; and participation of underrepresented groups, such as disadvantaged communities and local agencies with budget constraints.

This engagement would further the action recommended in the Governor’s Water Action Plan to “provide assistance to disadvantaged communities.”

Encourage, educate, and train the next generation of water resource managers.

o Water resource Education. State agencies should work with school districts, universities, and foundations to expand water resource curricula and programs. State agencies should first determine needs and opportunities to develop or expand curricula and programs.

All State conservancies, DWR, DFW, and California State Parks should improve outreach and education to children and in disadvantaged communities that will improve public health, support California’s outdoor lifestyle, and promote wise use of water resources.

Modernize and Rehabilitate Water Resource Management SystemsTo modernize and rehabilitate the water management system, including natural infrastructure and ecosystem services, the following actions are recommended:

Ensure facility operations and maintenance practices are based on current, best available data and management practices, and operating plans and manuals are routinely updated, as appropriate for the facility type.

o Statewide Water Resource Management Systems Operations and Maintenance Assessment Program. DWR will develop a Statewide Water Management System Operations and Maintenance Assessment Program to provide technical and financial assistance to help owners and operators of water resource systems (green and grey infrastructure) gain a better understanding of the current status of the operations of water infrastructure statewide and its ability to perform the desired level of service and to support the management of water resources for sustainability.

The program should assist local, regional, and State water managers to assess, on a system scale (i.e., larger infrastructure/systems, rather than the equipment scale), deferred maintenance; outdated operational procedures and manuals; and operational changes needed to address extreme hydrology, increase aquifer replenishment, reconcile operations and maintenance activities with ecosystem vitality, and modernize benefits (i.e., reoperation). Facility owners and operators will be responsible for determining if an assessment is necessary and for assessing their own facilities, if a sufficient and routine assessment program does not already exist. Facility owners and operators will also be

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responsible for requesting State technical and financial assistance, if needed, in compliance with State funding guidelines developed for the program. Results of the assessment program would be used to prioritize State investment in the Statewide Water Resource Management Systems Operations and Maintenance Modernization Program described below.

The assessments should be updated every five years, or in a time frame appropriate to the facility and local conditions (i.e., susceptibility to changing physical conditions and hydrology). Results of this assessment program would be used to prioritize funding for a Statewide Operations and Maintenance Modernization Program. Results should also be considered in the development of Regional Sustainability Outlooks and future watershed sustainability planning. This program would require authorization and funding from the Legislature to ensure sufficient resources are allocated. This program would help implement the actions recommended in the Governor’s Water Action Plan to “support and expand funding for integrated water management planning and projects,” “encourage State focus on projects with multiple benefits,” “revise operations to respond to extreme conditions,” “improve statewide groundwater recharge,” “encourage flood projects that plan for climate change and achieve multiple benefits,” and “prepare for the future through better technology and improved procedures.”

o Statewide Water Resource Management Systems Operations and Maintenance Modernization Program. DWR will develop a Statewide Operations and Maintenance Modernization Program to provide technical and financial assistance to help owners and operators of water resource management systems (green and grey infrastructure ) extend California’s water infrastructure’s useful life by reducing deferred maintenance, undertaking modernization of water- and flood-related operations and maintenance (O&M) procedures and manuals, providing for resiliency to extreme hydrology (e.g., floods and droughts), reconciling O&M needs with ecosystem vitality, and modernizing benefits through reoperation.

Facility owners and operators will be responsible for requesting State technical and financial assistance, if needed, in compliance with State funding guidelines developed for the program. State funding should capitalize on local and federal cost-sharing. The program should be informed by information and prioritization established by the Statewide Water Resource Management Systems Operations and Maintenance Assessment Program. Results of this program should be tracked and reported routinely to assess the attainment of the intended outcomes. Results should also be considered in the development of Regional Sustainability Outlooks and future watershed sustainability planning. This program would require authorization and funding from the Legislature to ensure sufficient resources are allocated. This program would help implement the actions recommended in the Governor’s Water Action Plan to “support and expand funding for integrated water management planning and projects,” “encourage State focus on projects with multiple benefits,” “revise operations to respond to extreme conditions,” “improve statewide groundwater recharge,” “encourage flood projects that plan for climate change and achieve multiple benefits,” and “prepare for the future through better technology and improved procedures.”

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Undertake modernization and rehabilitation of water- and flood-related water management system to reduce risks associated with aging and/or deficient infrastructure and the effects of climate change.

o Statewide Water Resource Management Systems Assessment Program. DWR will develop a Statewide Water Management System Assessment Program to provide technical and financial assistance to local, regional, State, and federal water managers.

The purpose is to gain a better understanding of the current status of their water resource systems (green and grey infrastructure) and their ability to perform the desired level of service and support managing water resources for sustainability. The program will assist local, regional, and State water managers and facility owner/operators to assess their water resource management systems for critical deficiencies, remaining useful life, climate resiliency, potential effects of subsidence, and benefits of system modernization, as needed. The assessment will also consider whether any components of the water management system have outlived their useful life and require decommissioning. Facility owners and operators will be responsible for determining whether an assessment is necessary and for assessing their own facilities, if a sufficient assessment program does not already exist. Facility owners and operators will also be responsible for requesting State technical and financial assistance, if needed, in compliance with State funding guidelines developed for the program. Results of the assessment program would be used to prioritize State investment in the Statewide Water Resource Management Systems Modernization and Rehabilitation Program described below. Results should also be used by local and regional entities in the development of Regional Sustainability Outlooks and future watershed sustainability planning. In addition, results would support local asset management programs and forecasting of capital improvements. This program would require authorization and funding from the Legislature to ensure sufficient resources are allocated. This program would help implement the actions recommended in the Governor’s Water Action Plan to “support and expand funding for integrated water management planning and projects,” “encourage State focus on projects with multiple benefits,” “improve statewide groundwater recharge,” and “encourage flood projects that plan for climate change and achieve multiple benefits.”

o Statewide Water Resource Management Systems Modernization and Rehabilitation Program. DWR will develop a Statewide Water Infrastructure Modernization and Rehabilitation Program to help ensure statewide water resource systems are rehabilitated from the effects of subsidence, resilient to a changing climate, and provide flexibility for managing water resources into the future.

This program should include funding for major rehabilitation, replacement, and new facilities that promote modernization of water- and flood-related infrastructure. The program will assist local, regional, and State water managers and facility owner/operators to modernize and rehabilitate their water resource management systems, as needed. Facility owners and operators will be responsible for requesting State technical and financial

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assistance, if needed, in compliance with State funding guidelines developed for the program. State modernization and rehabilitation funding assistance should capitalize on local and federal cost-sharing. The program should utilize an integrated approach to rehabilitation and modernization, including ecosystem restoration and climate change adaptation. This program would help implement the actions recommended in the Governor’s Water Action Plan to “support and expand funding for integrated water management planning and projects,” “encourage State focus on projects with multiple benefits,” “improve statewide groundwater recharge,” and “encourage flood projects that plan for climate change and achieve multiple benefits.”

As part of this program, DWR, in consultation with the U.S Army Corps of Engineers, regional flood agencies, groundwater sustainability agencies, and landowners, will prepare a comprehensive plan and implement opportunities for integrating flood, surface water supply, and groundwater management. This would include using flood flows for managed aquifer recharge to reduce flood risk; stopping or slowing groundwater overdraft and subsidence; reconnecting floodplains; and improving ecosystems, drought preparedness, and water quality. The plan should examine expanded flood bypasses and flood easements in conjunction with groundwater recharge strategies, including groundwater banking and storage. These strategies should include using agricultural and grazing lands for recharge, expanded conveyance of flood flows to recharge areas, and reoperation of reservoirs for early releases of water for recharge prior to storms.

This program should be informed by the results and prioritization established in the Statewide Water Management System Assessment Program. Results of this program should be tracked and reported routinely to assess the attainment of the intended outcomes. Results should also be considered in the development of Regional Sustainability Outlooks and future watershed sustainability planning. This program would require authorization and funding from the Legislature to ensure sufficient resources are allocated.

Promote the use of vegetation, soils, and other elements and land use practices, such as working landscapes and mountain meadow and forest management, to restore some of the natural processes required to manage water and create healthier urban, rural, and natural environments.

o Statewide Green Infrastructure and Working Landscapes Task Force. The California Natural Resources Agency and the California Department of Food and Agriculture should jointly lead a Statewide Green Infrastructure and Working Landscapes Task Force.

The task force would review alternatives and establish a framework for developing a conservation easement program that supports green infrastructure and working landscapes and considers protection of groundwater recharge areas and natural upper watershed lands. The Task Force should prepare a report summarizing its findings and recommendations for use by the Legislature and the Executive Branch in developing statute, regulations, and policy. Establishing this task force would require authorization and funding

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from the Legislature to ensure adequate resources are allocated. This Task Force would further the actions recommended in the Governor’s Water Action Plan to “improve land use and water alignment” and “improve statewide groundwater recharge.”

o Integrated Land Use and Water Management Implementation Program. The California Natural Resources Agency, Governor’s Office of Planning and Research, and the California Department of Food and Agriculture should jointly implement an Integrated Land Use and Water Management Implementation Program to promote the integration of land use and water management activities.

This program should be designed to enable the State to improve the integration of its own infrastructure, as well as provide technical and financial assistance to local and regional agencies. This program should facilitate stronger collaboration between land use planners and water planners. This program should provide regulatory and financial incentives for local and regional plans that include integrated water management (IWM) and provide technical tools and data resources to make it easier for local governments to prepare land use plans that include IWM. The program should encourage measures that also include preservation of existing floodplains, aquifer recharge areas, agricultural lands, and alluvial fans; reduction of hardscapes; implementation of low-impact development practices; restoration of natural floodplain functions; and design measures to increase post-flood resiliency. This Task Force would further the actions recommended in the Governor’s Water Action Plan to “improve land use and water alignment” and “improve statewide groundwater recharge.”

Provide Sufficient and Sustainable FundingTo ensure sufficient and sustainable funding for water resource management activities over time, the following actions are recommended:

Commit to consistent, ongoing, State investment designed to deliver specific long-term outcomes that contribute to the four societal values.

o Investment Prioritization. State government should prioritize investments based on expected contribution of a program or project to the four societal values, cost effectiveness, and ability to improve watershed resiliency.

Use consistent, reliable, and diverse funding mechanisms, with an array of revenue sources, to support managing water resources for sustainability, including ongoing management actions and capital projects.

o Removal of Funding Barriers. DWR will engage local water managers and elected officials in compiling strategies and best practices to remove barriers to local and regional funding for water projects.

This evaluation should include recommendations to clarify the 1996 Right to Vote on Taxes Act’s (Proposition 218’s) applicability to water-related fees and taxes, including potential recommendations to modify legislation, if necessary. The evaluation will also identify limitations to implementing multi-district/multi-benefit projects, such as using fees from

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assessment districts for out-of-district actions. This activity would help implement the action recommended in the Governor’s Water Action Plan to “remove barriers to local and regional funding for water projects.”

o Novel Funding Mechanisms Feasibility Study. In collaboration with water managers, decision-makers, and other stakeholders, DWR, through the Water Plan Team, will work with stakeholders and develop a feasibility study to identify any potential changes to existing funding mechanisms and explore novel funding mechanisms.

Novel funding mechanisms may include an assessment to help fund the public benefits of water projects or a statewide flood insurance program for funding flood management activities. The study will provide recommendations to the Legislature and Administration regarding novel funding mechanisms, who would pay them, how they would be collected, and how they could be used. This program would help implement the action recommended in the Governor’s Water Action Plan to “analyze user and polluter fees.”

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Summary Table of RecommendationsTable 1 provides a summary of how the actions described above could support sustainability and a range of costs and time to implement. How each action may support sustainable water resource management in California is scored by determining if the action has an indirect, low, moderate, or high potential to contribute to the four societal values. The potential range of annual capital and State operations costs for each of the identified actions is identified by the following ranges of costs:

Table3-1. Summary of How the Recommended Actions Support the Societal Values and the Estimated Cost and Time to Implement the Actions

Policy Recommendation / Prioritized Actions

Societal Values CA Water Action Plan

Actions Advanced

(Directly or Indirectly)

Annual Cost

Time to Implement

Public Health &

Safety

Healthy Economy

Thriving Ecosystems

Enriching Experiences

Improve Alignment of Agencies’ Initiatives and GovernanceSocietal Value Legislation All $ 1–2 yearsState Agency Alignment Around Sustainability

i i i i All $ 1–2 years

Regional Sustainability Planning Outreach and Recommendations

i i i i All $ 1–2 years

Lead Agency Definition i i i i 9 $ 1–2 yearsTribal Consultation i i i i All $ 1–2 yearsState Contracting with Tribes i i i i All $ 1–2 years

Improve Regulatory Framework to Reconcile Environmental Needs and Human ActivitiesProgrammatic Environmental Compliance Task Force

i i i 9 $ 1–2 years

Restoration Project Permitting i i i 9 $ 1–2 yearsDelegation of Federal Permitting

i i i i 9 $ 1–2 years

Cooperative Agreements i i i i 9 $ 1–2 yearsProvide Resources, Knowledge, Skills, and Tools Water Managers Need for Data-Driven Decision-making

Climate Science and Monitoring Program

i i i i All $$ Continuous




Actions Advanced

(Directly or

Annual Cost

Time to Implement

Public Health &

Safety

Healthy Economy

Thriving Ecosystems


Comprehensive Water Resource Data Collection and Management Program

i i i i All $$$ Continuous

Regional Sustainability Outlooks

i i i i All $ Continuous

Water Management Sector Plans

All $$ Continuous

Plan Alignment i i i i All $ 1–2 yearsStatewide Water Storage Reconnaissance Program

i i i i $ Continuous

Regional Engagement in Update 2023

i i i i $ 3–5 years

State Agency Performance Tracking and Reporting

$ Continuous

Reporting Requirements for State Funding

$ 1–2 years

DAC Planning Support $ ContinuousDisadvantaged Communities Engagement in Integrated Regional Water Management

i i i i $$$ Continuous

Water Resource Education $ ContinuousModernize and Rehabilitate Water Resource Management Systems

Statewide Water Resource Management Systems Operations and Maintenance Assessment Program

i i i i $$$$ 3-5 years

Statewide Water Resource Management Systems Operations and Maintenance Modernization Program

$$$$$ Continuous

Statewide Water Resource Management Systems Asset Assessment Program

i i i i $$$$ 3–5 years

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Actions Advanced

(Directly or

Annual Cost

Time to Implement

Public Health &

Safety

Healthy Economy

Thriving Ecosystems


Statewide Water Resource Management Systems Modernization and Rehabilitation Program

$$$$$$ Continuous

Statewide Green Infrastructure and Working Landscapes Task Force

$ 1–2 years

Integrated Land Use and Water Management Implementation Program

$$$$ 3-5 years

Investment Prioritization $ ContinuousRemoval of Barriers $ 1-2 yearsNovel Funding Mechanisms $ 1-2 years

Notes:i Potential indirect contribution to this outcome Low potential contribution to this outcome Moderate potential contribution to this outcome High potential contribution to this outcome

$ < $2 million$$ $2 million - $10 million$$$ $10 million - $50 million$$$$ $50 million - $200 million$$$$$ $200 million - $500 million$$$$$$ $500 million+

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Chapter 4: Investing in Water Resources Sustainability

Aligning investments and funding mechanisms with Californians’ values is necessary to effectively move toward sustainability. Californians place a high value on statewide sustainability, yet many water resources management sectors in California lack the stable and sufficient funding needed to improve resiliency, maintain existing systems, restore ecosystems, and improve reliability. Update 2018 provides the analysis, findings, rationale, recommendations, and accountability for sufficient and stable funding of State actions that contribute toward societal values. Annual historical funding will not support the level of investment needed for statewide sustainability. Additional funding is needed for actions that the State is uniquely positioned to accomplish, which will improve California’s watersheds; allow for ongoing actions to operate, maintain, repair, rehabilitate, and replace existing systems; and track and report progress toward water resources management sustainability.

Setting and ScopeSome water management sectors, such as water supply reliability and water quality, are predominately funded by ratepayer revenues, as well as through local revenue bonds for larger capital investments. On the other hand, flood management (including stormwater management), statewide planning and data management, statewide infrastructure, disadvantaged communities, legacy impacts, and ecosystem management often do not have stable or sufficient funding. State government has a major role in supporting many of these actions. Historically, State funding for water resources management predominately consists of state general fund dollars and general obligation bonds. Funding for actions that help ensure desired outcomes from past investments (e.g., operation and maintenance) and future investments (e.g., data and planning) are often inadequate or unstable. This has caused a significant decline in the condition of some water system infrastructure and ecosystems.

While local, federal, and other stakeholders play a crucial role in funding water management actions, the scope of Update 2018’s funding recommendations are focused on State government roles, responsibilities, and obligations for sustaining California’s water resources. While the estimated funding needs exceed California’s willingness and ability to pay, Update 2018 uses a principled, disciplined approach by recommending a realistic increase in State government funding for the actions recommended in Chapter 3. While a 50-year planning horizon was used to examine long-term funding needs and trade-offs, the five-year implementation period for Update 2018 (2019 – 2023) is emphasized.

Building on Update 2013 Finance Accomplishments and CommitmentsFunding conversations and decision-making are complicated and often contentious. But, broad agreement was accomplished in California Water Plan Update 2013 (Update 2013) regarding several fundamental aspects of State government funding. Update 2018 builds on the accomplishments and makes significant strides in fulfilling agreed-upon principles and shared values in developing viable, well-vetted State integrated water management (IWM) investment and funding recommendations. Table 4-1


illustrates how key finance components of Update 2013 accomplishments and agreements are advanced in Update 2018.

Table 4-1: Summary of Update 2018 Leveraging and Fulfillment of Update 2013 Accomplishments and Commitments [Note to reviewer: Table populated with placeholder text- will be refined]

Update 2013 Accomplishment/Commitment

Update 2018 Advancement/Fulfillment

Balanced regard for comprehensive social criteria

Improving cost effectiveness, efficiencies, and accountability

Prioritization method and rationale for apportioning IWM investment based on values

Increasing certainty of desired outcomes Enhancing stewardship of State

government monies at statewide and regional scales

Annual Progress Report; Operational description and clear vision for sustainability and associated social values plus establishment of Sustainability Outlook

Timely decision-making despite ever-present uncertainty

Adaptive policy-making made possible through Sustainability Outlook

Not redirecting State government funding from its authorized purpose

Annual progress report

Investment decisions accounting for the availability of future revenues

Funding mechanism and recommendations considered public’s ability and willingness to pay

Cost of borrowing, and risks of indebtedness considerations

Long term costs and other trade-offs examined for funding scenarios that range from pay as you go to exclusive use of general obligation bonds

Avoiding stranded costs and funding discontinuity

Minimizes stranded costs of governance by leverage existing entities such as RWMG’s and GSA’s. Underscores the value of funding continuity and recommends solutions to enhance stability.

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Funding Needed for Recommended Actions

Identifying, analyzing, and recommending ways to implement the recommended State actions (including local/regional assistance) in Update 2018 is essential to putting California on a more sustainable path. The first step is estimating the funding required to implement the recommended actions in Chapter 3 (recommended actions). This forms the basis of the recommended funding scenarios in Chapter 5. To put these costs in perspective, Update 2018 includes a broader estimate of funding needs for all IWM actions across State, local, and federal agencies1.

Providing Context - IWM Funding NeedsThe purpose of estimating statewide IWM funding needs across all levels of government is to support a common understanding of the broader context of funding needs for water-related management actions planned within California. The IWM funding need estimates represent the most recent and complete estimate of planned and proposed water resources management actions. Estimated need is arranged by water management sectors (i.e., flood management, water supply reliability, water quality, ecosystem management, and people and water) because the suitability of funding mechanisms varies based on the sector.

The estimated need is based on the best readily available information, and will continue to be refined in future Water Plan Updates. The total estimated need is more than $365 billion during the next 50 years. If current funding levels are maintained, there is a funding gap of more than $175 billion during the next 50 years. Update 2018 does not include recommendations for funding this larger, contextual need.

Table 4-2 provides the estimated need for water resources management in California. The estimated need includes capital costs of more than $189 billion and ongoing costs of approximately $1.4 billion annually (including costs for safe and affordable drinking water for disadvantaged communities).

Cost of Initiating Update 2018 Actions

The cost of implementing recommended actions in Update 2018 total more than $102 billion for capital and less than $100 million per year for ongoing actions. Update 2018 calls for an incremental increase in State funding to begin advancing the recommended actions at a feasible rate, but this is not enough to immediately and fully fund all recommended actions. An additional $2 billion to $5 billion per year (gradually increasing over the next 50 years) is recommended. This jumpstarts the State’s roles and responsibilities in implementing the recommended actions, and includes additional funding for financial and technical assistance at local and regional levels. Table 4-2 also shows estimated funding needs for each of the five Update 2018 priorities. Using a “realistic funding ask” to implement recommended actions will provide decision-makers with a practical knowledge base to invest among the five priorities. This knowledge also helps maximize the return on investment by directing funding toward well-defined desired outcomes.

1 Funding need estimates do not include administration, operations and maintenance, and other transactional costs of local and federal agencies.

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Table 4-2. State, Local, and Federal Capital Water Management Needs in California (2016 Dollars) 1,2

Water Management SectorsIdentified Need

Capital($ Million)

Ongoing($ Million/Year)

Flood Management $35,270 $650Water Supply Reliability $74,440 $380Water Quality3 $51,900 $200Ecosystem Management4 $27,160 $90People and Water $240 $50Total $189,010 $1,370Update 2018 Recommended ActionsImprove Alignment of Agencies’ Initiatives and Governance $0.00 $0.1

Improve Regulatory Framework to Reconcile Environmental Needs and Human Activities $0.00 $0.1

Provide Water Resources Managers Resources, Knowledge, Skills, and Tools Needed for Data-Driven Decision-Making

$0.00 $59.4

Modernize and Rehabilitate Water Resources Management Systems $102,500 $36.2

Provide Sufficient and Sustainable Funding $0.00 $0.1Total $102,500 $95.9Total $291,510 $1,470.9Notes: 1 Partial estimate based on best available State, local, and federal plans and information. Plans and associated funding needs are generally constrained by existing planning capacity, funding constructs, and funding levels; therefore, they do not necessarily represent the full statewide funding needs. Ongoing need estimates are primarily from DWR.2 Table columns and row totals may not sum correctly due to rounding.3 This includes costs for safe and affordable drinking water for disadvantaged communities as estimated by the California Public Policy Institute (PPIC; PPIC. 2017. Priorities for California’s Water. Accessed online at http://www.ppic.org/wp-content/uploads/r_1017ehr.pdf on November 9, 2017).4 There are very few comprehensive plans and funding estimates for ecosystem management at either watershed statewide scales. As such, an average annual funding demand of $500 million is assumed over the 50-year planning horizon – not adjusted for time-value of money (PPIC. 2014. Paying for Water in California. Accessed online at http://www.ppic.org/content/pubs/report/R_314EHR.pdf on November 9, 2017.).

Funding Mechanisms A mix of funding mechanisms must be implemented to provide the stable and sufficient funding for capital (large magnitude, short duration) and ongoing (low magnitude, long duration) management actions. Stable funding helps increase efficiency and return on investment for addressing many of California’s most pressing issues. This list includes deferred maintenance; avoided costs associated with planning, research, development, or construction disruptions; and minimization of stranded investment from data gaps and inaccessibility.

There are several existing and novel mechanisms that can be used to implement management actions. Each funding mechanism has a unique set of characteristics including applicability, feasibility, interannual reliability, and limitations. These characteristics informed Update 2018’s funding recommendations. Update 2018 includes several funding scenarios comprised of various mechanisms. Scenarios were used to help understand the feasibly, pros, and cons, of using various mechanisms to pay

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for management actions. The scenarios provide decision makers, stakeholders, and the State with insight in formulating a strategy to fund the recommended actions in Chapter 5.

Tables 4-3 through 4-5 provide a list of existing and novel State funding mechanisms, along with their respective attributes.

Table 4-3. Summary of Existing and Novel Funding Mechanisms

Funding Mechanis

m

Description

Existing MechanismsGeneral Fund A fund used for the daily and long-term operations of the State, local, or Federal agencies. The general

fund is typically supported with revenues that are collected on a regular basis with few restrictions on the use of those funds, primarily income and sales taxes. The general fund can be used for capital, O&M, and ongoing actions.

General Obligation Bond

A general obligation bond is a municipal bond backed by the full faith and credit of a jurisdiction rather than solely by the revenue of a specific project. Issuance of State general obligation bonds requires a statewide vote. Time is required to prepare language for the bond measure for the statewide vote, as well as a time lag before funds would be available after passage. General obligation bonds are generally used to fund capital actions. The State must pay back the principal (amount raised), plus bond issuance cost, and interest over the life of the bond.

Greenhouse Gases (GHG) Cap-and-Trade Program Fund

A market based program to reduce GHG emissions using a cap and trade program that includes an annually declining limit on GHG emissions. The State sets an annual cap on total emissions and auctions off emission allowances to GHG emitters, who may subsequently buy or sell allowances among themselves. For the auction proceeds to be used to fund water resources management actions, the action must show a nexus in reducing GHG emissions.

User Fees A tax or fee based on the principal of either a beneficiary paying for a service or good, or a polluter paying for costs associated with damages to the environment. Examples include: State Water Resources Control Board Drinking Water, Water Quality, and Water Rights fees; local development fees, and water rates. A user fee requires legislation that stipulates the types of benefits that can be assessed actions permitted under the fee.

Novel MechanismsWatershed or River Basin Assessment

A watershed or river basin assessment could be used to fund IWM. The watershed or river basin assessments would be assessed statewide with funding returned to watershed or river basins to support implementation of management actions previously identified in a regional sustainability plan.

Water Surcharge Fee

A water use surcharge on retail water sales could be used to generate revenue for water projects. The fee could support actions including integrated water resources management. Revenue generated by a water use surcharge would require actions funded to demonstrate a nexus to the tax.

Risk Reduction Insurance

Risk reduction insurance could be used to support funding of management actions to reduce risks from flooding, droughts, climate change, and unreliable water supplies. Implementation would involve the State partnering with private insurers and underwriters to effectively develop a State insurance program. The insurance program would be structured to allow the State to use a portion of the insurance premiums on implementing management actions to reduce risk and the remaining amount to purchase private catastrophic insurance.

Water Markets

Water markets allow willing buyers and sellers to shift the use of water through exchanges, one-time purchases, short-term leases, long-term leases, or permanent sale of water rights or contract quantities. Revenue could be generated from water markets by assessing a fee or per unit charge for each transfer, which could be used to implement management actions.

Public Private Partnerships

Public-private partnerships (P3s) are long-term contractual agreements between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance2.

Notes:1Based on best available plans and information from California Department of Finance.2Marin, Philippe. 2009. Public-Private Partnerships for Urban Water Utilities: A Review of Experiences in Developing Countries. Trends and Policy Options; no. 8. World Bank. https://openknowledge.worldbank.org/handle/10986/2703 License: CC BY 3.0 IGO.GHG– greenhouse gases O&M – operation and maintenanceP3s – public private partnership

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Table 4-4. Frame of Reference for Future Use of Existing Funding Mechanisms

(Based on Average and Maximum Historical Expenditures 2006-20151,2)

Funding Mechanism Historical Average($ in Millions)

Historical Maximum($ in Millions)

State General Fund $150 $300State General Obligation Bond $2,440 $3,410Local Agency3 $810 $1,060Federal Government4 $410 $540Notes: 1 Table columns and row totals may not sum correctly due to rounding.2 Average and Maximum Historical State Expenditures do not include designated State special funds.3 Local agency funding is from city, county and special district general funds, user fees, and general obligation bonds for water resources associated capital and some ongoing actions (excludes administrative and local agency O&M activities).4 Federal government funding is from congressional appropriation for BLM, FEMA, NOAA, NPS, NRCS, Reclamation, USACE, and USFS, water resources management associated capital and some ongoing actions (excludes administrative and Federal O&M activities).

Table 4-5. Analysis of Appropriateness of Existing State Funding Mechanisms

Funding Mechanism

Inter-annual Reliability

(High, Moderate, Low)

Applicability(High, Moderate,

Low)

Cost Share Range (Minimum – Maximum)

Existing MechanismsGeneral Fund Moderate dependent

upon State budgetingHigh: OMRR&R and ongoing actionsLow: capital actions

20 to 100% for capital, data, tools, and planning actionsUp to 100% for ongoing and policy actions

General Obligation Bond

Low High: Capital actionsLow: Ongoing actions

20 to 100% for capital, data, tools, and planning actions N/A: O&M

Greenhouse Gases (GHG) Cap-and-Trade Program Fund

Moderate dependent upon market factors

High: ecosystem and other actions that reduce GHGN/A: capital, OMRR&R, ongoing actions unrelated to GHG reduction

Up to 80% of capital and planning actions that show nexus to GHG reductions

State User Fees High High: actions related to benefitN/A: capital, OMRR&R, ongoing actions unrelated to identified fee benefit

Up to 80% of capital and planning actions related to benefitN/A: O&M and policy actions

Novel MechanismsWatershed or River Basin Assessment

High High Up to 100% for State services and policy actionsUp to 80% of infrastructure and planning actionsN/A: O&M

Water Surcharge Fee

Moderate dependent upon resource usage

Moderate dependent upon nexus to fee

Up to 80% of capital, ongoing, and policy actions related to benefit

Risk Reduction Insurance

Moderate dependent upon number of insurance policies purchased

Moderate dependent upon linkage to risk reduction actions

Up to 100% of risk reduction related capital, ongoing, and policy actions

Water Markets Variable/Moderate dependent upon market factors

Moderate dependent upon nexus to resource benefit

Up to 80% of capital, ongoing, and policy actions

Public Private Partnerships

High Low – Legislative changes are needed for

Up to 100 % with potential reductions from innovation and

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(Based on Average and Maximum Historical Expenditures 2006-20151,2)

Funding Mechanism Historical Average($ in Millions)

Historical Maximum($ in Millions)

State General Fund $150 $300State General Obligation Bond $2,440 $3,410Local Agency3 $810 $1,060Federal Government4 $410 $540Notes: 1 Table columns and row totals may not sum correctly due to rounding.2 Average and Maximum Historical State Expenditures do not include designated State special funds.3 Local agency funding is from city, county and special district general funds, user fees, and general obligation bonds for water resources associated capital and some ongoing actions (excludes administrative and local agency O&M activities).4 Federal government funding is from congressional appropriation for BLM, FEMA, NOAA, NPS, NRCS, Reclamation, USACE, and USFS, water resources management associated capital and some ongoing actions (excludes administrative and Federal O&M activities).

Table 4-5. Analysis of Appropriateness of Existing State Funding Mechanisms

Funding Mechanism

Inter-annual Reliability

(High, Moderate, Low)

Applicability(High, Moderate,

Low)

Cost Share Range (Minimum – Maximum)

implementation cost savingsNotes:OMRR&R – Operations, Maintenance, Repair, Rehabilitation, and ReplaceGHG- greenhouse gases

Funding ScenariosA variety of funding mechanisms were used to create several funding scenarios. Each scenario is comprised of a unique mix of mechanisms to pay for the additional funding called for in Update 2018. Each funding scenario results in different benefits and impacts. The scenarios evaluate the plausibility and trade-offs of different combinations of funding mechanisms. Funding scenarios that are plausible with acceptable trade-offs are presented in Chapter 5, Implementation and Funding Scenarios. These can be used by the governor, Legislature, and other decision-makers to formulate funding policies that meet Californians’ funding preferences and priorities.

The six funding scenarios include:

Scenario A: Current Trends Continue – Represents average annual State, local, and federal historical funding levels. This scenario provides a common frame of reference to examine changes occurring in other scenarios.

Scenario B: Heavy Reliance on Borrowing – Increases State general obligation bonds to help pay for the Update 2018 recommended actions. This scenario illustrates the level of debt incurred and the total cost over 50 years if State general funds remain at historical annual average levels, no novel mechanisms are utilized, and State general obligation bonds are increased to pay for recommended actions. Local and federal funding remains at historical annual averages.

Scenario C: Heavy Reliance on State General Fund – This scenario explores increasing appropriations from the State general fund to implement the recommended actions. State general obligation bonds remain at historical annual averages and no novel mechanisms are utilized. Local and federal funding remains at historical annual averages.

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Scenario D: Historical Maximum Existing Mechanisms and Implementation of Novel Mechanisms – Uses a combination of maximum historical annual funding for State general fund and general obligation bonds, in addition to implementing novel mechanisms to pay for implementing the recommended actions. Local and federal funding remains at historical annual averages.

Scenario E: Using State General Fund to Defray Implementation of Novel Mechanisms – Same as Scenario D, but replacing the use of novel mechanisms with increased appropriations from the State general fund. This scenario explores the prospect of using the State general fund to defray the cost of implementation of novel mechanisms. Local and federal funding remains at historical annual averages.

Scenario F: Accelerated Funding – Uses the maximum historical annual funding level of the State general fund, implements novel mechanisms at the same level as in Scenario D, and increases State general obligation bonds to meet an accelerated implementation of the recommended actions. Local and Federal funding remains at historical annual averages.

Scenario G: Pay as you Go – Exclusively relies on the use of State general funds and novel mechanisms to pay for the recommended actions. No new borrowing (State general obligation bonds) is undertaken. Local and Federal funding remains at historical annual averages.

FindingsThere are many complexities, considerations, and unknowns surrounding the identification, implementation, and administration of the most appropriate, feasible, equitable, and cost-effective way to pay for Update 2018 implementation. The findings below provide insights and guidance that is intended to inform and rationalize the funding scenarios presented in Chapter 5. More specific and quantitative funding scenario findings provide a common understanding of specific trade-offs of the different funding scenarios and help determine the recommended funding scenarios presented in Chapter 5.

General Findings: Annual historical funding will not support the level of investment needed for statewide

sustainability. Historical expenditures were often driven by funding constructs that have not adequately

funded what Californians value. Public benefits from flood management, statewide planning and data, statewide infrastructure,

disadvantaged communities, ecosystem management, and remediation of legacy impacts are often inadequately or unstably funded. State government has a major role in many of these areas.

Water supply reliability and water quality management actions have more reliable funding because they are ratepayer supported. However, there is still insufficient funding in some areas of the State.

State government does not have a stable and sufficient funding mechanism to assist disadvantaged communities in securing funding for capital investment and, to a greater extent, operation, maintenance, and other ongoing funding needs.

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Increasing funding from local and Federal mechanisms to match State expenditures results in earlier implementation of management actions, especially for capital actions. This early implementation is a result of additional funding becoming available sooner.

Implementation of some of the novel mechanisms could provide more stable, long-term funding for management actions.

Funding for ongoing management actions are underfunded compared to capital management actions. This has caused significant deferred maintenance for much of the state’s infrastructure.

A blend of several existing and novel mechanisms is necessary for sufficient and stable funding for water resources management.

One of the most effective and flexible methods for State government to invest in statewide suitability is to provide local and regional financial assistance with specified desired outcomes. The outcomes must reflect the public benefits, consistent with State government’s roles and responsibilities, at the appropriate scale (e.g., watershed). Local and regional entities can then determine the best way to accomplish the outcomes based on local/regional priorities, conditions, and available solutions.

Funding Scenario Findings:The results of exploring the trade-offs and sensitivities for each funding scenario are shown in Table 4-6. The metrics used to identify trade-offs and plausibility of different funding scenarios are as follows:

Total Annual Funding by Funding Mechanism – Enables comparison of total annual funding for each State, local, and federal funding mechanism.

Annual Fiscal Impacts of Novel Mechanisms - Illustrates the relative magnitude of cost impacts from novel mechanisms.

Cost per Household – It is hypothetical and not intended to signal a specific funding mechanism nor an actual distribution of costs among households. The equivalent cost per household is shown in two ways. This first spreads costs equally across all Californian households (100 percent pay). The second assumes 90 percent of households pay. This reflects the realities of the state’s socio-economics and demographics (it is assumed that 10 percent of Californian households are below the poverty line, as defined by the U.S. Census Bureau, and may not have the ability to pay).2, 3

Equivalent cost per capita –It is hypothetical and not intended to signal a specific funding mechanism nor an actual distribution of costs among Californians. The equivalent cost per capita is shown in two ways. The first is spread equally across all Californians (100 percent pay), and the second assumes 85 percent of the population pays. This reflects the realities of the state’s socio-economics and demographics. It is assumed that 85 percent of California’s total population would be responsible for funding 100 percent of the novel mechanism.3, 4

2 Number of household estimates (13,307,614) and persons per household (2.79) are from California Department of Finance County/State Population and Housing Estimates, January 1, 2017. http://www.dof.ca.gov/Forecasting/Demographics/Estimates/E-1/3 Number of households and persons under the poverty line are from American Community Survey, Percentage Of Families And People Whose Income In The Past 12 Months Is Below The Poverty Level. http://www.dof.ca.gov/Reports/Demographic_Reports/American_Community_Survey/

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Per Parcel – It is hypothetical and not intended to signal a specific funding mechanism nor an actual distribution of costs among parcels. Calculated as a flat amount of dollars per parcel (based on Fiscal Year 2014-2015 number of taxable parcels in California) required to generate funding for novel mechanism5

Dollars per $100 of Assessed Value of Property – It is hypothetical and not intended to signal a specific funding mechanism nor an actual distribution of costs among properties. This metric indicates the equivalent of an ad valorem tax rate in terms of dollars per $100 of net assessed value required to generate funding for novel mechanism. The net assessed value is based on Fiscal Year 2014-2015 secured local tax rolls. 5

Percentage of Need Funded – Percentage of total capital and ongoing needs that are funded in each scenario.

Specific findings related to each scenario are as follows:

Scenario A: Current Trends Continue – A significant funding gap will remain over the 50-year planning period. As State investments are prioritized to fully fund ongoing management actions, less funding is available for capital management actions. This prioritization would limit the amount of available State funding for local assistance programs. Overall, less than 10 percent of all capital management actions will be funded.

Scenario B: Heavy Reliance on Borrowing – To maximize funding from increased State general obligation bonds, local cost shares will need to increase in a proportionate fashion for some water sectors such as flood management. If local funding is increased, more State general obligation bonds will be used to fund capital management actions. But, increasing State general obligation bond funding will not fully fund all capital and ongoing management actions. It will also result in significant increased debt service from accrued interest. Doubling historical average funding from State general obligation bonds would be required to fully fund ongoing actions.

Scenario C: Heavy Reliance on State General Fund – This scenario would require a considerable increase (more than 15 times the historical average) in State general fund appropriations for water management. Fewer State general obligation bonds and an increased reliance on the State general fund lowers long-term debt service. State general fund appropriations have a lower interannual reliability because they must compete with other State services for funding. Historically, patterns of general fund appropriations are highly reactionary and are not stable enough to align with State planning efforts. Increasing State general fund appropriations enables all recommended and ongoing actions to be funded, and increases the number of capital management actions funded.

Scenario D: Historical Maximum use of Existing Mechanisms and Implementation of Novel Mechanisms – By implementing novel mechanisms, a dedicated funding mechanism for capital and ongoing

4 Population estimates are from California Department of Finance State/County Population Estimates with Annual Percent Change. http://www.dof.ca.gov/Forecasting/Demographics/Estimates/E-1/ 5 Number of parcels (11,649,442) and net assessed evaluation ($4,604,886,582,000) are based on FY 2014-2015 Secured Local Tax Roles.

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management actions is available for underfunded water sectors and areas of state. A tax or assessment, such as less than $10 a month per household (excluding households that fall below the poverty line), could realistically be implemented. Novel mechanisms would decrease State borrowing and reduce the debt service from State general obligation bonds. In addition, when combined with an increase in local funding, more capital management actions would be funded. But, any new tax or assessment will require legislation.

Scenario E: Using State General Funds In-Lieu of the Novel Mechanisms Used in Scenario D – This will require an increase of more than eight times the historical average of State general fund appropriations for water management, as well as an increase in State general obligation bond funding. Scenario E is more viable than Scenario C because it has a more balanced approach to funding, more realistic increases in State general fund appropriations and State general obligation bond issuance, and less long-term debt service.

Scenario F: Accelerated Funding – An accelerated implementation of the recommended actions requires a significant increase in funding from State general funds, an increased amount of State general obligation bond funding, and the implementation of novel mechanisms. An accelerated funding scenario may provide a more balanced approach to funding (as each State funding mechanism is increased), but significant challenges remain, including:

Significant debt accrued because of increased State general obligation bonds. Implementation of novel funding mechanisms will require legislation for a new tax or

assessment. May overwhelm State and local institutional capacity to perform work. Examples include initial

shortages in staffing or expertise. To implement all management actions under this scenario, existing State and local funding would need to double, and federal appropriations would need to be increased.

Scenario G: Pay as you Go – To pay for management actions without borrowing, State general fund appropriations would need to increase, and novel mechanisms would need to be implemented. This scenario would require a considerable increase in State general fund appropriations for water management (more than 15 times the historical average). State general funds have a lower interannual reliability because they must compete with other State services. In addition, implementation of any new tax or assessment will require legislation. In this scenario, the funding required from novel mechanisms would be considerable, making the public’s ability to pay unattainable and potentially not politically viable.

Funding Scenarios A, B, C, F, and G are not advanced in Chapter 5 because of unacceptable trade-offs, gaps in funding management actions, and an unrealistic increase in overall costs. Scenarios D and E are plausible and have more acceptable trade-offs. These two scenarios will be presented in Chapter 5 as alternative funding scenarios for implementation by the legislature and governor’s administration.

Placeholder: Table 4-6 presents the scenarios trade-off analyses.

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