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A Practitioner’s Guide to Instream Flow Transactions in California

The purpose of this guide is to help water right holders –and those assisting them – understand their options for keeping water instream in California.

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A Practitioner’s Guide to Instream Flow Transactions in California
SWIFT Working Group, American Rivers, Nature Conservancy, Trout Unlimited, Scott River Water Trust, River Right, Alford Environmental | March 1, 2016...
Summary
The purpose of this guide is to help water right holders –and those assisting them – understand their options for keeping water instream...

The purpose of this guide is to help water right holders –and those assisting them – understand their options for keeping water instream in California. This guide briefly describes some of the most common types of instream flow transactions (i.e., methods for restoring flow for environmental purposes), and discusses in detail how to navigate the process of completing an instream flow dedication by changing a water right, as permitted by Water Code Section 1707.

The intended audience for this document includes both water rights holders and practitioners, such as staff for land trusts, water trusts, Resource Conservation Districts (RCDs), and other organizations. This guide focuses on instream dedications via the change petition process administered by the State Water Resources Control Board (State Water Board). Other publications – for example, the Trust for Public Land’s Water Acquisition Handbook (2003) – provide a more general overview of acquiring water for environmental purposes in California. This guide will provide a description of the change petition process, and offer advice on how to navigate, troubleshoot, and work in partnership with the State Water Board and other natural resource agencies to complete an instream flow dedication.

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Background and Recent History of Water Transfers in California

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Background and Recent History of Water Transfers in California
California Department of Water Resources (DWR), State Water Resources Control Board | July 1, 2015...
Summary
The purpose of this paper is to provide a basic understanding of water transfers in California with an emphasis on transfers that move...

The purpose of this paper is to provide a basic understanding of water transfers in California with an emphasis on transfers that move water through the Sacramento-San Joaquin Delta (Delta). This paper provides an overview of various types of water transfers, their recent history, and the regulatory setting that governs transfers.

In its 1976 report, the Governor’s Commission on Water Rights recognized the importance of water transfers to the future of California’s water supply and made recommendations regarding the need for specific changes to the Water Code to facilitate the transfer of water. Many of these changes were accomplished in the following years and are reflected in the discussions below.

Water transfers involve a change in the place of water use, from the water’s historic point of diversion and use, to a new location either within or outside the watershed of origin. Water may be transferred from one user to another for a variety of purposes, including agricultural, municipal and industrial uses. It may also be transferred for environmental purposes such as in-stream flow augmentation and wildlife refuges. Water transfers and exchanges can be temporary (up to one year) or long-term (more than one year, but not permanent) or permanent.

Water transfers can be an effective water management tool providing much-needed flexibility in the allocation and use of water in California. Transfers in California are primarily executed to meet dry-year demands rather than to obtain a primary water supply for either agricultural or municipal development. Transfers are particularly useful for meeting critical needs during drought periods. Transfers, however, must be carried out in a responsible manner in order to assure that they do not result in adverse impacts to other water users or unreasonable effects to the environment.

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California’s First Farmer-Led Groundwater Market

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California’s First Farmer-Led Groundwater Market
The Nature Conservancy | July 12, 2018...
Summary
Ventura County, located in California’s south coast, is one of United States’ most productive agricultural counties (ranked 10th in California and 11th in the...

Ventura County, located in California’s south coast, is one of United States’ most productive agricultural counties (ranked 10th in California and 11th in the US)1, with agricultural production valued at $2.1B in 2016.2 California’s landmark groundwater law, the Sustainable Groundwater Management Act (SGMA), requires that 127 groundwater basins, including those in Ventura County, develop Groundwater Sustainability Plans that ensure pumping within sustainable limits. In western Ventura County, where over 70 percent of groundwater use is agricultural, the California Department of Water Resources has designated two groundwater basins as being in critical overdraft under SGMA.

The local management agency may have to reduce groundwater use in these basins by as much as 40 percent to achieve a sustainable yield. While these reductions are critical to achieving long-term sustainability of water use, which includes nature’s needs, they also pose significant challenges to wisely managing reduced water allocations to keep irrigated agricultural land in production. The Nature Conservancy (TNC) has a vested interest in preserving farming in the county because it buffers important river and wetland habitat from nearby urban lands.

Growers in the region quickly identified water markets as an important tool for managing limited groundwater resources.

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California’s Water Market, By the Numbers
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California’s Water Market, By the Numbers
Public Policy Institute of California | October 17, 2002...
Summary
Prepared for presentation to the Department of Water Resources, October 2002.
Prepared for presentation to the Department of Water Resources, October 2002.

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California’s Water Market, By the Numbers, Update 2012
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California’s Water Market, By the Numbers, Update 2012
Public Policy Institute of California (PPIC) | November 21, 2012...
Summary
This report provides a check-up on California’s progress with two innovative water management tools: water marketing and groundwater banking. These tools are part...

This report provides a check-up on California’s progress with two innovative water management tools: water marketing and groundwater banking. These tools are part of a modern approach that will enable California to manage its scarce water resources more flexibly and sustainably.

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Central Valley Project (CVP) Water Transfer Program Fact Sheet

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Central Valley Project (CVP) Water Transfer Program Fact Sheet
U.S. Bureau of Reclamation (USBR) | February 1, 2015...
Summary
Water transfers and exchanges are an integral part of CVP water operations, particularly in drought years, as long as transfers can occur consistent...

Water transfers and exchanges are an integral part of CVP water operations, particularly in drought years, as long as transfers can occur consistent with state and federal laws governing water transfers. In 2014, Reclamation facilitated the transfer of over 257,000 acre-feet of water. Of the 257,000 acre-feet, 213,220 acre-feet was considered “new water” to the system, meaning specific actions (such as reservoir reoperation, crop idling/shifting, groundwater substitution, or Yuba Accord purchases) were taken to make the water available. The remaining quantity was considered an in-basin transfer or a reallocation of contract supply.

• §3405(a) of the Central Valley Project Improvement Act of 1992 (CVPIA) authorizes the transfer of all or a portion of a CVP contractors contracted water supply to any other California water user or water agency, State or Federal agency, Indian Tribe, or private non-profit organization for project purposes or any purpose recognized as beneficial under State law.

• CVP water transfers are subject to the conditions prescribed in §3405(a), 1993 Interim Guidelines for Implementation of Water Transfers, and the Department of the Interior Final CVPIA Administrative Proposal on Water Transfers (1998).

• Water transfer provisions of CVPIA do not apply to permanent contract assignments under which a CVP contractor relinquishes their contractual right to Project water; water banking and recharge actions outside of the contractors boundaries; water for water exchanges; forbearance actions whereby CVP contractors are paid not to exercise their right to water; and transfers of base supply water under settlement contracts which are carried out in accordance with State law.

• Since 1992, the Region and the State of California Department of Water Resources, owners and operators of the two largest water projects in California, have collaborated to develop criteria to facilitate water transfers.

• The Region facilitates both short and long-term transfers of CVP water. Long-term transfer approvals are accomplished through programmatic environmental documentation, with annual approvals of physical water transfers.

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Groundwater Exchange Pools and Urban Water Supply Sustainability: Modeling Directed and Undirected Networks
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Groundwater Exchange Pools and Urban Water Supply Sustainability: Modeling Directed and Undirected Networks
Journal of Water Resources Planning and Management, American Society of Civil Engineers | August 1, 2018...
Summary
Groundwater basins are important sources of water supply and storage for many cities. Groundwater exchange pools offer additional opportunities for utilizing these common...

Groundwater basins are important sources of water supply and storage for many cities. Groundwater exchange pools offer additional opportunities for utilizing these common pool resources, but their potential role in urban water management is not clear, and modeling such exchanges can be challenging. This paper presents an analysis of the potential for groundwater basin exchange pools to contribute to urban water supply sustainability. Building on an existing model of urban water management in Los Angeles, the analysis assesses the potential for groundwater exchange pools to reduce scarcity and demonstrates a method for modeling two-way (undirected) flows within a directed-network model using linear programming. Results indicate that exchange pools can help alleviate shortages from operational changes (reduced imported water) in Los Angeles, but providing more parties with access to storage improves their effectiveness. Exchange pools could potentially provide 6–12% of total supplies and reduce shortages as much as 86%. Considerations for organizing exchange pools are discussed to explore policy implications for managing common pool resources. The analytical method for embedding undirected network flows within a larger directed-network model has wide applicability for water resource systems analysis applications, including modeling water markets and interbasin transfers.

* U.C. Davis hosts a discussion of the content by the authors at California Water Blog.

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Groundwater Trading as a Tool for Implementing California’s Sustainable Groundwater Management Act
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Groundwater Trading as a Tool for Implementing California’s Sustainable Groundwater Management Act
Environmental Defense Fund, Mammoth Trading, The Robert B. Daugherty Water for Food Global Institute at the University of Nebraska | December 8, 2017...
Summary
Until recently, the State of California lacked comprehensive groundwater management policy. While many basins havebeen adjudicated in court or have adopted voluntary groundwater...
Until recently, the State of California lacked comprehensive groundwater management policy. While many basins havebeen adjudicated in court or have adopted voluntary groundwater management programs following Assembly Bill 3030 and Senate Bill 1938, the vast majority of groundwater use remained unregulated. In 2014, the State Legislature passed the landmark Sustainable Groundwater Management Act (SGMA) in response to wide-ranging consequences of prolonged and unchecked groundwater pumping. While groundwater serves as an important primary and supplemental water supply for many water users, over-pumping can result in negative consequences, six of which are listed as “undesirable results” under SGMA: chronic aquifer overdraft, reduction of groundwater storage, seawater intrusion, degradation of water quality, land subsidence, and depletion of hydrologically connected surface water. SGMA requires local Groundwater Sustainability Agencies (GSAs) to develop and implement Groundwater Sustainability Plans (GSPs) to manage groundwater to avoid such consequences.

To meet the requirements of SGMA, GSAs will need to employ a wide range of management tools. This paper focuses on one set of these tools: groundwater trading programs. Trading goes by many different names, including markets, cap and trade, transfers, credit programs, banking, pooling, and exchanges. For the purposes of this paper, we have elected to use the terms “trading” and “trading programs” as the broader categorization of incentive-based management tools. Trading can be executed through a wide range of exchange vehicles, including short- and long-term leases, permanent transfers, and other more advanced or unique arrangements, such as inter-annual water exchanges or dry-year options contracts.

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How are Western water districts managing groundwater basins?

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How are Western water districts managing groundwater basins?
California Agriculture | March 13, 2018...
Summary
Making the transition from open-access groundwater rights to sustainable groundwater management is a formidable task for newly formed groundwater sustainability agencies in California....

Making the transition from open-access groundwater rights to sustainable groundwater management is a formidable task for newly formed groundwater sustainability agencies in California. As agencies begin to decide how to make equitable water allocations, how to monitor groundwater use and what mix of supply- and demand-side mechanisms to adopt to satisfy sustainability criteria, the groundwater management strategies in place across other basins in the western United States are worth studying. We surveyed 18 groundwater districts in California and other Western states to identify the management approaches and practices they have instituted. The conclusions we draw suggest a correlative rights framework of water allocation with phase-ins for heavy users; metered pumping; flexible arrangements for trading and carrying over allocations for multiple years; and incentivizing groundwater recharge, including recharge from deep percolation from crops. Rigid formulas for significantly reducing groundwater use in medium- and high-priority basins are likely to have significant negative effects on the regional economy.

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Incentive-based Instruments for Freshwater Management
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Incentive-based Instruments for Freshwater Management
Pacific Institute | December 1, 2015...
Summary
This new synthesis report from the Pacific Institute and the Foundation Center provides a review of existing evidence about the use of incentive-based...
This new synthesis report from the Pacific Institute and the Foundation Center provides a review of existing evidence about the use of incentive-based instruments worldwide. Based on case studies, evaluations, journal articles, and white papers, the authors provide a detailed review of three incentive-based instruments: water trading, payment for ecosystem services, and water quality trading. The report and interactive tool highlight the importance of finding the right fit between a community’s water goals and the water management tool(s) it might choose and, perhaps most importantly, characterize the conditions required for their effective implementation.

Originally commissioned by The Rockefeller Foundation, all of the results from this project: the synthesis report, interactive tool, and digital collection are freely available for funders, practitioners, and researchers to use, contribute to, and build on in their work.

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