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California’s Water Market: Overall Trends and Southern California’s Role

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. California’s Main Water-Using Regions. Bay Area. Sacramento Valley. San Joaquin Valley.

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California’s Water Market: Overall Trends and Southern California’s Role

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

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

  4. Water Market Was Jumpstarted by Droughtin Early 1990s 1,400,000 18 17 Water-year 16 1,200,000 type 15 14 1,000,000 13 12 800,000 Wet 11 10 600,000 9 Normal 8 400,000 7 6 Dry 200,000 5 4 Acre-feet 1985 1987 1989 1991 1993 1995 1997 1999 2001 Water-year type Acre-feet traded

  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. Environmental Concerns, Not Cities, Drove Late 1990s Growth in Demand 1,000,000 800,000 Mixed uses Acre-feet 600,000 Other farmers per year SJ Valley farmers Environment 400,000 Cities 200,000 1988 -1994 1995 -2001

  7. So Cal Share of Purchases: 10–35 Percent Acre-feet So Cal Other regions 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

  8. So Cal Has Not Been a Big Net Importer, It Actually Has Exported in Wet Years Water-year Acre-feet type 300,000 16 14 200,000 Wet 12 100,000 10 Normal 0 8 6 -100,000 4 Dry -200,000 2 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 -300,000 0 Net imports to So Cal Water-year type Net exports from So Cal

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

  10. Long-term and Permanent Deals Are On the Rise… Thousands of acre-feet 1,400 1,200 Permanent Sales* 1,000 800 New Long- Term Sales * 600 400 Existing Long- Term Sales* 200 1988 1990 1992 1994 1996 1998 2000 2002 recent or pending* * See data notes for an explanation

  11. ...and So Cal and Environmental ProgramsAre Major Buyers Thousands of acre-feet 1,400 1,200 Environment 1,000 800 Other regions 600 400 Southern CA 200 1988 1990 1992 1994 1996 1998 2000 2002 recent or pending

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

  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) • 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

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