Climate Change/Energy – Page 15 – Public Policy Institute of California

Drought Watch: Keeping Better Track of Water

This is part of a continuing series on the impact of the drought.

In most years, the arrival of May signals the end of the rainy season. As California transitions from hoping for rain to managing its absence, it is appropriate to assess how we have handled this drought so far. In a recent blog post, we, along with our colleagues at UC Davis, UC Hastings, and Stanford University, identified several key lessons from the current drought. One of these is the need to modernize the way we track water supply and use.

To illustrate, just this past week the State Water Resources Control Board released a series of graphs that summarize the gaps between projected supply and demand for this year. These graphs form the basis for determining who may be told to curtail the amount of water they take out of rivers when supplies are scarce. The take-away from these projections is that significant shortfalls will occur starting this month—when the irrigation season starts in earnest. Under California’s water rights system, irrigators holding junior water rights—i.e., rights established more recently—could be completely cut off in most areas. It also appears that unprecedented cuts will occur for senior water rights holders as well.

Although these demand and supply curves appear precise, the state board is handicapped by a lack of good information on water supply and use. To manage the drought more effectively, the board needs better information in two key areas.

First, there have been major advances in technology that can be used to measure flow. These include sophisticated remote sensing techniques, computer modeling, and sensor networks. Although there has been progress, the state has been slow to adopt these new technologies. For many rivers the board, and its partner the California Department of Water Resources, are, at best, making educated guesses. In addition, the state uses protocols for managing this information that were adopted in the early 20th century. In a drought there is need for real-time information and forecast-based projections to manage diminishing supplies.

Second, who uses how much water, and when, is acutely important when river flows are low, because a handful of users can have great impact. Although reporting on water use has improved since legislation passed in 2009, the board has not been in a position to verify the accuracy of self-reporting by thousands of water rights holders, including the oldest, most senior water right holders. Statewide, there is no comprehensive understanding of how and when water rights holders make use of alternative supplies, including the state’s overdrafted groundwater basins.

Since the economic, social and environmental consequences of water management during a drought are especially high, people understandably want to see the board administering diversion curtailments with precision and in real time. But during the wet periods, the legislature and state agencies tend to ignore this issue because there is more water to go around and little public pressure to correct information gaps. Then, when the wet inevitably turns to dry, there are insufficient time and resources to address the problem.

Droughts provide the political and economic motivation to get our water management system into better shape. Step one would be to invest in modernizing the way we measure, forecast, and administer water use—hopefully before the next drought.

Drought Watch: Essential Elements for a Water Bond

This is part of a continuing series on the impact of the drought.

In both houses of the California Legislature, multiple versions of a new water bond are being amended and debated to make the June deadline for replacing the $11.1 billion bond now slated for the November election. Originally intended for the November 2010 ballot, the bond has been twice delayed due to concerns it would not pass. The March 2014 PPIC Statewide Survey showed a bump in public approval since last year, with 50 percent of likely voters now saying they would approve it, up from 42 percent in March 2013. Survey responses to other questions about water suggest that this rise in support likely reflects concerns over the drought. For example, a record share of residents (15%) named water as the most important issue facing the state (up from 2% a year earlier).

As the legislature considers the final size and shape of this new bond, it is worth reviewing how bond funds have been used in the past and the areas that most need bond support in the future.

The 2000s were a big decade for water bonds, with approved funds totaling almost three times as much as the three previous decades combined. Even so, bond funds currently only contribute about $1 billion a year to the water sector, a small portion of the $30 billion that is spent annually on the state’s water system.

Moving forward, new bond funds are likely to be more limited (as shown by the current bond’s bumpy road to approval), so it makes sense to focus them on areas that lack sustainable and reliable funding sources. As we show in our report Paying for Water in California, these areas include small water systems in rural, low-income communities, flood protection, stormwater pollution management, aquatic ecosystem recovery, and integrated water management. The bond funds approved in the 2000s have been spent overwhelmingly in these areas, yet the need is still great.

For activities that more readily raise funds from local ratepayers—such as water supply and wastewater management—future bond support should be limited to projects that generate broad public benefits. This might include water supply projects that promote better integration of our water system (e.g., by capturing stormwater, which can improve both water supply and prevent pollution) or ecosystem recovery (e.g., by improving the quality or quantity of water to support fish and wildlife).

Even if a new water bond passes this fall, California will need to find other ways to pay for small system drinking water quality, critical improvements to flood protection, stormwater management, aquatic ecosystems, and integrated water management. As part of its deliberations, the legislature will need to think beyond bonds, and consider new statewide fees or special taxes—such as a small surcharge on water use or a small increment on the sales tax—to help fill these gaps with a reliable revenue stream.

Chart Source: Paying for Water in California.

Videos Highlight Water Finance Event

The drought has focused attention on water supply and highlights the crucial role of funding in supporting our water system, said Ellen Hanak, PPIC senior fellow, at a half-day conference PPIC hosted last week at the Sacramento Convention Center. The conference focused on the issues highlighted in the PPIC report Paying for Water, which pinpoints funding gaps in five key areas of water management. Hanak opened the conference with a presentation of her report, starting with an overview of how California pays for water. She noted that state general obligation bonds make up just a small part of the $30 billion spent annually on the water system.Most funding, about 85 percent, comes from local sources—rates, fees, and taxes. However, legal obstacles make it difficult for local agencies to raise money. Hanak then summarized the areas in which the state is failing to deliver the level of services California residents expect. She closed with a roadmap of recommendations for funding reform.

In the first panel discussion, experts from local water agencies and the governor’s office took up the issue of “fiscal orphans” for which there is no clear revenue stream—areas such as flood control, stormwater, and safe drinking water for small, disadvantaged communities. panelists talked about their challenges and successes in building better integrated systems in these orphan areas.

The second panel tackled a series of tough questions: How can the state partner with local and regional agencies to improve water management? What has the state done well and what can it do differently? Panelists with both state and local perspectives joined this lively discussion.

The third panel considered some of the legal challenges posed by Propositions 218 and 26. Panelists said these constitutional amendments have pushed water authorities to be more transparent in their use of taxpayer funds. But the measures and the courts’ interpretations of them have also made it more difficult to fund water solutions.

Drought Watch: Funding Sustainable Groundwater Management

This is part of a continuing series on the impact of the drought.

Although droughts have many downsides, they can also spur lasting improvements in water management. Unsustainable groundwater use has long plagued California’s rural areas, and the current drought is providing much needed impetus to pursue reform.

California is one of the only western states that does not regulate groundwater use under state law. Except for a few dozen basins where local agencies have special oversight authority (mainly in urban Southern California and the Bay Area), local groundwater management remains largely voluntary and somewhat precarious. Despite some recent advances in basin monitoring and replenishment programs, these agencies have been unable to prevent damaging declines of groundwater supply and quality. As recent headlines on water scarcity point out, overtaxed basins are unable to effectively serve one of groundwater’s most important roles: as a buffer against drought.

In late March, the Governor’s Office held a workshop to seek input from local managers and other experts on a proposal that would empower local agencies to better manage groundwater—and commit the state to step in as an emergency backstop if locals fail to come through. Today’s post on the California Water blog, coauthored by an interdisciplinary team from PPIC, UC Davis, UC Hastings, Stanford, and elsewhere, walks through important funding considerations for this reform.

To be effective, local entities must have sufficient authority and flexibility to raise the money they need to track water levels and make key investments—both in infrastructure and in new water supplies for replenishing their basins. In addition, these agencies should have the ability to enact special surcharges to prevent excessive pumping. Right now, that power is only granted to a handful of agencies.

Extending and strengthening the funding and oversight authorities available to local agencies across the state will better prepare us for the next time we need to look to the ground, instead of the sky, for our water needs.

Testimony: Funding to Promote Drought Resilience

The Assembly Budget Subcommittee for Resources and Transportation–which oversees budget allocations for water-related state agencies–convened a group of experts on Wednesday to provide an update on the current drought. PPIC senior fellow Ellen Hanak gave the members an overview of state and federal emergency drought funding for California and suggested other fiscal measures that the legislature should consider to make California more drought resilient. Here are her prepared remarks.

Good morning and thank you for the invitation to address the committee. I’d like to focus my remarks on how the legislature can help California become more drought-resilient, both in the near term and over the longer term. And since your committee is tasked in particular with considering budget measures, I will highlight the question of funding.

As you all know, several weeks ago the legislature passed, and the governor signed, emergency drought legislation. These bills made $687 million available for a variety of programs. This state funding package came on the heels of an announcement of $222 million in federal drought funding for California—bringing the total to $909 million. In the state’s case, most of the funds (80%) come from previously authorized state general obligation (GO) bonds, with the remainder from the general fund (11%), new cap and trade auction revenues (6%), and a variety of other funds (3%). A large portion of the federal funds comes from the 2014 Farm Bill.

The table provides an overview of the allocation of these funds. About a quarter ($239 million) is for near-term emergency assistance to communities facing special hardship because of the drought. A small share (0.3%, or $2.3 million) is directed to emergency ecosystem support. And nearly three-quarters of the total ($668 million) is directed toward improving water use efficiency and reliability. Although some of the investments in this last category may help in the near term, most should be viewed as efforts to make the state more drought-resilient over the longer term.

This breakdown between near- and longer-term impacts of drought spending reflects the realities of drought response: In the very near term, cash can provide helpful support to affected communities, but it can’t fundamentally change the water supply situation. One of the very interesting lessons from the current drought is that two decades of investments by California’s major urban utilities—in areas such as water use efficiency, above- and below-ground storage, and non-traditional supplies like recycled wastewater and stormwater—has made these communities much more capable of getting through droughts. The new spending earmarked for improving efficiency and water supply reliability should help California continue to build its resilience to future droughts.

The drought has also renewed legislative attention on putting a new GO bond on the November 2014 ballot to fund water management in California. As we show in a new PPIC study on water finance, Paying for Water in California, state bonds approved since 2000 have helped fund a range of important water management activities. However, bonds can at best be just a part of the overall solution to meeting California’s critical water funding needs. The legislature can and should pursue other actions to give California a sustainable and reliable funding system for water. Some examples include:

Adopting new state fees and special taxes to fill critical gaps. For instance, a small surcharge on water use could support integrated water management and protect our threatened aquatic ecosystems, and a small surcharge on chemicals could help fund pollution prevention and safe drinking water in affected communities.
Passing enabling legislation to make it easier for local agencies—the front-line managers of water resources—to raise the funds they need. One example would be extending the authority to assess fees for groundwater pumping and basin replenishment—now available to just a handful of communities—to groundwater management agencies across the state.
Providing guidance to the courts on how to interpret California’s Constitution so that local water agencies can improve water supply reliability. In particular, agencies should have the flexibility to adopt tiered, conservation-oriented rate structures and fund activities such as recycled wastewater and stormwater capture. In some cases, narrow judicial interpretations of Proposition 218—a voter-approved amendment passed in 1996—have created uncertainty about the ability of local agencies to use fee revenues to carry out such programs, which are essential for drought resilience.

In closing, it’s worth recognizing that droughts are a recurring feature of California’s climate. The current crisis presents an opportunity to continue improving our water system’s ability to cope with water scarcity in the face of population growth and a changing climate. By supporting the emergency funding package, the legislature has already taken some important steps to help alleviate the worst effects of this drought and to build future drought resilience. With additional steps, the legislature can help ensure that our water system can support a healthy economy, society, and environment over the longer term.

Table sources: California Senate Bills 103 and 104 (chaptered March 1, 2014); White House Fact Sheet on drought response (February 14, 2014).

Drought Watch: Roadblocks to Efficient Funding

This is part of a continuing series on the impact of the drought.

The drought has prompted California to redirect hundreds of millions of dollars of remaining state bond funds and other revenues to make the state more resilient in the future. These funds are certainly welcome, but it’s important to see this spending in perspective. As we show in a new PPIC report—written with a team of co-authors from other institutions—the contributions of state money are small change when it comes to spending on water. Most of the $30 billion spent annually to support California’s water system is raised by local and regional water agencies.

The good news is that California’s urban water and wastewater utilities are in relatively good fiscal health. Thanks to their significant investments to improve water supply reliability in the two decades since the last major drought, California’s major urban areas—and the state’s economy—will largely be able to weather this one. Crucially, these utilities have been able to make the needed investments by raising local water rates.

However, looming legal challenges may limit the ability of local agencies to make continued investments in modern, integrated water management—investments that would better prepare us for population growth, climate change, and future droughts. Proposition 218, a constitutional amendment adopted by the state’s voters in 1996, requires water bills to reflect the costs of service to each individual parcel. As some recent court cases have shown, a narrow interpretation of this requirement can present roadblocks to several important management tools:

Conservation pricing. Tiered pricing—which charges higher per gallon prices for larger amounts of water use—can promote conservation. And, because new water sources often cost more than existing supplies, higher-priced tiers are justified. But it is difficult to establish a precise link between the price paid and the amount of water saved at each property. As a result, these rate structures may be legally vulnerable even though they improve utilities’ ability to maintain reliable water service.
Use of new water sources. Non-traditional sources of water, such as recycled wastewater and stormwater, improve overall system reliability for existing customers, even if not all customers use those specific sources. But a recent trial court interpreted Proposition 218 to mean agencies could not charge customers for any part of water service (in this case, recycled water) that was not physically available to them.
Sustainable groundwater management. One promising way to stabilize California’s overtaxed groundwater basins is by charging a per gallon fee to limit pumping and to cover the costs of recharging basins with other supplies. But because groundwater overdraft doesn’t affect each parcel in exactly the same way, groundwater agencies have also faced court challenges regarding the legality of these fees.

To enable our water system to respond effectively to future droughts, the courts need to keep the entire water system in mind when responding to rate challenges. And over the longer term, California needs to better align its funding laws to the goals of modern water management. In a state where drought is a fact of life, this alignment will allow us to manage this crucial resource far into the future. Asking our water managers to account for the cost and location of each drop of water when developing their water rate structures will undermine recent momentum toward a more sophisticated and interconnected water system.

Drought Watch: Harnessing the Storms

This is part of a continuing series on the impact of the drought.

Southern California got a thorough soaking in late February and early March, with intense storms that caused localized urban and coastal flooding. Northern California also received some much needed rain and snow. As officials pointed out during and after this wet interlude, it helped, but it was not a drought buster.

So where did all that rain go and did we miss an opportunity to improve our water supplies?

In urban Southern California and the San Francisco Bay Area, most of this water was lost to the ocean. This loss comes from both the nature of the storms and our long-standing approaches to stormwater management.

First, like many of California’s winter storms, these storms were very intense. When heavy rains fall on urban landscapes, all those hard surfaces—roads, roofs, gutters—gather and shed water quickly rather than allowing it to soak in to recharge groundwater.

Second, the way we manage most of this runoff in coastal areas ensures that it goes to the ocean. During the post-WWII expansion of urban California, planners and engineers viewed storm runoff as a nuisance to be disposed of as quickly as possible. The iconic California urban stream—straightened, channelized, and lined with concrete—is designed to move water rapidly out of neighborhoods and route it to the ocean. This design has made places like the Los Angeles River better suited to filming car chases than to harnessing local water supplies. Moreover, this fast-moving stormwater is a major source of pollution of California’s bays, beaches, and watersheds. Regulations to limit this pollution have become increasingly strict, making this one of the costliest water management headaches for many California communities.

Fortunately, this antiquated style of stormwater management is now changing. Many of the state’s urbanized areas have begun to capture and store stormwater in groundwater basins for later reuse. Sustainable stormwater management can be accomplished in many ways: installing pavements that soak up rain instead of repelling it, designing landscapes and streetscapes to capture runoff, replacing hard urban landscapes with parks, and routing stormwater into settling basins. These projects achieve multiple benefits: in addition to increasing local water supplies and greening our neighborhoods, they help reduce water pollution.

All of these efforts are still a work in progress. Drought legislation signed by the governor will allocate some additional state funds to stormwater projects. This money is a welcome boost, because funding stormwater projects with local dollars is difficult to accomplish. As a forthcoming PPIC report on water system finance shows, stormwater is a “fiscal orphan” —an area where our current funding rules (including two-thirds majority voting requirements to pass local special taxes) limit the ability of local managers to raise the resources they need to make smart community investments. Reshaping our urban environments to make stormwater an asset, rather than a liability, will take time and money but it will pay off in future droughts.

Drought Watch: Saving the Fish

This is part of a continuing series on the impact of the drought.

In a recent California WaterBlog post, Peter Moyle of the University of California, Davis—a frequent collaborator on PPIC projects—highlights an issue not much discussed in the context of this drought: we ignore fish and wildlife at our peril. California is home to 122 different species of native fishes, including 32 kinds of salmon and trout. These fishes are part of the unique natural heritage of California and, as Moyle points out, most are on a trajectory toward extinction. A poorly managed drought can hasten this process.

State and federal laws that protect endangered species reflect the high value society places on native biodiversity. The sweeping Delta Reform Act of 2009, passed by bipartisan majorities, went a step further, placing ecosystem health on par with water supply reliability. Above all, history shows that failure to manage fish and wildlife well during a drought can have very expensive long-term consequences for water management once the rains return.

So what, if anything, is being done for fish in this drought?

The short answer is “not much.” Most discussion at both the state and federal levels has focused not on whether to relax environmental standards, but on how much to relax them. In the coming weeks many petitions will be filed with the State Water Resources Control Board for exemptions from water quality and flow standards. The board has already exempted the Central Valley Project and the State Water Project from meeting flow standards for the Sacramento–San Joaquin Delta, which is home to many endangered fishes, including salmon and steelhead. The emergency drought legislation making its way through the state legislature includes significant sums to provide relief to communities hard hit by the drought, but very little to help reduce stress on the environment. On the federal level, the legislation pending in the House would reduce protections for the environment, while the Senate bill—introduced by California’s two U.S. senators—offers little to improve conditions for fish.

Moyle points out that although native fishes adapt well to drought, they are hampered by the many modifications we have made to our rivers, the way we manage water, and our policies regarding fish harvests and hatcheries. He offers some well-known prescriptions for drought management and some novel ideas, including trucking fish to cool water sources and establishing fish triage panels with the authority to allocate water to keep fish alive through a drought. Equally important, his post reminds us that the actions that help the environment most during a drought are those taken long before the drought begins.

Testimony: Using Cap & Trade Revenues to Bolster Climate Policy

The Senate Budget and Fiscal Review Committee focused Thursday on the governor’s proposal for spending revenue from the quarterly auction of emissions allowances that is part of California’s program to reduce greenhouse gases. The committee took testimony from the Legislative Analyst’s Office, the administration, and a panel of independent experts. Ellen Hanak, PPIC senior fellow, was part of that panel. Here are her prepared remarks:

Thank you for inviting me to address you this morning. I’d like to focus my remarks on ways to think about achieving multiple benefits from the use of cap and trade auction revenues. In addition to a primary goal of reducing greenhouse gas (GHG) emissions, the governor’s budget proposal emphasizes two types of co-benefits: supporting disadvantaged communities (as required by Senate Bill 535) and creating jobs. It’s also important to recognize that the cap and trade revenues have the potential to strengthen an integrated climate policy for California that focuses both on reducing GHG emissions – or “mitigation” – and on helping the state prepare for some of the negative impacts that are anticipated from climate change – or “adaptation.” This approach to using the auction revenues is consistent with the legislative guidance provided by Assembly Bill 1532, which included climate adaptation as one of the desirable co-benefits of a spending plan.

A significant body of research suggests that the impacts from climate change will be significant in California, even if global efforts to reduce GHG emissions are successful. We are already seeing rising temperatures and accelerating sea level rise, and the science points to the likelihood of increased frequency of extreme events, such as more frequent droughts, wildfires, floods, and heat emergencies. Although it is difficult to attribute any specific weather shock to climate change, the current severe drought facing California highlights the importance of making investments to reduce our vulnerability to these types of extreme events.

Some mitigation and adaptation actions are complementary, in the sense that they simultaneously reduce GHG emissions while making us better able to cope with the expected impacts of climate change. Examples include efforts to improve energy efficiency in buildings, to manage energy demand, to conserve water, and to build more transit-oriented “sustainable communities.” All of these efforts reduce energy demand and hence, GHG emissions; they each also make it possible to better handle one or more of the anticipated negative effects of climate change. Energy efficiency and energy demand management lower peak energy needs during extreme heat events. Water conservation helps us cope with water scarcity. And denser, more transit-oriented, and walkable communities reduce the urban footprint, making it possible to lower the water use devoted to landscaping (which helps cope with water scarcity) and to keep more habitat available for California’s plant and animal species that are also being threatened by a changing climate. As another example, forestry management can help store carbon (providing GHG benefits), while also reducing the risks of wildfire and the potentially harmful consequences of such events for the state’s water supplies. (Last year’s Rim Fire, which threatened the water supplies for many Bay Area communities, illustrates this risk.)

The governor’s proposal for spending the cap and trade revenues includes some activities that are clearly complementary in this sense, including weatherization of homes, energy efficiency in state buildings, water use efficiency, and forest fire prevention. Other parts of the governor’s proposal have the potential to be complementary if implemented carefully. For instance, urban forestry can lower energy demand, but it can also raise water demand unless care is taken to plant low-water-using tree species and to design the tree planters in ways that capture stormwater. (This type of approach is known as low-impact development, and it can help increase water supplies and reduce the water pollution associated with storms.) The same is true for the sustainable communities’ grants: They can provide multiple benefits if planning considers other factors besides encouraging transit use, like energy- and water-efficient buildings and landscapes.

In all, as much as a $300 million of the $850 million of proposed spending for next year falls into categories that potentially can contribute to an integrated climate policy addressing both mitigation and adaptation. At a minimum, the state should be attentive to the specifics of how these programs are implemented to ensure that they meet both goals. It could also be valuable to consider some rebalancing of the overall spending proposal to favor measures that contribute to these dual goals. As one example, it could be very beneficial to expand the effort on forest management in California’s upper watersheds.

In closing, I’d like to leave you with a couple of reflections on this idea of using cap and trade revenues to support an integrated climate policy. First is the question of reducing costs of climate change policy for Californians. In contrast to the view that cap and trade revenues should be focused solely on reducing the costs of GHG mitigation, I’d like to suggest that it’s also appropriate to think about using these revenues to reduce the costs of preparing for a changing climate. The cap and trade program itself is designed to help lower the costs of reducing greenhouse gas emissions, because it allows trading of emissions allowances to meet the cap. Preparing for a changing climate will also entail numerous costs for Californians, and using these funds in ways that also support such efforts will help reduce those costs.

Second is the question of what Californians think about the state’s role in climate policy. In PPIC’s most recent survey on this issue eight out of 10 residents said it is important that the state pass regulations and spend money now on efforts to reduce global warming. And eight out of 10 residents said it is important to pass regulations and spend money now on efforts to prepare for the effects of global warming. An integrated approach to using cap and trade revenues will help California meet both goals.

Drought Watch: A Better Way to Manage Water for Fish

This is part of a continuing series on the impact of the drought.

As California’s drought wears on, state and federal regulators will be under increasing pressure to loosen environmental standards that protect native fish and other wildlife. Relaxing flow standards in rivers and streams is always problematic; the standards exist because many native species are already in a precarious condition. But during droughts, regulators often make this decision as part of a balancing act, in order to make additional water available to cities and farms. Usually, the standards are relaxed without requiring any payment from cities or growers for the added water they receive. Yet the environmental consequences of relaxing standards can be costly, requiring special efforts to protect and recover species in other ways—such as with conservation hatcheries that help maintain populations of endangered species outside of their natural environment.

In a recent op ed in the Sacramento Bee, we joined a group of researchers from UC Davis, UC Hastings, and Stanford University to propose a new way for California to approach this challenge. The basic idea: instead of giving the water away, California should create a special environmental water market to sell to growers and cities the water made available by relaxing environmental standards. The revenues would be used to support fish and wildlife recovery. This special environmental market would be an extension of the water trading that already happens during droughts. It would help meet California’s goals of both ensuring reliable water supplies and protecting the environment, even during the dry times.