A water portfolio planning report card for California

by Jay Lund


Kern Water Bank conjunctive use with waterbird benefits

Governor Newsom recently called for a state portfolio of actions to manage water under rapidly changing climate and other conditions.  This post reviews the state of water portfolio planning in California today.

In this complex changing world, major problems are rarely solved with a single solution or a single problem-solver. Portfolio-based planning and management tries to do many things in an organized and coordinated way, often with friends to collectively improve water management, reduce costs, and improve environmental conditions overall.  This sounds idealistic, but with hard work this approach has been tremendously successful when earnestly applied.

The most common portfolio plans are financial.  We feel safer if retirement funds have a diverse portfolio of different stocks, bonds, real estate and other investments, as well as social security and pension payments and an ability to manage expenses.  Government finance similarly is more stable if supported by a range of taxes and fees and some discipline and ability to reduce expenses.  Energy systems also usually involve a diverse portfolio of power stations connected by a flexible transmission network, along with pricing and efforts to manage energy demands and rules for managing shortages and outages.  Good portfolios provide a foundation for flexibility and help hedge against uncertainties.

California’s most advanced water management portfolios are by local and regional urban water suppliers seeking to diversify supplies and manage demands, often in cooperation with neighbors.  The Sacramento Water Forum, and efforts of EBMUD, MWDSC, SCVWD, CCWD, SDWA, Orange County, the Inland Empire and other areas show local and regional water agencies adapting to changes in conditions in California with great success using portfolio management.  These efforts almost always involve cooperation with outside agencies.

The safety of drinking water systems relies on a portfolio approach known as “multiple barriers.” Regulating harmful substances, source water protection, water treatment, disinfection, and public health monitoring and responses provide multiple layers of actions and institutions to reduce drinking water contamination and waterborne disease outbreaks.

Local agricultural water suppliers also employ portfolio approaches.  These cases are less well-funded, but usually include effective efforts to conjunctively manage surface water and groundwater supplies, in cooperation with farmers and often in cooperation with outside agencies. YCWA, YCFCWCD, KCWA, and other agencies have been leaders.

For floods, portfolio approaches also have become common, led by federal policy, with a mix of “structural” and “non-structural” approaches advocated to reduce the frequency of flooding and reshape human activities to suffer less when flooding occurs.  California benefits from a mix of flood warning, evacuation, floodplain management, flood bypass, levee, and reservoir operation activities and preparations at federal, state, and local levels.

Even in ecosystem management, portfolio approaches have been developed to help restore and maintain waterfowl in California, and North America, involving a range of institutions and a diverse and substantially coordinated set of adaptable management actions.  In California this includes the  Central Valley Joint Venture, which has been a foundation for broader relative successes for waterfowl.

California’s recent droughts and floods show the success of portfolio approaches.  The extreme events from 2012-2017 were more easily managed and caused less damage when agencies had developed effective portfolio water management approaches.  The areas hardest hit lacked preparation based on portfolio planning.  These results are illustrated by the overall portfolio water management scorecard below.

Portfolio Report Card for Water Management California:

Problem Grade Explanation
Urban water A- Mostly great success, illustrated by recent drought.  Still room for further improvement and opportunities to benefit from expanded collaborations.  Prop. 218 might limit cooperation.
Agricultural water B- Good successes, but more difficult future. Opportunities to benefit from expanded collaborations with urban, flood, rural drinking water, and ecosystem interests.
Rural drinking water D+ Band-aid approaches to a more systemic problem. Problem is relatively cheap to address, but wickedly hard to effectively organize and fund.
Floods C+ Good history of portfolio development and use, but lacks steady funding and attention outside of emergency management.  Still room for improvement.  Small communities remain problematic.
Ecosystems D Generally absent or poor development or use of portfolio or other active management approaches.  Poor development and integration of science. Waterfowl management is the most advanced and successful.
Groundwater C Improving over time, but far to go, particularly for water quality.  Worsening water quality in agricultural areas is a major challenge. SGMA brings major opportunities.  State needs a common technical groundwater program.
Delta C Slow improvements.  Stewardship Council plan is a potential foundation, but efforts to integrate efforts across agencies are slow to develop; meanwhile ecosystems decline and water demands rise.
Regional integration C+ Steadily improving in urban regions, with room for improvement.  Rural regions will be challenged much more by SGMA, which also can help structure opportunities.
Interagency integration D+ Largely absent among state agencies, isolated to a few examples.  Some excellent isolated programs, poorly integrated into agency and interagency efforts.  Disintegration disrupts developing a common understanding of problems and potential solutions.

The Governor is right to call for more and better use of portfolio management in California water.  The general portfolio approach has shown great value and effectiveness, but also has several challenges.

Three barriers hinder development of effective portfolio management:

Intellectually, people who would be involved in portfolio approaches must sufficiently understand and be willing to deal with the greater complexity and flexibility of portfolio management.

Organizationally, portfolio management requires organizing more people in more complex ways.  Organizing people is never easy.  Organizational issues include a host of legal, funding, coordination, personnel, and sociology issues.

Politically, those involved must be sufficiently unafraid of a portfolio approach. Challenges arise because most portfolio approaches require more entanglements and risks with outsiders for cooperative activities, such as conjunctive use, water trading, or economies of scale from regional facilities and activities.

It is remarkable how successful and widespread portfolio water management has already become despite these barriers.  Not surprisingly, portfolio management often takes time to develop and requires some motivating need and pragmatism.

Portfolio management has still greater and growing potential.  Improving portfolio management will be motivated and challenged by a more rapidly changing climate, growing collapses of native ecosystems, ending groundwater overdraft under SGMA, changes in Delta and storage infrastructure and environmental management (new flow regulations and/or voluntary agreements), and the need for cooperation to sustain economic prosperity at reasonable costs for agricultural and urban water users.

Moreover, portfolio management has still greater importance in helping balance and integrate management for multiple benefits.  This is nicely hinted-at by the State’s co-equal goals for the Delta Plan’s elements.  As single-purpose management becomes more effective, it ultimately struggles with management for other objectives.  As such, California’s portfolio water management must grow beyond narrow objectives and into a greater and less adversarial balancing across objectives.  Organizing state, local, and regional activities to achieve such balancing and integration might be the biggest challenge.

Further Readings

Central Valley Joint Venture. http://www.centralvalleyjointventure.org/partnership/what-is-the-cvjv

Hanak, E., J. Lund, A. Dinar, B. Gray, R. Howitt, J. Mount, P. Moyle, and B. Thompson (2011), Managing California’s Water:  From Conflict to Reconciliation, Public Policy Institute of California, San Francisco, CA.

Lund, J. (2019), “Portfolio Solutions for Safe Drinking Water – Multiple Barriers,” 7 April, CaliforniaWaterBlog.com

Lund, J. (2019), “Portfolio Solutions for Water – Flood Management,” 3 March, CaliforniaWaterBlog.com

Lund, J. (2019), “Portfolio Solutions for Water Supply,” 10 March, CaliforniaWaterBlog.com

Lund, J. (2019), “Shared interest in universal safe drinking water,” January 13, CaliforniaWaterBlog.com

Lund, J.R., J. Medellin-Azuara, J. Durand, and K. Stone, “Lessons from California’s 2012-2016 Drought,” Journal of Water Resources Planning and Management, October 2018. (open access)

Pinter, N., J. Lund, and P. Moyle (2019), “The California water model: Resilience through failure,” Hydrologic Processes, March, and blog post.

White, Gilbert (1966), Alternatives in Water Management, Publication 1408, National Academy of Sciences – National Research Council, Washington, DC, 52pp.

Jay Lund is a Professor of Civil and Environmental Engineering at the University of California, Davis where he is also Director for the Center for Watershed Sciences. He has always liked the idea of optimizing portfolios (perhaps a little too much).

About jaylund

Professor of Civil and Environmental Engineering Director, Center for Watershed Sciences University of California - Davis
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