Most recognized California as “the Golden State” long before lawmakers adopted the official nickname in 1968. But while California’s standing as the land of big ideas and golden opportunities is well-earned, so too is its recent reputation as a state in perpetual crisis. In few places is this more evident than the state’s ongoing debate over its aging and unsustainable water management system.

For all its experience in crisis management, resolving problems hasn’t exactly been California’s strength lately, particularly regarding water. Although virtually every stakeholder concedes that the system needs to be overhauled, the consensus generally ends there. As with the state’s annual hyperpartisan budget bloodletting, the key players on all sides have spent years digging in their heels, protecting their interests and resisting structural reform. The result is almost laughably predictable: A water system built a half-century ago for 18 million people is now woefully inadequate for the 38.3 million who live here today, much less the nearly 50 million residents expected to be here by 2030. With no comprehensive solution in sight, everyone from fish to farmers is living in flux.

And that’s business as usual for veteran water observers such as Rita Schmidt Sudman, executive director of the Water Education Foundation, a Sacramento nonprofit dedicated to raising public awareness about the state’s water issues.

“I’ve been doing this for almost 30 years now, and I am sad to say that unless there’s a crisis, nobody really pays attention,” Sudman says. “It gets attention when we have a prolonged drought or, worse, a flood. Everyone panics in a flood, but when the rain stops and the sun comes out, it is amazing how quickly people forget.”

It is safe to say everybody is paying attention now. With a third straight year of below-average rainfall putting the state into drought conditions, fears over adequate supply are acute. For many people living south of the Sacramento-San Joaquin Delta, supply is the key element in the equation.

Everyone panics in a flood, but when the rain stops and the sun comes out, it is amazing how quickly people forget.”

Rita Schmidt Sudman, executive director, Water Education Foundation

According to the Water Education Foundation, California averages approximately 193 million acre-feet of annual precipitation, mostly in the northern and coastal parts of the state. The majority is lost to evaporation, leaving less than 80 million acre-feet in yearly surface water supply, which includes water taken from the Colorado and Klamath rivers. Californians also use around 12.5 million acre-feet of groundwater each year and significantly more in a drought year. Around 46 percent stays in the environment while 43 percent flows through a maze of pipes and canals for agricultural use. Residents and businesses get the rest.

That might sound like a lot, but based on studies from the state Department of Water Resources, it is abysmally short of what we will need to accommodate the expected population growth. According to DWR, by 2020 California could regularly fall 2.4 million acre-feet short of its needed supply during good years and as much as 6.2 million acre-feet shy in heavy drought seasons.

Even a ready supply, however, wouldn’t resolve California’s water issues. A series of stringent federal court decisions meant to protect the fragile Delta ecosystems and fish populations have cut the flow of water to Central Valley farms, some by as much as 80 percent. That has dramatically reduced availability for agricultural use and forced many farmers to fallow large portions of their land. Those rulings have also fueled the long-running battle between environmental advocates and agricultural communities suffering through the worst economic downturn since the Great Depression. All of which has made finding a solution even more challenging.

The floundering economy may be the final stressor that brings the water issue to a head. “Water runs our economic engine,” says Valerie Nera, a water policy advocate for the California Chamber of Commerce. Nera says the ongoing water delivery shortfalls have undoubtedly placed even greater pressure on an already overtaxed system and had a drastically negative impact on the state economy. But getting specific on just how negative depends on whom you ask.

The Cal Chamber, for instance, notes that in 2008 water shortage was a major factor in the fallowing of more than 100,000 acres of otherwise fertile farmland and the resulting loss of more than 1,000 agricultural jobs. The cumulative economic loss totaled an estimated $260 million, and at least 50 of the state’s 58 counties qualified for federal disaster assistance. This year will be worse based on a recent report from UC Davis researchers, who, using economic multipliers, estimate that water delivery restrictions will cost the San Joaquin Valley nearly a billion dollars in agricultural income in 2009, including the loss of at least 31,200 jobs. Gov. Arnold Schwarzenegger’s office pegged the figure even higher, up to $3 billion. Both of these estimates have come down as officials were eventually able to supply Central Valley farms with more water than expected.

Those numbers have spurred countless angry calls from farm communities to get normal water rations flowing south again. Those pleas have received a friendly ear from several of the region’s congressional representatives, who have called for changes to the federal environmental regulations that led the courts to limit water transfers. In March, Rep. Wally Herger, a Republican who represents the predominantly agricultural 2nd Congressional District, told the House Natural Resources Committee that California’s water shortage was “a regulatory drought” made worse by regulations such as the federal Endangered Species Act. Rep. Tom McClintock, a Republican who represents the 4th Congressional District, has also lamented government regulation and called for a thorough review of how the ESA is applied.

“Water runs our economic engine.”

Valerie Nera, water policy advocate, California Chamber of Commerce

That view is far from universal. Peter Gleick, president of the nonpartisan Pacific Institute, an Oakland-based nonprofit that researches water issues around the world, says the global economy is the real culprit in Central Valley job loss, not lack of water. Gleick says that while farm labor unemployment is certainly bad, it is no worse — and perhaps even better — than job losses in nonfarm industries. In a blog he writes for the San Francisco Chronicle, Gleick said: “The Central Valley of California has been plagued by poverty and lack of access to reliable jobs and basic services, like clean drinking water, for decades. Turning the pumps back on will do little, if anything, to address the systemic injustice that farm worker communities endure in both wet years and dry.”

In an interview, Gleick agreed there is a water supply issue in California. But he says the problem is not what proponents of environmental deregulation and easing water delivery restrictions are making it out to be. “The real problem is that we don’t have enough water to do everything that everyone wants to do as inefficiently as we want to do them,” he says. Gleick says the push for deregulation is really just a desire to return to “old-style” solutions to our water problems.

“That thinking was to just give everyone all the water they want and let them do whatever they want with it,” Gleick says. “Those days are over.”

The California fishing industry certainly hopes Gleick is correct. John Beuttler of the California Sportfishing Protection Alliance says that since the advent of the State Water Project and the federal Central Valley Project in the 1960s, large water diversions have gradually taken a drastic toll on sport and commercial fishing. With lower river levels, water temperatures have become too high to support healthy salmon populations. Lower rivers also mean a higher concentration of pesticides and other urban and ag-related runoff, making the water more polluted than ever.

The result has been near catastrophic for both the chinook salmon population and the state’s fishing industry, which relies on a healthy salmon run to stay in business. That was impossible in 2008, when the chinook run was at just 66,000. That is barely above half the 122,000 minimum run necessary to hold the fishing season and far less than the optimal 180,000 seen in good years. With 2009 no better, the salmon fishing industry is suffering through its second consecutive year of federally ordered inactivity in hopes that time will allow the fish population to recover. In the meantime, the California Department of Fish and Game says the shutdown has cost more than 2,600 jobs and taken $279 million out of the state economy.

But CSPA’s Beuttler says those numbers only account for direct losses and don’t take into account related impacts the way most agricultural analysis does. In that regard, industry advocates such as the Pacific Coast Federation of Fishermen’s Associations and the Planning and Conservation League contend that economic multipliers similar to those used by farm groups would put the job loss at around 23,000 with total losses at $1.4 billion. But Beuttler says even those numbers don’t account for the gradual decline in fishing revenue the past four decades.

“There is at least $160 million in lost revenue each year just from the decline in Central Valley fisheries alone,” Beuttler says.

“The status quo is simply not an option anymore. We must shape the future, or it will certainly shape us.”

Tim Quinn, executive director, Association of California Water Agencies

There also isn’t universal agreement that water shortages are the main culprit in the Central Valley, where the unemployment rate hovers over the statewide average. A recent report from the Business Forecasting Center at the University of the Pacific says that construction job losses from the foreclosure crisis have exceeded water-related farm labor losses by an 8-to-1 margin. Pumping restrictions and drought have only hiked the unemployment rate in the Central Valley by 0.3 percent, much less than the 2.5 percent increase in construction unemployment, according to the report.

With the system under so much distress, federal, state and local leaders are faced with increasing pressure to make progress on water issues this year. Schwarzenegger responded in February by declaring a state of emergency and asking, among other things, all Californians to cut water use by 20 percent. The federal government also stepped into the picture in April when Interior Secretary Ken Salazar pledged $260 million in federal funds to help mitigate the state’s water problems. The funds target Bureau of Reclamation projects that expand water supplies and repair outdated infrastructure. Funds also include millions of dollars in dam upgrades and ecosystem restoration.

Schwarzenegger, who saw both of his multibillion-dollar water infrastructure bond proposals drown in a budget-related morass last year, hailed the newfound federal interest in the state’s water issues. During a presentation ceremony in April, Schwarzenegger said any long-term solution “can’t happen without federal help.”

State lawmakers have also weighed in as Senate Pro Tem Darrell Steinberg and leaders in both parties have pledged to finally tackle the state’s water problems. Although history has shown that water legislation is as susceptible to the same political tsunami as every other critical issue, Steinberg has sworn this year will be different.

“We will break gridlock on water in 2009,” Steinberg says.

It’s likely that no one is holding a breath on that promise. In fairness, water might be even more of a Rubik’s Cube for lawmakers than the budget. Although in the most oversimplified of terms, the system really has three components: supply, delivery and quality. In reality, each leg of that footstool contains enough traps to kill any comprehensive reform proposal.

Possibilities for improving the state’s annual supply include new ground storage facilities and even greater conservation efforts from residential, agricultural and commercial users. But serious questions remain on how to incorporate those possibilities together in a way that is both cost-effective and just to people and communities most impacted by those decisions. Schwarzenegger’s 20 percent conservation mandate, for one, has caught the attention of many urban users, including those in the Sacramento region. John Woodling, executive director of the Sacramento-based Regional Water Authority, acknowledges the need to solve the water dilemma and to protect the state’s economy but contends the one-size-fits-all directive puts an “inordinate amount of the burden of conservation on the Sacramento and Central Valley.” Woodling and others also question why no such mandate has been placed on agricultural users.

But as we have seen in recent years, having water is only one part of the puzzle; getting it to users is an entirely different headache. That reality has led to the latest uprising in California’s water politics: a peripheral canal to transport water from Northern California, around the Delta and to Central Valley farms and Southern California.

Tim Quinn, executive director of the Association of California Water Agencies, which represents more than 400 local water districts, says there is no doubt that all possibilities — increased storage, stricter conservation, increased groundwater cleanup, new urban restrictions, new conveyance and even seawater desalination — will remain in the discussion for its duration. Although nobody can predict with any certainty what will come out of the policymaking, Quinn echoes the sentiments of a huge number of water advocates and stakeholders when he says time is running out.

“The status quo is simply not an option anymore,” he says. “We must shape the future, or it will certainly shape us.”

Dredging up the numbers

Pegging the economic impact of the state’s water enigma is no easy task. Calculations vary by government agency, industry analysts and interest groups. Some calculations state direct losses while others use economic multipliers to determine its ripple effects. But one fact is agreed: The state’s water crisis has resulted in lost revenue and fewer jobs. The extent of such losses, however, is up for debate.

UNIVERSITY OF THE PACIFIC EBERHARDT SCHOOL OF BUSINESS

This year, water shortages are costing the San Joaquin Valley an estimated 6,000 jobs and $170 million in wages. By comparison, the construction collapse has cost the valley an estimated 47,000 jobs and $1.8 billion in lost wages. Nonemployee income losses, such as proprietor’s income and corporate profits, total $330 million from water shortages and $1.4 billion for construction.

CALIFORNIA CHAMBER OF COMMERCE
Water shortages caused more than 100,000 acres of fertile cropland to fallow and more than an estimated 1,000 full-time jobs in agriculture in 2008. At least 50 of the state’s 58 counties qualified for federal disaster assistance. Crop and forage losses are estimated at about $260 million so far.

STATE DEPARTMENT OF WATER RESOURCES
In February, the department said the state’s third consecutive year of drought had prevented an increase in the State Water Project delivery allocations for the first time since 2001. This is only the second time in SWP history the February allocation has been this low. In a mid-year report, the department, in collaboration with UC Davis, estimates that between 31,200 and 35,300 jobs will be lost in the Central Valley in 2009, with income loss to crop production and related businesses estimated at $848 million to $959 million. These figures include direct farm impacts and indirect off-farm multiplied impacts.

Folsom Water Blues
Voters urge officials to find a source before developers can build
by Joanna Corman

When the city of Folsom announced plans to annex and develop the land south of Highway 50, residents spoke up. You can build, they said, but not without restrictions. In 2004, voters passed Measure W by 69 percent, putting constraints on the project, including its water supply.

Although the city has identified a water supply for the proposed development, many hurdles remain. For one, the deal isn’t final, which is forcing the city to examine alternatives. Officials are also looking for ways to transport the water roughly 30 miles from the Sacramento River to Folsom.

In 2001, the Sacramento Local Agency Formation Commission designated about 3,500 acres of agriculturally zoned land south of Highway 50 between Prairie City and White Rock roads and the El Dorado County line inside Folsom’s sphere of influence. In 2004, the city asked residents and the seven landowners, including Aerojet-General Corp., AKT Development Corp. and Carpenter Ranch, what kind of development they’d like. The proposal includes 5.1 million square feet of commercial use and 10,210 housing units, which would add some 25,000 people. About 1,000 acres will remain oak woodlands and wetlands.

David Miller, Folsom’s community development director, says Measure W is one of the strictest growth-management plans he’s seen in California. The measure’s water restrictions prohibit developers from building until a reliable water supply has been identified and secured at no cost to the existing residents. In addition, the future water supply can’t reduce the existing residents’ supply, which comes from the American River at Folsom Lake.

The city has additional water restrictions from LAFCO. For LAFCO to approve annexation, Folsom has to demonstrate it has a sufficient water supply and is following the terms of the Water Forum, a regional agreement designed to protect the American River and the region’s water supply, LAFCO Executive Officer Peter Brundage says.

The city conducted an “exhaustive search” for water, says Ken Payne, Folsom utility director. Because transporting Sacramento River water would cost much more than tapping into the American River, the city began with the American River. That proved a poor choice for two reasons, he says: Diverting it would spark a political battle, and the city couldn’t find any water available during the timeframe it would be needed. “We just wanted to verify because … that’s a natural question by the public: Why did you go so far away?” Payne says.

The city expects water to come from the Natomas Central Mutual Water Co. The company plans to sell surplus water to the developers in a $32 million deal that would reassign its Sacramento River rights from the U.S. Bureau of Reclamation to Folsom. The reassignment allocates 8,000 acre-feet of water annually. The sale is contingent on Bureau approval and completion of the environmental impact report.

The Natomas company won’t comment, saying the developers, who are acting as a partnership, would speak publicly about the arrangement. One developer says it was premature to talk about water and that the city is taking the lead. Another didn’t return calls for comment. Bob Holderness, a Folsom attorney acting as a liaison between the landowners and the city over the project’s water issues, says the deal will help fund a Natomas Basin habitat conservation plan, protect the American River and keep water local, rather than selling it to water agencies to the south. “One of the important goals here is to maintain consistency with the Water Forum throughout that process, and so far, so good,” Holderness says.

Measure W is pushing the city, which acts as its own water provider, to secure a water supply much earlier in the development process, says Payne, Folsom’s utility director. The measure mirrors SB 221, a 2001 state law that prevents cities or counties from approving a subdivision map of a project with at least 500 homes unless the proposed water provider secures a minimum 20-year water supply large enough to cover existing and new customers under normal, dry and multiple dry years.

Folsom Vice Mayor Jeffrey Starsky, who sits on a committee overseeing the sphere of influence development, calls Measure W’s restrictions on using the American River a “non-issue” because another supply has been tentatively secured. But he says it makes sense to swap Sacramento River water rights it’s pursuing for those in the American River.

Jonas Minton, senior water policy advisor to the Sacramento-based Planning and Conservation League, an environmental lobbying organization, says the region will be watching the cost and environmental impacts of the water supply.

Betsy Weiland, volunteer coordinator with Save the American River Association, says her organization is concerned because tapping the Sacramento River could hurt fish populations in the American River. “When you look at the Sacramento region, you cannot look at water and water sources in isolation,” she says. “You have to look at it like a system.”

River Rivals
Three decades later, two Northern California agencies learn how to play nice
by Joanna Corman

At a bend in the Sacramento River just north of Freeport, two water agencies are building an 85-foot-tall pumping station into the levee to serve their customers. Several miles to the east, one of the agencies is also building a plant that would transform raw river water into drinking water.

The two utilities, the East Bay Municipal Utility District and Sacramento County Water Agency, didn’t always get along. In the 1970s, Sacramento County joined a lawsuit against the Bay Area utility. For 18 years, they fought in court over the Bay Area agency’s right to take water from the lower American River. In 2002, 30 years after the lawsuit was filed, both agencies entered into a joint powers agreement. The $950 million Freeport Regional Water Project includes a set of eight 2,000-horsepower motors expected to be completed in 2010; a 17-mile pipeline; and a water treatment plant. Together the facilities represent one of the largest water infrastructure projects in cost and capacity ever built in Sacramento County, says Keith DeVore, the county’s director of water resources.

Alexander R. Coate, EBMUD’s director of water and natural resources, says the Freeport facility sets a precedent because it “demonstrates that go-it-alone projects with a disadvantage to other stakeholders are no longer the way business is done. Regional projects that provide regional benefits to a larger set of stakeholders are how projects can actually be successful.”

For Sacramento County, the projects will serve as economic development tools. The main water supply for its 55,000 customers is groundwater, which can’t provide all the needed water for future growth. Tapping river water in wet years will prevent overpumping and allow groundwater to recharge. The projects also will help fuel growth. Eventually — at least 15 years from now — the Vineyard Surface Water Treatment Plant will have the capacity to serve 300,000 people.

For EBMUD, which serves more than 1.3 million customers in Alameda and Contra Costa counties, the Freeport project will minimize water rationing in dry years and the associated economic impacts. Finally, the Freeport project helps protect the American River, a key regional environmental and quality-of-life concern.

The Freeport project came to fruition after three decades of fighting over the American River. In 1970, EBMUD received a contract from the U.S. Bureau of Reclamation to take 150,000 acre-feet of water annually from the American River. Two years later, Save the American River Association, represented by the Environmental Defense Fund, sued the utility and argued that taking the water would damage fish and recreation. Sacramento County also joined the suit.

In 1990, Judge Richard Hodge ruled that EBMUD could take water from the American River when the flows were at a certain level, a restriction that precluded it from taking water in dry years when the utility needed it most. In 2002, after several years of studying alternatives and with the help of mediators, both agencies formed the Freeport Regional Water Authority, which establishes a framework to share the cost, construction and operation. Sacramento County will take water annually. EBMUD has a reclamation contract to draw water during dry years, about three out of 10.

Jim Jones, a SARA board member who was president when the suit was filed, called the settlement “a major victory” for his group and the American River, adding he has an “overall concern about how much water is safe to take from the Sacramento River.”

EBMUD had been looking for an alternate source of high-quality water for more than 30 years, Coate says. The agency, which gets most of its water from the Mokelumne River, has enough water in normal and wet years but relies on rationing during droughts. According to a recent self-study, cutbacks of 25 percent to the agency’s customers would cost more than $1 billion in lost business.

In addition to building the Freeport intake plant, Sacramento County is building a $270 million surface water treatment plant in the Vineyard area, a 37-square-mile swath of the county’s southern portion, east of Highway 99. It’s scheduled to go online in 2011. In the 1980s, when Sacramento County began developing the city of Elk Grove and the Laguna neighborhood, officials realized they couldn’t sustain future growth with wells alone.

An expanded drinking water supply will be crucial to the county’s ability to attract and retain business, says Troy Givans, principal planner with the county’s department of economic development.

This is the opening story in a four-part series on water. This month, we examine the state’s water woes and antiquated system. Next month, we’ll explore storage, conservation and desalination.