Finalist 1995
State of California
Innovations in American Government Awards
Innovations in American Government Awards

The California Drought Water Bank program aims to alleviate the worst localized economic, social, and environmental impacts related to critical water shortages created by drought or other unanticipated events. As defined by the program, “drought” refers to periods when regional or statewide water supplies fall significantly below normal and large localized reductions in deliveries to urban, agriculture, and fish and wildlife uses are projected. The program operates until water supplies return to non-critical levels and is not intended to substitute for long-term water development or demand-reducing programs or facilities. This initiative serves as an additional statewide water management tool in an integrated program.

The Water Bank program was activated in the 1991, 1992 and 1994 drought years. It is a voluntary program whereby the California Department of Water Resources buys water from willing sellers or pays water users to forego use of a portion of their supplies. The Department of Water Resources then remarkets the water to buyers under specific critical needs allocation rules. Critical needs may apply to any water user in California that requires an additional short-term water supply to alleviate serious economic, social or environmental disruption and losses.

The Department of Water Resources purchases water by three primary mechanisms for the Water Bank program: 1) water made available by groundwater substitution, whereby a portion of a water district's surface water supply is acquired and the water district replaces it by pumping an equivalent amount of local groundwater; 2) surface water stored in local reservoirs and surplus to the current needs of the local agency; and 3) water made available by farmers fallowing or foregoing irrigation of designated farmland. Due to economic and social impacts and wildlife habitat concerns created by a reduction in farming operations, the fallowing option would be exercised only during years of extreme water supply shortages such as occurred in 1991.

The single most important achievement of the Water Bank program to date is the establishment and successful accomplishment of the first large-scale voluntary water transfer program in California. Past water marketing and transfers in California were small-scale and infrequent and there have been legal and institutional barriers to large-scale water transfers. The success of the Water Bank broke psychological barriers by demonstrating that water transfers could be accomplished on a large scale and in a timely manner. The entire water community has contributed to the success of the program. There has been a marked improvement in working relationships between buyers and sellers, and among local, state, and federal agencies.