1. 1 California’s Water Market: Overall Trends and Southern California’s Role Ellen Hanak Public Policy Institute of California Presentation to So. Cal. Water Dialogue October 26, 2005

2. 2 California’s Main Water-Using Regions Southern CA (rural)* (Imperial County) San Joaquin Valley Sacramento Valley Bay Area Southern CA (urban) 5m 10m 15m 20m Population 2004 * Imperial County is included in the Southern CA region in this presentation

3. 3Outline  Market trends to 2001  More recent and pending long-term transfers  Data sources

4. 4 Water Market Was Jumpstarted by Drought in Early 1990s 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 198519871989199119931995199719992001 Acre-feet 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Water-year type Acre-feet traded Water-year type Dry Normal Wet

5. 5 Putting the Market in Perspective  Still comparatively small: 3% of all water used  But delivers 3 times more water than recycling  Contracts mainly short-term: 80% of volume

6. 6 Environmental Concerns, Not Cities, Drove Late 1990s Growth in Demand 200,000 400,000 600,000 800,000 1,000,000 1988 -19941995 -2001 Acre-feet per year Mixed uses Other farmers SJ Valley farmers Environment Cities

7. 7 So Cal Share of Purchases: 10–35 Percent 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 19851986198719881989199019911992199319941995199619971998199920002001 So CalOther regions Acre-feet

8. 8 So Cal Has Not Been a Big Net Importer, It Actually Has Exported in Wet Years -300,000 -200,000 -100,000 0 100,000 200,000 300,000 19881989199019911992199319941995199619971998199920002001 0 2 4 6 8 10 12 14 16 Net imports to So Cal Water-year type Net exports from So Cal Acre-feet Water-year type Wet Normal Dry

9. 9Outline  Market trends to 2001  More recent and pending long-term transfers  Data sources

10. 10 Long-term and Permanent Deals Are On the Rise… 200 400 600 800 1,000 1,200 1,400 19881990199219941996199820002002recent or pending* Permanent Sales* New Long- Term Sales * Existing Long- Term Sales* Thousands of acre-feet * See data notes for an explanation

11. 11...and So Cal and Environmental Programs Are Major Buyers 200 400 600 800 1,000 1,200 1,400 19881990199219941996199820002002recent or pending Environment Other regions Southern CA Thousands of acre-feet

12. 12Outline  Market trends to 2001  More recent and pending long-term transfers  Data sources

13. 13 Data Sources  Data up to 2001 are found in Hanak, Who Should Be Allowed to Sell Water in California?, Public Policy Institute of California, July 2003, Appendix A (available at www.ppic.org) www.ppic.org  Data on more recent trends in long-term and permanent transfers are taken from tables A.5 and A.6 in the above report, supplemented with information from news articles. The “recent or pending” category includes maximum annual flows from new or pending transfers – in practice it will take some years before these levels are reached. –“Permanent” sales refer to the permanent transfer of water rights or contracts –“Long-term” sales are for over 1 year (typically ranging from 10 to 45 years)  For questions, contact Ellen Hanak (hanak@ppic.org); (415-291- 4433 hanak@ppic.org