by Brian Gray, Leon Szeptycki, and Barton “Buzz” Thompson

Waterways meander throughout farmlands in the Delta. (Photo: CA Dept. of Water Resources, shot 3/24/2008)

California’s management of water for is not working for anyone. Environmental advocates argue that state and federal regulators have set water quality and flow standards that do not adequately protect fish and wildlife, and have not enforced these requirements when they are most needed. Farm and urban interests claim that these regulations have been ineffective and cause unnecessary economic harm. These water users may incur additional cutbacks in their water supplies if regulators conclude that more water is needed to support struggling fish populations, making planning for producers difficult. Amidst this tension, native fish populations in the state have continued to plummet.

This ironic situation—in which both sides believe they bear a disproportionate burden of water shortages and regulatory uncertainty—cries out for reform. We should start by granting the environment a water right, as detailed in a new report we helped write for the Public Policy Institute of California.

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California’s native fish species have long struggled against the cumulative effects of land and water resources development for agricultural, business, and residential purposes. Dams have blocked access to spawning grounds, reservoir operations have altered river flows, land development has degraded essential habitat, and diversions for water supply have severely reduced the volume of water in many California rivers.

Stressors on fishes are especially pronounced when precipitation and runoff are diminished. During the 2012–16 drought, for example, a parasite known as “ich,” which thrives in low water conditions, infected adult Chinook salmon returning to spawn in the Klamath and Trinity Rivers . The State lost two consecutive wild cohorts of endangered winter-run Chinook salmon when waters warmed on the Sacramento River below Shasta Dam. And the populations of several species that inhabit the Sacramento–San Joaquin Delta declined to historically low levels as flows and water quality diminished throughout the estuary.

Although many have tried to address the drought’s challenges creatively and cooperatively, two opposing viewpoints have dominated the political debate. Water users—especially San Joaquin Valley farmers—complain that the water quality and endangered species requirements compounded the severity of the drought and deprived them of valuable water. Signs along Interstate 5 to “Stop the Congress Created Dust Bowl” are manifestations of this resentment.

In contrast, environmental and fishing advocates argue that native fish are in peril because state and federal regulators too often compromise on enforcement of these standards, especially during drought. They point to operational and regulatory decisions that diverted water from Trinity River reservoirs until salmon actually began to die, kept too little water in Lake Shasta to provide cold water releases for juvenile salmon, and loosened Delta salinity standards to facilitate water exports for farms and cities. Their claims are backed up by evidence of plummeting populations of key aquatic species.

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These unfortunate events show that the existing regulatory structure is not working for any party. We recommend that California move away from the long-standing policy of protecting water quality and instream flows by restricting the exercise of water rights, and instead foster a new policy that integrates environmental uses into the water rights system. This reform will increase the efficiency and flexibility of environmental water management and enhance certainty for all water right holders.

The centerpiece of our proposal is the creation of Ecosystem Water Budgets (EWBs) for the state’s principal watersheds. An EWB is a defined quantity of water that would be flexibly allocated to meet ecosystem management objectives. This concept includes several key features:

• Watershed-based planning. Local water managers, water users, and environmental and fishing groups would draft “watershed ecosystem plans” that would determine the volume of water needed to ensure the ecological integrity of each river system. These plans also would designate priorities for the use of the EWB under varying hydrologic conditions.

For example, during periods of relative water abundance, the EWB could be directed to aquatic habitat improvements (such as refreshing spawning gravels) and floodplain and wetlands enhancement for fish and terrestrial wildlife. During drought, when water supplies are scarce for all uses, the EWB would be devoted to critical ecosystem needs—such as cold-water refugia for salmon or wetlands for waterbirds. Planning for ecosystem needs in dry years would perform the dual function of allowing water users to know drought water availability in advance and prepare accordingly.

As with the existing environmental regulatory standards, the ecosystem water assigned to each EWB would carry the highest priority within each watershed. Because the EWBs would largely implement the environmental regulatory standards, the State Water Resources Control Board would review and approve both the watershed ecosystem plans and the EWBs. This priority would be needed to comply with existing laws, and would also implement a key aspect of California water law:  that “public trust” purposes, such as watershed health, must be incorporated into the water rights system.

• Functional flows and integrated objectives. The quantity of water assigned to each EWB would be based on a “functional flows” assessment of the most effective flow regime for the ecosystem as a whole. This would stand in marked contrast to the current regulatory approach to environmental protection, which focuses on the needs of individual species by regulating individual stressors such as water diversions and discharges of pollutants.

Integrated ecological planning is more realistic because it recognizes that multiple species are adapted to the same flow regime within a single aquatic ecosystem. It is also more efficient because it minimizes the risk of overlapping, and sometimes conflicting, regulatory water requirements.

• Independent and flexible administration. An independent trustee for the watershed would administer each EWB. The trustee would manage the ecosystem water as an environmental water right with the same prerogatives as other water right holders. The trustee’s primary responsibility would be to deploy the ecosystem water to fulfill the objectives of the watershed ecosystem plan and annual watering plans that define the specific goals of ecosystem water management in light of current and projected hydrologic conditions and water availability.

As with other water right holders, the trustee should have authority to acquire and lease water. Water leases would be limited to circumstances in which there is excess water within the EWB in light of annual ecosystem goals. The proceeds of these short-term sales could then be used to purchase additional ecosystem water during droughts, to fund habitat improvements, and to acquire land and water rights. Moreover, because storage is an essential feature of efficient water management, the trustee should be able to store water—both in surface reservoirs and in underground aquifers—and to enter into surface and groundwater exchange agreements with other users.

The volumes of water assigned to each EWB would not necessarily be the same as those dedicated to ecological purposes under the current regulatory system. The EWB could be greater in watersheds where the existing regulations have proved inadequate to meet the goals of healthy and sustainable fisheries and ecosystems. But it also could require less water—or change the timing and uses of that water—because the EWB would be based on an integrated determination of the needs of the whole ecosystem, rather than fragmented regulatory assessments of individual species requirements. Moreover, each trustee could deploy this water flexibly in light of current hydrologic conditions to achieve targeted biological and ecological benefits. This approach would enable the trustees to use available ecosystem water more efficiently than is possible under existing law. Combined with other improvements in California water management, including improved water accounting and increased groundwater recharge during wet years, the EWB approach has the potential to stem the loss of aquatic species and allow environmental protections to work in better harmony with irrigation and urban water use.

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There are precedents for this form of environmental water management. Several western states and Australia have developed programs akin to ecosystem water budgets, and California has taken small steps toward this approach. For example, water users, environmentalists, and community groups have negotiated agreements on Putah Creek and the Yuba River that provide integrated ecological planning and flexible administration of water for fish and wildlife.

We expect that parties in other river systems will be interested in following these examples. Indeed, the State Water Resources Control Board has proposed designating blocks of water to support ecological uses in the principal tributaries of the Sacramento and San Joaquin Rivers, although currently without the management flexibilities we recommend. This process could be a catalyst for negotiation of EWBs on one or more of these rivers. The Federal Energy Regulatory Commission’s relicensing of hydroelectric dams on several of California’s other important rivers also may serve as a forum for interested parties to pursue more creative and flexible means of managing environmental water. Moreover, because groundwater storage and conjunctive use are components of our proposal, EWBs also may be useful to the parties who are now negotiating groundwater sustainability plans under the recently enacted Sustainable Groundwater Management Act.

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Although negotiated solutions are often the best means of resolving water resources controversies, the Legislature could facilitate the adoption of EWBs by recognizing instream environmental uses as valid water rights or by authorizing the trustees to administer ecosystem water with the same flexibility as other water rights. Legislation to outline the essential features of watershed-based ecological stewardship also would be useful. These include establishing criteria for the assignment of water to ecosystem uses, describing the management powers and responsibilities of the trustees, and defining the relationships of the EWBs to the existing laws and regulations that govern water quality and fisheries.

These changes would promote efficiency and certainty for all water users. Assigning water to the EWBs based on an integrated functional flows approach would direct the available water to the most valuable ecological services within each watershed. And the quantity of ecosystem water would be fixed, providing assurances to other water users in the watershed. The trustees would have to fulfill their stewardship responsibilities within the assigned budget or acquire additional water from other users. Conversely, the assigned ecosystem water would be off-limits to other water users unless they purchase surplus water from the trustees or acquire it through voluntary exchanges.

California’s aquatic ecosystems are fragile and ill-prepared for future droughts and a warming climate. We have a window of opportunity before the next drought strikes to adopt policies that encourage more creative and effective management of water assigned to essential ecological functions.

Brian Gray is a senior fellow at the Public Policy Institute of California and professor emeritus at UC Hastings. Leon Szeptycki is director of Water in the West and professor of the practice at Stanford University. Barton “Buzz” Thompson is the Robert E. Paradise Professor in Natural Resources Law at Stanford Law School.

Additional Reading:

Jeffrey Mount, Brian Gray, Caitrin Chappelle, Greg Gartrell, Ted Grantham, Peter Moyle, Nathaniel Seavy, Leon Szeptycki, and Barton “Buzz” Thompson, Managing California’s Freshwater Ecosystems: Lessons from the 2012–16 Drought (PPIC 2017).

Jeffrey Mount, Brian Gray, Caitrin Chappelle, Greg Gartrell, Ted Grantham, Peter Moyle, Nathaniel Seavy, Leon Szeptycki, and Barton “Buzz” Thompson, Eight Case Studies of Environmental Management During the 2012–16 Drought (PPIC 2017).

Jeffrey Mount, Brian Gray, Caitrin Chappelle, Jane Doolan, Ted Grantham, and Nat Seavy, Managing Water for the Environment During Drought: Lessons from Victoria, Australia (PPIC 2016).

Leon F. Szeptycki, Julia Forgie, Elizabeth Hook, Kori Lorick, and Philip Womble, Environmental Water Rights Transfers: A Review of State Laws (Stanford 2015).