Where is the Water? How to deal with California’s Paper Water Discrepancies

Where is the Water?

How to deal with California’s Paper Water Discrepancies

by Bryce McAteer



“There it is. Take it.” These were the famous words uttered by William Mulholland in 1913. Quickly thereafter, the first flows of water were released from the newly created Los Angeles Aqueduct and into the homes and fields of the Los Angeles Basin [1]. His quote is emblematic of the western United States’ approach to water use and acquisition. An environment naturally lacking in large, perennial flows of water, the arid desert lands west of the Rockies required significant manipulation or, as the federal government put it, “reclamation” to be made inhabitable. The consumptive, “beneficial” use of every last drop of flowing water is an underlying philosophy found in most western State’s constitutions [2]. As Marc Reisner writes, to not use every drop is seen as wasteful in the west.


But to lay claim to water only works when there is water to claim. California’s complex history of water rights is muddled with trickery, confusion, miscalculations, and overzealous feats of human engineering. Court battles continue to this day because of tensions or unmet promises or ecological disasters birthed out of the early-to-mid 1900s when the government constructed the state’s major water projects. Moreover, irrigation projects based on bad science, like the dividing up of the Colorado River, severely over-estimated the amount of water folks could actually expect in the future [3]. These dilemmas have only endured to create a state, and a region, that is persistently lacking in reliable water supplies and consistent policies.


Today, over two-thirds of California relies on two major public projects, the Central Valley Project (CVP) and the State Water Project (SWP) [4,5]. Begun in 1935 and 1960, respectively, the projects pump water from the northern Sacramento/San Joaquin Delta into aqueducts that then carry millions of acre-feet of water down to the farmers and municipalities in the dry south. While water conveyance was sufficient to quench these southern stakeholders’ thirst in early years, the aqueducts have consistently failed to meet promised contract obligations since 1985 [6,7].


The realization that the Municipal Water District of Southern California and other water districts must contend with each year is that water is only real when wet. The discrepancy is one some scholars like to call “Paper Water”, or the overpromising of dedicated water supplies to the point where the State cannot meet the annual water right entitlements that it had approved in the past [8]. For example, contract obligations for the State Water Project now total 4,172,786 acre-feet [9], yet the annual average delivery — due to rainfall variability and environmental factors — averages only 2.3 MAF or million acre-feet [10]. Similarly, the Central Valley Project has a total obligation of 3,488,246 acre-feet in contracts, but averages a delivery of only 2.5 MAF [7]. This leaves water districts and farmers at a deficit. Stakeholders can often offset this discrepancy with local sources (particularly groundwater), but the ever-present uncertainty of water supplies looms as a systemic threat to California’s livelihood [11]. Though not often, the threat sometimes finds fruition. At the beginnings of both 2014 and 2015, CVP could not even promise to delver 1% of its water contract obligations to agricultural entities South-of-the-Delta [12,13]. But rather than initiate effective reforms, the state has failed to act in any decisive manner to relieve citizens’ uncertainty.


Rights to water and contracts for delivery are further complicated by the over-allocation of those rights throughout the state. In California, water rights persist through a hierarchical scheme of precedence [14]. Riparian rights, or rights to the water that flows through one’s property, sit at the top of the hierarchy. Then come prior-appropriation rights, or those rights given to folks who laid claim to a particular amount of water at particular time in history for a particular use. Persons with the earliest rights (from before 1914) are considered “senior”, while those after 1914 are considered “junior” [14]. The priority of who gets the water depends largely then on the “first come, first serve” principle or, in other words, who has the oldest or most “senior” right. If the state’s water resources were better accounted for, then it would mean most rights holders would get their fair share except for when intermittently disrupted by years of drought or below-average rainfall. However, the State Water Resources Control Board has handed out these rights to Paper Water far in excess of the average annual flows of California’s major watersheds. In the two major watersheds of the Sacramento and San Joaquin Rivers, it is estimated that total claims sit somewhere around 120.6 MAF — well above the average 21.6 MAF that annually flow into the Bay Delta [15]. Holders of prior-appropriation rights are the most heavily impacted by this, because those with the most senior rights are afforded the legal permission to take their full allotment, even if this excludes junior rights holders from any delivery at all.


Climate change is only expected to increase variability in California’s annual rainfall regime and, more specifically, decrease the annual average flows of the most important sources of surface water due to decreased snowfall and increasing rates of evaporation [16]. Lack of real water is driving many water districts to innovate via water recycling, conservation efforts, and even finding new sources through desalination. But it is also driving many — particularly Central Valley rights holders — to pump groundwater at rates that threaten the state’s future capacity to sustain meaningful economic vitality [10].


To really address the issue at hand, though, the State must act to mitigate, or in the best-case scenario, eliminate the Paper Water discrepancy. Australia’s model of reform stands out as one that California could follow to the benefit of all its citizens. Comparable in its arid climate and lack of water resources, Australia dealt with severe strains on its water systems in the early 1990s due to a drought that extended all the way into 2009 [17]. The country had also been issuing entitlements in excess of what its numerous irrigation systems could actually provide, so the crisis offered a much-needed justification to completely reform its water policies. In 1994, the Council of Australian Governments created a new framework that aimed to price water at its actual “full cost of recovery.” In practice, this form of recovery pricing — a scheme later adopted by the EU in its Water Framework Directive — would act to incentivize water’s efficient use while also fully internalizing the cost of aquatic environmental protection through activities such as water treatment [18]. More importantly, this new framework moved to open a national water market, allowing entities to effectively buy and sell allocations at the most efficient price [19]. Completing the country’s water reforms, the Australian government decided in the following year to cap the total permitted diversions of water at a level that could and would sustain the natural environment. This cap also eliminated the possibility of over-issuing water entitlements, in effect solving Australia’s own Paper Water discrepancy.


Through a mixture of market trading and proportional allocation of water resources based on the annual supply, Australia has seen great success on all fronts. Australia’s GDP, for example, is estimated to have garnered an additional $220 million between 2008-2009 just from sector of water trading alone [17]. The trade has also offered farmers a secondary form of income. Farmers in the Murray-Darling Basin, where a majority of this trading goes on, overwhelmingly (91% in favor, to be exact) believe water trading has had a positive effect on their business [17]. The environment, too, has benefited from increased protections via government purchases of water entitlements to that are specifically used to sustain river flows and healthy riparian ecosystems [17]. The most recent shortcoming in rainfall between 2005 and 2009 affirmed the framework’s effectiveness. While available water decreased by 53%, agricultural profits bit the trend with only a 29% decrease and municipal water authorities were able to purchase sufficient allocations to provide for their citizens [17].


California’s future depends on a far more rigid management of its dwindling water resources. For too long has the state allowed its citizens to reach for water in thin air or, more precisely, dry streams. Remembering its xeric reality comes first. California, and many other western States, cannot continue to imagine that more water will magically appear down the road in the sands of their deserts. Being truthful about the actual amount of water the state can expect, and then reflecting that in its management policies, will be the only way for California to effectively provide for the needs of its people, its economy, and its environment. If it does not, all three of these are likely to suffer. But if it does, it can be expected to thrive. Certainty is what fuels development. Fewer dances in the courts over “who get the water this time around” will save everyone from another unwanted political headache. A water market, as seen in Australia, could provide farmers with a secondary form of income. Environmentally, the state could further augment its Environmental Water Account, which was created to protect critical ecological significant habitats largely in the Bay Delta [20]. And if California were to make progress on this strategic water reform— as it has with renewable energy, technology, and environmental legislation — it could serve as one more successful model whose footsteps the rest of the American West could follow after.



Your overlay of the plight California faces is quite informative, given the confined space it occupies. As California faces increasingly drier conditions, I agree that it is more and more prevalent to reexamine the water claims of yesteryear. One aspect that you ought to examine in the future is the effect climate change will have on this issue. As I can recall, scientists project California and the other western states will face drier and drier conditions in the near future. This is also a food issue; as you mention the majority of this water goes towards crop production. What would happen if the agricultural industry of California went into decline in an effort to conserve water? Would fruit and vegetable production shift to more humid climates, or would folks simply do without? Part of the reason California has stalled so much when dealing with dwindling water supplies is the drastic economic damage decreasing production could place on the state. Given this potential economic downturn I can see why the state is so hesitant to reduce water consumption, however much they really should. It will be very interesting to see in the long run, how California and the other western states deal with dramatically reduced water abundance.


The Australian government’s response to its drought situation, on top of its outmoded water distribution framework, is definitely commendable in its promptness and its general acceptance of the need for fundamental change. Also notable is the attention it paid to maintaining environmental wellbeing and sustainability in its overall deliberations, which reflects a concern for implementing long-term solutions that do not merely delay or shift consequences.

However, the notion of implementing the same (or a similar) framework in California may face opposition from the people, especially those with senior rights. Swift, decisive action that deals effectively with the drought, as well as with deeper issues of water distribution and water rights, is definitely necessary, but the likelihood that citizens will support policies that diminish their current entitlements before the situation worsens irreversibly is questionable.

In addition to the question of political feasibility, there were additional challenges and resulting reforms after the 1994 Water Reform Framework in Australia that should be noted. A year after the 1994 Water Reform Framework was passed in Australia, an evaluation of progress found several impediments, including large gaps in data/solid scientific knowledge regarding groundwater sources and river ecology; immature or nonexistent infrastructure for supporting water trading and accurate water measuring/accounting; and opposing local interests that inhibited water markets from developing as quickly as they could. There were also regional conflicts in implementation of the framework that resulted in over-allocation of water. (Source: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwioquGi84HMAhVE_R4KHRdoAlEQFggcMAA&url=http%3A%2F%2Fwww.engineersaustralia.org.au%2Fsites%2Fdefault%2Ffiles%2Fresources%2Fwater_reform_in_australia_ptaylor_11Nov07.pdf&usg=AFQjCNHbxIEL4gGI80ORXxQeg-CV7sYDHw)

The 2004 National Water Initiative (NWI) builds on the 1994 Water Reform Framework, and delineates more specific plans and timetables for achieving higher water efficiency and for developing interstate and intrastate water trading markets. Some specific goals listed in the NWI include implementing transparent and statutory-based water planning that takes into account the natural variability of water systems and interaction between surface- and groundwater; formulating clear, secure water access entitlements; improving monitoring, reporting and accounting for water; improving the accuracy of the risks associated with changes in water availability, and assurance that the risks are shared between state governments and water users; and removing barriers to trading in water entitlements and water allocations to encourage more efficient water use. The ultimate objective that underlies these goals seems to be the promotion of confidence in investors of the water trading market. (Source: http://www.environment.gov.au/water/australian-government-water-leadership/nwi) So, in transplanting this reform from Australia to California and possibly to other states, not only must the public be convinced of the need for change; there is a vast amount of infrastructural and scientific preparation that needs to be put in place to encourage full implementation and optimal functionality of such a reform.


This was a great read! I’m really unfamiliar with the water crisis in California, beyond what my Northeastern news channels broadcast about it, and absolutely lost on foreign water crises so even just for educational purposes I really enjoyed reading this blog. I agree that instituting a hard cap on water being allocated in California would definitely be beneficial — it really seems unreasonable to allocate water resources that the state doesn’t have, especially considering what a critical resource water is. However, I wonder if, as fresh water becomes more scare in places like California, would farmers shift more to their secondary income (selling off their water allocations) rather than innovating more efficient ways to use water on their farms or growing more water efficient crops? The way I see it, people still need to eat. However one of the most water-intensive crops, almonds, is commonly grown in California, so do people need to necessarily eat that? If I were an almond farmer, receiving a certain number of water allocations, as the area became drier due to climate change or other influences, I would begin to sell my water resources rather than farming because that would be a more valuable use of the allocation than trying to grow my almonds. Now, obviously the other alternative is shifting to a less water intensive crop, but I wonder if something like climate change would effect what crops could grow? Basically, what I’d be worried about (and this might be entirely hyperbolic, as I prefaced this comment with, I have very little experience with this topic) is that water consumption wouldn’t diminish, it would just shift elsewhere. I understand that the hard cap placed on the amount of water allocated would prevent consumption beyond California’s means, but I can’t imagine that completely consuming whatever is available isn’t a great option either. Rather than commodifying water, I wonder if there’s a way to instead incentivize reduced water consumption rather than simply reallocation.

Works Cited

  1. Kevin Roderick, “The Waters Flowed: ‘There it is. Take It’”, Los Angeles Times, October 3, 1999. Accessed on: March 27, 2016. Available from: http://articles.latimes.com/1999/oct/03/local/me-18302
  2. Marc Reisner, “Cadillac Desert: The American West and its Disappearing Water”, Penguin Books: New York, 1993. ISBN: 978-0-14-017824-1.
  3. David Owen, “Where the River Runs Dry: The Colorado and America’s water crisis”, The New Yorker, May 25, 2015. Accessed on: March 27, 2016. Available from: http://www.newyorker.com/magazine/2015/05/25/the-disappearing-river
  4. California Department of Water Resources, “California State Water Project Overview”, California Natural Resources Agency, August 11, 2010. Accessed on: March 27, 2016. Available from: http://www.water.ca.gov/swp/
  5. S. Bureau of Reclamation, “About the Central Valley Project”, U.S. Department of the Interior, December 18, 2015. Accessed on: March 27, 2016. Available from: http://www.usbr.gov/mp/cvp/about-cvp.html
  6. California Water Impact Network, “Paper Water in the State Water Project”, 2009. Accessed on: March 27, 2016. Available from: https://www.c-win.org/paper-water-state-water-project.html
  7. California Water Impact Network, “Paper Water in the Central Valley Project”, 2009. Accessed on: March 27, 2016. Available from: https://www.c-win.org/paper-water-central-valley-project.html
  8. California Water Impact Network, “Paper Water”, 2009. Accessed on: March 27, 2016. Available from: https://www.c-win.org/paper-water.html
  9. California Department of Water Resources, “California State Water Project Contractors: Maximum Table A Amounts…”, California Natural Resources Agency, Accessed on: March 27, 2016. Available from: http://www.water.ca.gov/swpao/swp-contractor-max-annual-entitlements.html
  10. David Carle, “Introduction to Water in California”, University of California Press: Berkeley, Los Angeles, and London, 2009. ISBN: 978-0-520-26016-0.
  11. Legislative Analyst’s Office, “The 2016-2017 Budget: The State’s Drought Response”, The California Legislature’s Nonpartisan Fiscal and Policy Advisor, February 5, 2016. Accessed on: March 27, 2016. Available from: http://www.lao.ca.gov/Publications/Report/3343
  12. S. Bureau of Reclamation, “Reclamation Announces Initial 2014 Central Valley Water Supply Allocation”, U.S. Department of the Interior, February 21, 2014. Accessed on: March 27, 2016. Available from: http://www.usbr.gov/newsroom/newsrelease/detail.cfm?RecordID=46045
  13. S. Bureau of Reclamation, “Reclamation Announces Initial Water Supply Allocation for Central Valley Project”, U.S. Department of the Interior, February 27, 2015. Accessed on: March 27, 2016. Available from: http://www.usbr.gov/newsroom/newsrelease/detail.cfm?RecordID=48986
  14. California State Water Resources Control Board, “The Water Rights Process”, California Environmental Protection Agency, 2016. Accessed on: March 27, 2016. Available from: http://www.waterboards.ca.gov/waterrights/board_info/water_rights_process.shtml
  15. Tim Stroshane, “Testimony on Water Availability Analysis for Trinity, Sacramento, and San Joaquin River Basins Tributary to the Bay Delta Estuary”, California Water Impact Network, October 26, 2012. Accessed on: March 27. Available from: http://c-win.org/webfm_send/265
  16. Betsy A. Cody, Peter Folger, Cynthia Brown, “California Drought: Hydrological and Regulatory Water Supply Issues”, Congressional Research Service, August 14, 2015. Accessed on: March 27, 2016. Available from: https://www.fas.org/sgp/crs/misc/R40979.pdf
  17. John Langford, John Briscoe, and Nathan Taylor, “The Australian Water Project: Volume 1 — Crisis and Opportunity: Lessons of Australian Water Reform”, Committee for Economic Development of Australia, November, 2011. Accessed on: March 26, 2016. Available from: http://adminpanel.ceda.com.au/folders/Service/Files/Documents/15335~waterprojectdigital.pdf
  18. European Environment Agency, “Assessment of Cost Recovery through Water Pricing”, European Union, November 16, 2013. ISSN 1725-2237. Accessed on: April 2, 2016. Available from: http://www.eea.europa.eu/publications/assessment-of-full-cost-recovery/at_download/file
  19. Ed Willet, “Promoting efficient and effective water trading across the Murray-Darling Basin”, Australian Economic Forum, August 20, 2009. Accessed on: March 26, 2016. Available from: https://www.accc.gov.au/system/files/Promoting%20efficient%20and%20effective%20water%20trading%20across%20the%20Murray-Darling%20Basin.pdf
  20. CALFED, “CALFED EWA Background”, CALFED Bay-Delta Program, n.d. Accessed on: April 2, 2016. Available from: http://calwater.ca.gov/content/Documents/library/CALFED-EWA_Background.pdf