The Environmental Benefits of the Water Storage Investment Program

Updated: Sep 27

Gokce Sencan and Jeffrey Mount

In August, the Newsom administration announced its Water Supply Strategy. Storing water in wet years is central to this strategy, principally to cope with increasing drought intensity and the resulting water scarcity that will impact supplies for cities and farms.

As part of our recent study, Storing Water for the Environment, we investigated current efforts to expand storage under the Water Storage Investment Program (WSIP)—a key component of a water bond passed by voters in 2014 (Proposition 1). WSIP put forth significant funding for storage—$2.7 billion—and it uses a novel approach. It requires that this funding go only to the public benefit portion of new storage, including new water for the environment.

Seven WSIP projects are slated to receive support. The amount of funding for each project was determined based on the value of its public benefits, which were calculated as part of a complex and often contentious process. Ecosystem benefits had to make up at least half the public benefits, and projects had to improve conditions in the Sacramento–San Joaquin Delta watershed.

The seven projects provide, among other things, water supplies for wildlife refuges and increased flows for salmon and steelhead habitat. Our analysis of available public data shows that the cumulative environmental water provided by these projects could exceed 200,000 acre-feet per year in an early drought year, or run as low as 79,000 acre-feet per year in successive drought years. In our Storing Water for the Environment report, we recommend diversifying the portfolio of water storage options for the environment to help manage an uncertain future. To our knowledge, the WSIP is the first attempt to incentivize new storage for the environment with public funds. WSIP faced several informational and administrative challenges. If this approach is used again in future bonds or legislation, it should:

  • Improve accounting for environmental water. The estimated volume of flows in the figure above is unlikely to be realized. The three south-of-Delta conjunctive use projects depend heavily on exchanges of groundwater with State Water Project (SWP) contractors whose allocations are routinely cut during drought, making limited SWP water available (for example, during 2014, 2021, and 2022, no water would have been available for exchanges). Additionally, off-channel surface reservoirs—such as Sites, Pacheco, and Los Vaqueros—rely heavily on wet years to fill. The frequency of wet years—and how wet they are—will play a major role in the volume of water these projects can provide to the environment.

  • Simplify the calculation of ecosystem benefits. Quantifying and monetizing ecosystem benefits was deemed necessary to meet the bond’s requirements. But the complexity of the process made this difficult (and contentious). Project proponents could use different approaches that would yield vastly different benefits and monetary values. Simplifying and systematizing this process—perhaps by engaging an independent auditor for all valuations—would help.

  • Be less prescriptive and more adaptive. The projects that sought WSIP funding were encouraged to be adaptive and multi-benefit. However, the benefit quantification and monetization process proved challenging, pushing projects to be highly prescriptive, with narrow requirements for timing, location, and volumes of water to be used for the environment. To adapt to changing conditions and make the most efficient use of environmental water, flexibility and regional coordination are needed.

  • Steer future projects to prioritize ecosystem benefits. WSIP took a “bottom up” approach that relied upon proponents of water supply projects to advance proposals showing how their projects could help the environment. As a result, the environmental benefits—particularly the new ecosystem water—were diffuse and distributed over a large geographic area. Concentrating projects in a specific watershed and on critical ecosystem functions could produce more environmental benefits.

WSIP takes a novel approach to incentivizing the development of new storage while funding public benefits, such as new water for the environment. Our report offers suggestions for how to improve it—especially if future efforts seek to make the environment a priority, rather than an ancillary benefit funded by public dollars. Given the pace of warming and increasing drought intensity, California should look closely at all options for storage, including storing water for the environment.