The 2016-17 Budget: The State's Drought Response

The 2016-17 Budget: The State’s Drought Response MAC TAYLOR • L E G I S L A T I V E A N A L Y S T • FEBRUARY 5, 2016 2016-17 BUDGET 2 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET EXECUTIVE SUMMARY State Has Been Experiencing Exceptionally Dry Period. California has been experiencing a serious drought for the past four years. In fact, by some measures the current drought actually began in 2007, with one wet year—2011—in the middle. While there are optimistic signs that El Niño weather patterns will bring California a wet winter in 2016, how much precipitation will fall as snow in the state’s northern mountain ranges—a major source of the state’s water throughout the year—remains uncertain. Moreover, the cumulative deficit of water reserves resulting from multiple years of drought is sufficiently severe that some degree of drought conditions likely will continue at least through 2016. Scientific research also suggests that climate change will lead to more frequent and intense droughts in the future. Drought Has Affected Various Sectors in Different Ways. Sector-specific water needs and access to alternative water sources have led to notable distinctions in the severity of the drought’s impacts across the state. For example, while the drought has led to a decrease in the state’s agricultural production, farmers and ranchers have moderated the drought’s impacts by employing short-term strategies, such as fallowing land, purchasing water from others, and—in particular—pumping groundwater. In contrast, some rural communities—mainly in the Central Valley—have struggled to identify alternative water sources upon which to draw when their domestic wells have gone dry. Multiple years of warm temperatures and dry conditions have had severe effects on environmental conditions across the state, including degrading habitats for fish, waterbirds and other wildlife, killing millions of the state’s trees, and contributing to more prevalent and intense wildfires. For urban communities, the primary drought impact has been a state-ordered requirement to use less water, including mandatory constraints on the frequency of outdoor watering. State Funded Both Short- and Long-Term Drought Response Activities. The state has deployed numerous resources—fiscal, logistical, and personnel—in responding to the impacts of the current drought. This includes appropriating $3 billion to 13 different state departments between 2013-14 and 2015-16. State general obligation bonds (primarily Proposition 1, the 2014 water bond) provided about three-quarters of these funds, with state General Fund contributing around one-fifth. Some of the funded activities (such as providing bottled drinking water or rescuing fish) are to meet an emergency need stemming from the current drought, and then will conclude. Other projects, particularly those supported by bond funds (such as building new wastewater treatment plants), will be implemented over the course of several years, and therefore will be more helpful in mitigating the effects of future droughts. Lastly, other activities (such as lawn removal or water efficiency upgrades), often are intended to have noticeable effects in both the current and future droughts. Drought Response Has Also Included Policy Changes and Regulatory Actions. In addition to increased funding, the state’s drought response has included certain policy changes. Because current drought conditions require immediate response but are not expected to continue forever, most changes have been authorized on a temporary basis, primarily by gubernatorial executive order or emergency departmental regulations. For example, one of the most publicized temporary drought- related policies has been the Governor’s order (enforced through regulations) to reduce statewide www.lao.ca.gov Legislative Analyst’s Office 3 2016-17 BUDGET urban water use by 25 percent. State regulatory agencies also have exercised their existing authority in responding to drought conditions. For example, the State Water Resources Control Board has ordered and enforced that less water be diverted from some of the state’s rivers and streams, and the Department of Fish and Wildlife has closed some streams and rivers to fishing. Governor Proposes Continued Funding for Drought Response Activities in 2016-17. The Governor’s budget proposal provides $323 million for drought response efforts in 2016-17. This funding would primarily support the continuation of initiatives funded in recent years that address emergency drought response needs. For example, the proposal includes funding for increased wildland firefighting, to provide various forms of human assistance in drought-affected communities (such as drinking water, food, financial assistance, and housing and employment services), and to monitor and assist at-risk fish and wildlife. The proposal also dedicates cap-and- trade revenues for four conservation programs intended to improve water and energy efficiency. LAO Recommendations for 2016-17: Adopt Most of Governor’s Drought-Related Budget Proposals. We believe the Governor’s approach to focus primarily on the most urgent human and environmental drought-related needs makes sense. The severity of enduring drought conditions supports the continued need for these response activities. As such, we recommend the Legislature adopt the components of the Governor’s drought package that meet essential human and environmental needs and that are likely to result in immediate water conservation. We believe additional information is needed, however, before adopting the Governor’s four cap-and-trade- funded conservation proposals. Whether these proposals represent the best approach to achieving water and energy savings and reducing greenhouse gases is unclear. We therefore recommend the Legislature delay deciding on whether to fund these programs until the administration has provided additional information to justify the request. LAO Recommendations for Longer Term: Learn Lessons to Apply in Future Droughts. Given the certainty that droughts will reoccur, and the possibility that subsequent droughts might be similarly intense, we recommend the Legislature continue to plan now for the future. Such planning can be facilitated by (1) learning from the state’s response to the current drought, (2) identifying and sustaining short-term drought-response activities and policy changes that should be continued even after the current drought dissipates, and (3) identifying and enacting new policy changes that can help improve the state’s response to droughts in the future. We recommend the Legislature spend the coming months and years vetting various drought-related budget and policy proposals for their potential benefits and trade-offs, and enacting changes around which there is widespread and/or scientific consensus. This could include both changes that remove existing barriers to effective drought response, as well as proactive changes that improve water management across the state. The Legislature can gather such information through a number of methods, including oversight hearings and public forums, but we also recommend the administration submit two formal reports: one that provides data measuring the degree to which intended drought response objectives were met, and one that provides a comprehensive summary of lessons learned from the state’s response to this drought. 4 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET INTRODUCTION California has been experiencing a serious the likelihood that drought conditions will continue drought for the past four years. In fact, by some into the near future, the Legislature will need to measures the current drought actually began in decide which response activities require continued 2007, with one wet year—2011—in the middle. funding in 2016-17 and even in subsequent years. (As discussed in the box on page 7, drought can Moreover, now is a good time for the Legislature to be defined in various ways.) While there are ask the questions and seek the data it will need to optimistic signs that El Niño weather patterns will make better decisions in the future. Assessing the bring California a wet winter in 2016, how much effectiveness of the recent response and learning precipitation will fall as snow in the state’s northern from successes and missteps are key to preparing mountain ranges—a major source of the state’s both for the possibility of continued drought and water throughout the year—remains uncertain. the certainty of future droughts. Moreover, the cumulative deficit of water reserves We begin this report by describing the current resulting from multiple years of drought is drought and its impacts across the state. Next, we sufficiently severe that some degree of drought summarize the state’s drought-response activities conditions likely will continue at least through and appropriations through the current year. We 2016. Scientific research also suggests that climate then describe and assess the Governor’s drought change will lead to more frequent and intense spending proposals for 2016-17. Finally, we droughts in the future. conclude by recommending steps the Legislature The state has invested notable funding and can take to address drought both in the coming effort in responding to the current drought. Given year and future. DROUGHT IMPACTS In this section, we begin by describing the recent four years are the driest consecutive four-year current drought, including the degree to which recent stretch since statewide precipitation record-keeping winter storms have affected statewide water storage began in 1896. (Throughout this report, hydrologic levels, and scientific predictions for the characteristics data are reported based on “water years,” which of droughts in the future. We then describe how the run from October 1 of the previous year through current drought has impacted the state’s agricultural, September 30 of the year cited. For example, the data rural, environmental, and urban sectors. contained in Figure 1 for water year 2015 consists of precipitation measured between October 1, 2014 and State in Midst of Severe Drought September 30, 2015.) State Experiencing Exceptionally Dry Period. Figure 2 (see next page) shows how this lack of Figure 1 (see next page) shows annual precipitation precipitation has affected conditions around the state. rates for the past 40 years compared to the average The maps, developed by the United States Drought across the period. As shown, rates were below average Monitor, display the severity of drought conditions for the past four years, and only one of the past nine around the state based on key indicators such as soil years was particularly wet. Even more notably, the moisture content, streamflow, and precipitation. www.lao.ca.gov Legislative Analyst’s Office 5 Graphic Sign Off Secretary Analyst MPA Deputy 2016-17 BUDGET drought” conditions for two Figure 1 years. State's Precipitation Below Average in Recent Years Recent Storms Have Statewide Precipitation in Inches Improved Statewide Recent Dry Period Conditions . . . Storms 45 in December 2015 and 40 January 2016 have brought 35 much-needed precipitation to 30 40 Year California. Between October 1, Average 25 2015 (the beginning of the 20 2016 water year) and January Graphic Sign Off 15 31, 2016, the Northern Sierra 10 region of the statSe ereccreeivteadr y 5 32.8 inches of prAecnipaitlaytsiotn, which is 23 perceMntP aAbove 1975 1980 1985 1990 1995 2000 2005 2010 2015 average for that pDeeripodu t(y26.7 inches). This compares to a Figure 2 highlights how the drought’s reach and total of 23.1 inches received intensity have expanded over the past five years. As in that region across the same four month period shown, much of the state has experienced “exceptional in water year 2015, and just 4.5 inches in water ARTWORK #150595 Figure 2 Template_LAOReport_mid.ait Drought Has Expanded, Intensified Across State Statewide Drought Measurements From U.S. Drought Monitor, Taken Around October 1 Each Yeara 2011 2012 2013 2014 2015 Abnormally Dry Extreme Drought Moderate Drought Exceptional Drought Severe Drought a The U.S. Drought Monitor estimates drought intensity based on several indicators, including soil moisture, streamflow, and precipitation. October 1 is the beginning of the state’s “water year” for annual precipitation calculations. The U.S. Drought Monitor is jointly produced by the National Drought Mitigation Center at the University of Nebraska-Lincoln (NDMC-UNL), the United States Department of Agriculture, and the National Oceanic and Atmospheric Administration. Maps courtesy of NDMC-UNL. 6 Legislative Analyst’s Office www.lao.ca.gov ARTWORK #150595 Template_LAOReport_large.ait 2016-17 BUDGET year 2014. Additionally, as of February 1, 2016, the coming year. While 2016 precipitation totals are on Northern and Central Sierra regions of the state track to exceed those of recent years, significantly recorded about 120 percent of historical average alleviating statewide drought conditions would snow water content for that date. Forecasters predict require considerably more rain and—most a likelihood of continued precipitation throughout importantly—snow. As of January 31, additional the spring from El Niño-influenced weather systems accumulation of 17 inches is needed in Northern that could continue to add to these totals. California just to meet average annual amounts . . . But Drought Far From Over. Despite the of precipitation for that region for this water year, recent storms, the drought is unlikely to end in the which still would not be sufficient to overcome the Defining Drought Depends on Interplay Between Water Supply and Demand No standard or statutory definition exists for delineating the presence, onset, duration, or conclusion of a drought. Generally, drought is thought of as a prolonged deficiency of precipitation, resulting in a shortage of water. Drought impacts, however, result from the interaction between natural events (such as rainfall) and the demand that people place on water. That is, whether precipitation rates result in a shortage depends in part upon how much water is needed for human, agricultural, and environmental uses. As such, determining the existence and severity of drought conditions depends on a number of factors, including: (1) the amount of water needed to maintain existing activities, (2) the amount of precipitation, (3) the amount of runoff, and (4) the amount of alternative sources of water available (such as reservoir storage, groundwater, or recycled water). Additionally, the same shortage of precipitation might have differing impacts across the state. For example, as discussed later in this report, entities with a large, fixed need for water and fewer alternative sources upon which to draw (such as fish and wildlife, as well as residents in some areas of California’s Central Valley) have experienced greater impacts during the current drought than those who can reduce their demand and turn to other sources (such as some urban areas that can modify outdoor landscapes and draw upon local reserves). Because defining drought can be complicated, governmental agencies often use several sources of data to determine when conditions might merit an official response. For example, the U. S. Drought Monitor—a federal project that produces weekly maps of drought conditions—bases its determinations on an index comprised of data on precipitation, soil moisture, and streamflow, combined with “reported impacts and observations.” These maps are used by some other government agencies, including the U.S. Department of Agriculture and the Internal Revenue Service, to determine eligibility for certain government assistance programs. Another tool upon which researchers and government agencies frequently rely to measure drought is the Palmer Drought Severity Index, which uses temperature and precipitation data to calculate water supply and demand. When Governor Brown declared a State of Emergency in California due to drought in January 2014, he cited: (1) extremely low water levels in the state’s snowpack, rivers, reservoirs, and groundwater basins; (2) the effects of dry conditions on drinking water supplies, animals and plants, farmland, and forests; (3) the extended timeframe of dry conditions; and (4) the strain that responding to such conditions was placing on local governments. www.lao.ca.gov Legislative Analyst’s Office 7 2016-17 BUDGET cumulative water shortfall from the past several such, many climate researchers warn that the state years of drought. Figure 3 displays conditions for will experience more frequent and intense droughts nine of the state’s largest reservoirs as of January 31, in the coming years. For example, a recent study 2016. As shown, even after the recent storms, storage from Stanford researchers predicts that by around levels remain well below average for this point in the 2040, California’s climate will have transitioned year in most of the state’s reservoirs. Experts also to one in which there is nearly a 100 percent caution that precipitation rates alone cannot predict likelihood that low precipitation years also will be water conditions for the coming year. Statewide severely warm. water supply is highly dependent on the amount Drought Has Affected of water content in the state’s snowpack and on Various Sectors in Different Ways spring runoff rates—conditions about which firm conclusions cannot yet be drawn. The statewide map Although Figure 2 shows the prevalence of the U. S. Drought Monitor produced for the last drought conditions in most areas of the state, these week of January 2016 still looks similar to the one conditions have not had the same effects in all displayed for October 2015 in Figure 2, with much of regions and sectors. Sector-specific water needs the state continuing in exceptional drought status. and access to alternative water sources have led to Science Indicates Warmer Temperatures notable distinctions in the severity of the drought’s Increase Drought Frequency and Severity. impacts across the state. Below, we discuss drought Temperatures in California also have been notably impacts in the agricultural, rural, environmental, warmer in recent years compared to historical and urban sectors. averages. Specifically, average annual statewide Agricultural Sector Has Reduced Crop temperatures have been higher than normal in each Acreage, Relied Upon Groundwater. While of the past four years, and 2014 and 2015 were the the drought has led to a decrease in the state’s warmest two years on record since 1895. These two agricultural production, farmers and ranchers have years each recorded average temperatures of over moderated the drought’s impacts by employing 61 degrees Fahrenheit, which is roughly 5 percent short-term strategies. In normal years, many of (about 3 degrees) above the annual statewide the state’s farming operations—particularly those average for the past 100 years. centered in the Central Valley—depend upon Scientific evidence indicates these warmer surface water deliveries from Northern California temperatures have contributed to the severity rivers fed by mountain runoff. In recent years, of recent drought conditions by leading to more however, farmers received lesser amounts—and precipitation falling as rain rather than snow, in some cases none—of their expected water faster melting of winter snowpack, greater rates deliveries through the state and federal water of evaporation, and drier soils. These conditions supply projects (as discussed later in this report). decrease the amount of spring snowmelt runoff Farmers responded to the lack of precipitation and upon which the state historically has depended surface water deliveries by temporarily fallowing for its annual water supply. Warmer temperatures roughly 5 percent of farmland in 2014 and 2015. also increase demand for irrigation water in both Researchers from the University of California, agricultural and urban settings. Davis (UC Davis) estimated that idling this land Numerous climate models predict such warmer led to a loss of 3 percent to 4 percent (around temperatures are indicative of future trends. As $2 billion) in net statewide agricultural revenues in 8 Legislative Analyst’s Office www.lao.ca.gov Graphic Sign Off Secretary Analyst MPA 2016-17 BUDGET Deputy Figure 3 State's Reservoir Levels Remain Low In Thousands of Acre-Feet, as of January 31, 2016 5,000 4,000 3,000 2,000 4,000 Capacity 1,000 3,000 Historical Average for January 31 3,000 2,000 Shasta Fill Level 2,000 1,000 1,000 Oroville Trinity 2,000 3,000 1,000 2,000 1,000 Folsom 3,000 New Melones 2,000 1,000 3,000 Don Pedro 2,000 1,000 2,000 2,000 San Luis 1,000 1,000 Pine Flat Exchequer Template_CA_County Map.ait ARTWORK# 150595 www.lao.ca.gov Legislative Analyst’s Office 9 2016-17 BUDGET each of these years compared to what they would these areas (both bottles and large tanks of water). have been absent the drought. Many affected communities, however, ultimately To maintain most of their agricultural will require more permanent solutions, as it could production, farmers have turned to alternative be several years before groundwater levels are sources of water. This practice has been particularly restored. Such solutions might include drilling important for farmers growing fruit and nut trees deeper wells, or connecting dry households to larger and grapes—lucrative permanent crops which are community water systems. The state has helped becoming increasingly prevalent in the Central initiate permanent solutions for some individuals Valley and cannot be temporarily taken out of and communities, but many dry wells have yet to be production. Some farmers paid abnormally high addressed. For example, as of December 2015, a total prices to acquire surface water from others. The of 1,130 households in Tulare County had reported overwhelming strategy farmers have used to running out of water, and of those, 700 reported maintain productive farmland, however, has been obtaining an interim or permanent solution. to turn increasingly to groundwater. Data from The impacts of these water shortages have a sample of wells monitored by the Department compounded other challenges in some affected of Water Resources (DWR) showed that between communities. Many of the areas where wells have spring 2010 and spring 2015, groundwater levels gone dry were economically disadvantaged before dropped by at least 10 feet in nearly half of the the drought. Additionally, because many rural wells, and by at least 2.5 feet in another one-quarter communities—particularly in the Central Valley—are of the wells. This reliance on groundwater— home to large populations of agricultural sector combined with the transition to more profitable employees, drought-idled farm fields have led to crops—allowed the agricultural sector to produce higher unemployment and lost incomes in these areas. record revenues of over $50 billion in 2014 and For example, researchers from UC Davis estimate in 2015, despite the reduction in surface water that 7,500 (4 percent) of the state’s farm jobs were lost deliveries and increase in fallowed land. Yet, as due to drought in 2014, and that this increased to discussed in the nearby box, such heavy usage 10,100 (5 percent) in 2015. As such, many residents of groundwater is not a sustainable practice. As in communities facing water shortages often lack the such, the agricultural sector may experience more financial resources to move or drill new wells. serious impacts from continued or future droughts Water Shortages and Heat Have Impaired compared to recent years. Habitats for Wildlife. Multiple years of low Rural Communities Affected by Groundwater precipitation have compromised habitats for fish, Shortages, Agricultural Cutbacks. The lack of waterbirds, and other wildlife across the state. precipitation and stream runoff, combined with Aquatic habitats have been affected by (1) low water increased groundwater pumping, has led to a drop in levels in streams, lakes, and rivers; (2) abnormally underground water levels in some areas of the state high water temperatures; and (3) an increase in during this drought. This in turn has contributed to invasive species and plants—such as water hyacinth domestic wells going dry in some rural communities and algal blooms—that degrade habitats and water which depend on those groundwater aquifers and quality. While conclusive data are not yet available do not have alternative water sources upon which on how severely various fish and other aquatic to draw. As discussed later, the state has funded species have been impacted by drought conditions, emergency drinking water supplies in many of initial indications are concerning. Researchers 10 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET from UC Davis estimate that up to 18 native cohort appears to have experienced an even higher California fish species face a high risk of near-term mortality rate—97 percent. extinction if severe drought conditions continue. Waterbirds and terrestrial wildlife also have For example, data indicate that at least 95 percent suffered from declining access to habitat due to of the juvenile Sacramento River winter-run lack of water and its impacts on sources of food. Chinook salmon preparing to migrate to the ocean Overcrowding in reduced wetland areas can lead to in 2014 (referred to as the 2014 cohort)—already illness for migrating and native bird populations. listed as endangered by both the federal and state In some areas of the state, dry conditions also have governments—died in the river below Shasta sent wildlife such as bears into residential areas in Dam due to high water temperatures. The 2015 search of food. Heavy Reliance on Groundwater Can Result in Serious Consequences While relying on groundwater has helped the agricultural sector temper the effects of the current drought, evidence suggests that maintaining current rates of groundwater withdrawal is not sustainable. Based on data from 2010, the Department of Water Resources determined that 21 of the state’s 515 groundwater basins are in a state of “critical overdraft,” where continuing current water management practices would result in “significant adverse overdraft-related environmental, social, or economic impacts.” Given the rate of pumping during the recent drought, conditions likely have worsened in many groundwater basins since the data was collected for that assessment. Absent replenishment (which would require a notable influx of new water combined with sufficient time to refill the aquifer), the current rate of withdrawal will stress groundwater supplies in some areas for many years to come. In certain areas, the underground geology is such that rapid overdraft is likely to permanently deplete the groundwater basin, without capacity for replenishment. Water quality issues also have materialized in some areas where groundwater has been accessed by drilling more deeply, including salt water intrusion in coastal basins. Moreover, state monitoring has detected certain areas where intensive groundwater pumping has led to notable land subsidence. For example, one area of the San Joaquin Valley near the town of Corcoran (south of Fresno) sunk by over 13 inches between May 2014 and January 2015. Another area near the town of El Nido (north of Fresno) sunk by 10 inches during the same eight month period. Land subsidence can result in dangerous damages to infrastructure such as roads, railways, bridges, and pipelines, and can increase flood risk by altering drainage patterns. State officials are particularly concerned about potential damage to the California Aqueduct, which transports water to millions of users in Southern California and runs through areas where significant land subsidence is occurring. Recently passed state legislation—The Sustainable Groundwater Management Act—will require most regions to adopt and start to implement plans to better manage groundwater resources beginning in 2020. The potential implications of severe overdraft and subsidence, however, might make it necessary for the agricultural sector to reduce its reliance on groundwater pumping even sooner. www.lao.ca.gov Legislative Analyst’s Office 11 2016-17 BUDGET Additionally, warm temperatures and drought this requirement has resulted in a change in conditions have contributed to the loss of millions outdoor watering practices (including mandatory of the state’s trees in recent years, with the potential constraints on the frequency of outdoor watering), for even greater losses if such conditions continue. combined with adjustments to indoor uses (such Specifically, in fall 2015 the United States Forest as opting for shorter showers). Some residents Service estimated 29 million trees had died largely have responded to the conservation requirements as a result of the drought. A subsequent study by permanently shifting to more water-efficient published by Stanford researchers in December outdoor landscapes and/or indoor appliances. (As 2015 reaffirmed such concerns. This research found described later, the state and some local agencies that up to 888 million large trees experienced have offered financial incentive grants to encourage measurable loss in canopy water content between these changes.) As a result, statewide urban water 2011 and 2015, including up to 58 million large usage dropped by 25.5 percent from June to trees that experienced severe canopy water losses December of 2015 compared to the same period in of greater than 30 percent. In October 2015 the 2013, slightly exceeding the statewide conservation Governor declared a State of Emergency for the target of 25 percent. epidemic of statewide tree die-off. Using less water, however, has not necessarily Such dry forest and vegetation conditions also translated into lower water bills for urban water have been a factor in more prevalent and intense users. In most cases, local water supply agencies wildfires in recent years, with devastating effects must retain a minimum amount of funding to on both humans and wildlife. Moreover, large fires cover fixed costs for staffing, maintenance, and can have lasting effects on watershed ecosystems, operations—regardless of water usage levels. leading to greater amounts of sediment runoff that Additionally, local agencies have experienced degrades downstream water conditions. new drought-related costs from increasing public Urban Areas Required to Use Less Water outreach and enforcing conservation. Yet on and in Some Cases to Pay More. The primary the natural, when water usage declines, so do drought impact on urban communities (including corresponding revenues. Many water agencies residential, commercial, and industrial water around the state therefore have raised or are customers in cities and suburbs) has been a considering raising water rates or adding user state-ordered requirement to use less water. fees to ensure they can continue to meet their Because the largest source of residential water use operational costs despite lower per-capita usage. is outdoor irrigation, for most urban residents STATE’S DROUGHT RESPONSE The state has deployed numerous resources— and major policy changes. (While this report fiscal, logistical, and personnel—in responding to deals primarily with state actions, the federal the impacts of the current drought. In this section, government and local governments and agencies we describe the state’s response through January also have responded to the drought, as highlighted 2016, including funding appropriations, delegation in the nearby box.) of responsibilities across departments, activities, 12 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET Federal and Local Entities Also Have Responded to Drought Federal Government Has Provided Funding, Coordinated Support. The federal government authorized emergency funding to help states respond to the drought across the western United States in both 2014 and 2015, of which roughly $500 million was allocated within California. These federal drought monies have helped fund emergency support for drought-affected communities (including food, water, housing, and job training), and provided financial assistance for livestock producers who lost grazing or pasture land. Federal funds also have supported activities to assist fish and wildlife threatened by drought conditions. In addition to funding, federal agencies have supported California’s drought response efforts through increased communication and coordination. For example, as discussed later in this report, the federal Bureau of Reclamation and the two federal fishery agencies (the U.S. Fish and Wildlife Service and the National Marine Fisheries Service) have worked closely with state agencies to adjust operations of the State Water Project and the federal Central Valley Project in response to decreased water availability and concerns about the environment and water quality. These federal agencies also have expedited review and permitting processes to facilitate drought response initiatives such as transferring water among users and trucking hatchery-raised fish for downstream release. Local Response Has Focused on Reducing Water Use. Drought response has extended to local governments, water agencies, and community members. Many of these local efforts have stemmed from the statewide requirement to reduce urban water use. In addition to the state-run programs described later in this report, many local agencies and governments have funded outreach campaigns and rebate programs to encourage conservation. For example, in 2014-15 the Metropolitan Water District (a regional water wholesaler serving most of Southern California) and its member agencies invested nearly $180 million in conservation and outreach programs to help customers improve water use efficiency, resulting in total estimated water savings of 374,000 acre-feet over the lifetime of the devices or programs implemented. Coupled with amounts from prior years’ investments, the estimated water savings in the region was about 180,000 acre-feet in 2014-15. (An acre-foot of water is the amount needed to cover one acre at a depth of one foot and is about the average amount used by two households in a year.) Besides conservation efforts, many local water supply agencies have increased efforts and investments to secure alternative sources of water to meet local needs now and in the future. These include undertaking water supply projects (such as water recycling, groundwater clean-up and storage, desalination, and stormwater capture) as well as purchasing water from other sources. Additionally, some water users have volunteered to divert less water from the state’s rivers and streams during the drought. For example, a large group of farmers in the Sacramento-San Joaquin Delta offered to reduce their diversions from the Sacramento River by 25 percent between June and September 2015. In addition, some local landowners have entered into voluntary agreements with the state’s Department of Fish and Wildlife to avoid diverting water from certain streams during sensitive fish spawning periods. In both of these cases, landowners received some additional assurances against future regulatory actions from state agencies in exchange for these agreements. www.lao.ca.gov Legislative Analyst’s Office 13 2016-17 BUDGET State’s Response Has Been Multifaceted departments to implement various conservation and regulatory activities, many of which also State’s Response Has Expanded as Drought are displayed in the timeline (and described in Has Continued. Figure 4 displays a timeline of greater detail below). The figure also displays major steps the state has taken in responding to legislative enactment of drought-relatGedr sataptuhteics Sign Off the current drought. As shown, drought-response and appropriations. (The appendix to this report efforts have increased and diversified over the past Secretary provides additional detail regarding the policy three years. Since 2013, the Governor has issued Analyst changes implemented by executive order and eight emergency declarations or executive orders MPA legislation.) related to the drought. These orders directed state Deputy Figure 4 Timeline of Major State Drought Response Activities May 2013 (cid:127)Governor issues Executive Order to streamline approvals for voluntary water transfers. December 2013 (cid:127)Governor establishes Interagency Drought Task Force. January 2014 (cid:127)Governor declares State of Emergency due to drought. (cid:127)SWRCB issues statewide notice of surface water shortage and potential for curtailments. (cid:127)SWRCB issues order temporarily modifying flow and water quality requirements for state and federal water project operations in the Delta. (Order later modified and extended.) February 2014 (cid:127)Legislature passes Senate Bills 103 and 104, including new statutory provisions and roughly $700 million for emergency drought response activities. April 2014 (cid:127)Collaborative of six state and federal agencies (including DWR and SWRCB) release Drought Operations Plan to guide operation of state and federal water supply projects. (cid:127)Governor issues Executive Order to extend State of Emergency, expedite drought response activities, and implement water conservation requirements. June 2014 (cid:127)SWRCB adopts general order expanding authorized uses of recycled water. (cid:127)Legislature passes 2014-15 budget package, including new statutory provisions and $200 million for drought response activities and projects. July 2014 (cid:127)SWRCB institutes new temporary restrictions on outdoor water use and new water use reporting requirements for urban water suppliers. September 2014 (cid:127)Legislature passes package of bills implementing the Sustainable Groundwater Management Act. (cid:127)Governor issues Executive Order to address drinking water shortages. November 2014 (cid:127)California voters pass $7.5 billion water bond, The Water Quality, Supply, and Infrastructure Improvement Act of 2014 (Proposition 1). December 2014 (cid:127)Governor issues Executive Order extending some provisions of earlier orders until May 2016. 14 Legislative Analyst’s Office www.lao.ca.gov Template_LAOReport_fullpage.ait ARTWORK #150595 2016-17 BUDGET Response Has Included New Funding, displayed also have deployed existing staff to Involved Many Departments work on drought response activities. The ongoing funding supporting such staff is not included in the State Has Appropriated $3 Billion for figure.) As shown in the figure, drought response Drought Response. Figure 5 (see next page) activities fall into four general thematic areas: shows the diverse array of appropriations the water supply ($2.2 billion), emergency response state has made specifically for drought response ($504 million), water conservation ($275 million), activities from 2013-14 to 2015-16. All of this and environmental protection ($62 million). Below, funding was provided on a one-time basis for we discuss these funded activities in more detail. one-time activities. (Most of the state departments Timeline of Major State Drought Response Activities (Continued) March 2015 (cid:127) Legislature passes Assembly Bills 91 and 92, including new statutory provisions and roughly $400 million for drought response activities and projects. (cid:127) SWRCB extends previous restrictions on outdoor water use and institutes new conservation requirements for restaurants and hotels. April 2015 (cid:127) DWR conducts annual Snow Survey, confirms statewide snowpack contains less water content than any comparable survey measurement since 1950. (cid:127) Governor issues Executive Order imposing 25 percent statewide urban water reduction and initiating state-funded turf removal and water-efficient appliance programs. May 2015 (cid:127) DWR installs temporary rock barrier at West False River to keep tidal salt water from flowing too far into the Delta. (cid:127) SWRCB establishes temporary water conservation standards ranging from 4 percent to 36 percent for communities throughout the state to achieve 25 percent reduction in statewide water use (compared to 2013 usage levels). June 2015 (cid:127) Legislature passes 2015-16 budget package, including new statutory provisions and $1.8 billion for drought response activities and projects. (cid:127) SWRCB issues notice of curtailment to pre-1914 water rights holders with a priority date of 1903 or later in the Sacramento-San Joaquin watersheds and Delta. (Lifted in October 2015.) July 2015 (cid:127) CWC adopts new Model Water Efficient Landscape Ordinance (developed by DWR), permanently increasing water efficiency standards for new and retrofitted landscapes. October 2015 (cid:127) Governor declares State of Emergency for epidemic of tree die-off. November 2015 (cid:127) Governor issues Executive Order to extend conservation restrictions if drought continues into 2016, and to expedite reviews of certain water projects. January 2016 (cid:127) SWRCB adopts emergency regulations for measuring and reporting water diversions. SWRCB = State Water Resources Control Board; DWR = Department of Water Resources; and CWC = California Water Commission. www.lao.ca.gov Legislative Analyst’s Office 15 2016-17 BUDGET Figure 5 State Drought Response Appropriations (In Millions) 2013‑14 2014‑15 2014‑15 2015‑16 Department Activity (SB 103) Budget (AB 91) Budget Totals Water Supply $480 — $267 $1,488 $2,235 SWRCB Clean up contaminated groundwater — — — $783 $783 DWR Fund regional water management projects $473 — — — 473 SWRCB Improve drinking water infrastructure — — $69 175 244 SWRCB Improve/increase water recycling — — 132 161 293 SWRCB Improve/increase wastewater treatment 7 — 66 158 231 SWRCB Improve/increase stormwater management — — — 101 101 DWR Support sustainable groundwater management — — — 60 60 DWR Improve/increase water desalination — — — 50 50 Emergency Response $108 $145 $68 $183 $504 CalFire Expand/enhance fire protection $44 $112 — $136 $292 DSS Provide food to drought-affected communities 25 5 $17 — 47 SWRCB Improve drinking water systems 15 — 16 — 31 DWR Conduct drought assistance and response — 16 12 — 28 OES Provide emergency drinking water — — — 22 22 HCD Assist/relocate drought-affected households 10 — — 6 16 DWR Remove Delta emergency rock barriers — — — 11 11 SWRCB Monitor/enforce water rights and conservation 3 4 7 1 14 OES Coordinate statewide drought response 2 4 4 — 11 CSD Assist drought-impacted farmworkers — — — 8 8 SWRCB Provide emergency drinking water 4 — 4 — 8 SWRCB Monitor use/quality of groundwater 2 4 — — 6 DWR Assist with drinking water shortages — — 5 — 5 CalFire Address water shortages at fire stations — — 3 — 3 EDD Provide job training in drought-affected areas 2 — — — 2 DWR Monitor use of groundwater 1 — — — 1 Water Conservation $54 $13 $32 $177 $275 DWR Increase water efficiency, reduce energy use $30 — $20 $20 $70 CDFA Increase agricultural water efficiency 10 — 10 40 60 DWR Increase urban water conservation — — — 56 56 DWR Increase agricultural water conservation — — — 42 42 DGS Increase water efficiency at state facilities — $5 — 15 20 CCC Conduct conservation outreach 13 — — — 13 DWR Save Our Water campaign 1 2 1 4 8 DFW Improve efficiency at wildlife refuges — 5 — — 5 CDFA Study economic impact of drought — — 0.2 0.2 0.4 Environmental Protection $2 $33 $26 — $62 DFW Emergency fish and stream activities $2 $33 $19 — $54 Parks Eradicate water hyacinth — — 4 — 4 SWRCB Study instream flows — — 2 — 2 DWR Model Delta flows — — 1 — 1 Totals $643 $191 $393 $1,849 $3,076 SWRCB = State Water Resources Control Board; DWR = Department of Water Resources; CalFire = California Department of Forestry and Fire Protection; DSS = Department of Social Services; OES = Office of Emergency Services; HCD = Department of Housing and Community Development; CSD = Department of Community Services and Development; EDD = Employment Development Department; CDFA = California Department of Food and Agriculture; DGS = Department of General Services; CCC = California Conservation Corps; DFW = Department of Fish and Wildlife; and Parks = Department of Parks and Recreation. 16 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET Numerous State Agencies Involved in respond to drinking water shortages. While all Responding to Drought. Figure 5 also highlights three agencies have funded provision of emergency how widespread drought response has been bottled water, generally SWRCB’s role has been to across state government. As shown in the figure, work on developing more permanent solutions for 13 different departments received funding community water systems (such as extending water specifically for drought-related activities. The state’s pipelines, intakes, or wells), DWR has worked on response has been coordinated by an Interagency finding long-term solutions for individuals and Drought Task Force convened by the Governor water systems with fewer than 15 connections, and in December 2013, which has met regularly OES has helped residents in need of an interim throughout the past two years. solution (such as large refillable water tanks). The largest amount appropriated to an Similarly, both SWRCB and DWR were funded individual department across the three years to work on different components of improving ($1.7 billion) has gone to the State Water Resources groundwater management across the state. Control Board (SWRCB), mainly to allocate grants Drought Activities Supported by Multiple for improving groundwater basins and water Sources. Figure 6 summarizes the funding supply infrastructure around the state, but also for sources making up the state’s $3 billion in drought emergency response activities. Roughly one-quarter appropriations. As shown in the figure, while of total drought appropriations ($805 million) the state has drawn upon multiple sources to has gone to DWR, primarily to allocate grants support response activities over the past several for water management planning and for years, about three-quarters ($2.3 billion) was improving water conservation and efficiency. The provided from state general obligation bonds, California Department of Forestry and Fire Figure 6 Protection (CalFire) State Drought Funding by Fund Source received $295 million for 2013-14 Through 2015-16 (In Millions) emergency fire response State General Fund $530a between 2013 and 2016, Bond Funds $2,329 which is the third largest Proposition 1 (2014) 1,853 departmental drought Proposition 84 (2006) 476 allocation. (This includes Special Funds $398 midyear funding from the Greenhouse Gas Reduction Fund 130 Clean-Up and Abatement Account 24 state’s Emergency Fund.) SRA Fire Prevention Fund 19 In some cases, State Housing Funds 10 multiple departments DGS Service Revolving Fund 11 Water Pollution Revolving Fund 7 were funded to respond Fish and Game Preservation Fund 6 to similar issues, but Harbors and Watercraft Revolving Fund 4 in different capacities. Waste Discharge Permit Fund 3 Timber Regulation and Forest Restoration Fund 2 For example, SWRCB, Total $3,076 DWR, and the Office of a Includes $182 million in midyear transfers from the state’s Emergency Fund for higher-than-anticipated Emergency Services (OES) firefighting costs. all received funding to SRA = State Responsibility Area and DGS = Department of General Services. www.lao.ca.gov Legislative Analyst’s Office 17 2016-17 BUDGET including $1.9 billion from Proposition 1 (2014). drinking water and food, housing assistance, and As discussed below, most bond funding has been job training services. Another notable state effort dedicated to water supply infrastructure projects has been to expand CalFire’s firefighting resources, that will help the state prepare for future droughts. given that drought conditions have contributed to The state General Fund contributed 17 percent more frequent and intense wildfires in recent years. ($530 million) of total drought appropriations, Several departments (DWR, OES, SWRCB, and including $182 million in midyear funding from the Department of Fish and Wildlife [DFW]) also the state’s Emergency Fund to support higher-than- received short-term funding and staff for drought anticipated firefighting costs. coordination and monitoring. The DFW has taken the lead on emergency State Funded Both Short- and response to protect fish and wildlife during the Long-Term Drought Activities drought. Specific activities supported by the While all of the drought response funding $54 million in drought funding DFW received displayed in Figure 5 was provided on a one-time for environmental protection have included basis, the timeline for realizing the intended effects (1) intensive monitoring of how the drought is of the funded activities varies. Some activities (such affecting at-risk fish species such as smelt and as providing bottled drinking water) will meet salmon; (2) monitoring of several threatened an emergency need stemming from the current and endangered birds, amphibians, and small drought, and then will conclude. Other projects mammals; (3) responding to increased incidents (such as building new wastewater treatment of human-wildlife contact; and (4) trucking plants) will be implemented over the course of hatchery-produced fish downstream to avoid several years, and therefore will be more helpful migratory hazards and improve survival rates. in mitigating the effects of future droughts. Lastly, The department also has engaged in a number other activities, such as those that improve water of rescue and relocation operations for at-risk conservation, often are intended to have noticeable fish and aquatic species, both from watersheds effects in both the current and future droughts. with deteriorated water conditions, as well as (As we discuss later in this report, data on the from DFW-hatcheries rendered unusable due to effectiveness of these activities still is somewhat heat or disease. The department has modified limited.) Below, we describe specific examples some existing hatcheries to hold rescued fish by of these three categories of drought-response purchasing and installing equipment such as water activities. chillers and recirculating holding tanks. Emergency Response and Environmental Water Supply Activities Focused on Future Protection Activities Meet Immediate Needs. Benefits. The majority of drought funding is not Nearly one-fifth of the funding shown in Figure 5 likely to have much effect during the current has been used to respond to the immediate drought. This is because the intended water supply effects of the current drought on people and the projects (mostly supported with Proposition 1 bond environment. In most cases, these are short-term funding) primarily represent larger infrastructure activities both in duration and effects. projects that will take several years to complete. As shown in Figure 5, many such activities have These projects are intended to expand the state’s assisted people living in communities particularly water supply portfolio in order to improve hard hit by the drought through the provision of resiliency in future droughts. Funding for such 18 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET projects has been or will be allocated primarily as These include installing new equipment at DFW grants for local entities to improve and increase hatcheries, making emergency improvements groundwater storage, drinking water systems, water to small community drinking water systems, recycling, wastewater treatment, capturing and restoring wetlands to expand wildlife habitats, and cleaning of stormwater, and water desalination. drilling new wells to address water shortages at fire Additionally, the 2015-16 Budget Act allocated stations. nearly $800 million for SWRCB to administer loans Other Ways State Has Responded to Drought and grants to prevent and clean up contamination in groundwater basins. Drought Response Has Included Both Proposition 1 also allocated $2.7 billion Temporary and Permanent Policy Changes. for water storage projects, which also will help In addition to increased funding, the state’s bolster the state’s resilience in future droughts. drought response has included both temporary This program is still in the development stages, and permanent policy changes. The appendix to however, with the project eligibility criteria still this report summarizes the most notable of these being determined. Moreover, the funding for these changes. water storage projects is continuously appropriated Because current drought conditions require to the California Water Commission, and therefore immediate response but are not expected to not within the purview of the Legislature. As such, continue forever, most policy changes have been these funds have not been considered part of the authorized on a temporary basis, primarily by Legislature’s recent drought response efforts, and gubernatorial executive order or emergency we do not include them in our discussion in this departmental regulations. These include expediting report. certain drought-response projects and activities Conservation Activities Yield Near-Term Results by exempting them from meeting some state and Ongoing Impacts. Some of the funded activities contracting requirements and from undergoing are intended to help the state respond to droughts environmental impact reviews typically required both in the near and longer term. This is true of the by the California Environmental Quality Act activities classified as water conservation in Figure 5. (CEQA). For example, DWR and SWRCB have For example, the state has funded water efficiency approved certain transfers of water between buyers upgrades at state buildings, state wildlife refuges, and sellers, and DFW has undertaken several farms, cities, and even private residences (through restoration and upgrade projects on its lands, all rebates for turf removal and efficient appliances). without conducting CEQA reviews. Additionally, the statewide Save Our Water campaign One of the most publicized drought-related and outreach activities conducted by the California policies has been the Governor’s call for a Conservation Corps have encouraged residents to 25 percent statewide reduction in urban water change their water-using practices. These efforts are use. In response to direction from the Governor’s intended to permanently reduce statewide demand for executive order, SWRCB passed regulations water—beginning now. implementing temporary water conservation In addition to water conservation requirements for urban potable water users, activities, some of the emergency response and including specific limitations on outdoor irrigation. environmental protection projects also represent Specific reduction requirements varied across near-term activities that will yield lasting effects. water supply agencies from 4 percent to 36 percent www.lao.ca.gov Legislative Analyst’s Office 19 2016-17 BUDGET compared to 2013, depending on previous usage Joaquin river basins, as well as for some users in the levels. Originally intended to be effective from Sacramento-San Joaquin Delta (Delta). Pursuant to June 2015 to February 2016, a December 2015 state law, SWRCB has prioritized surface water for executive order authorized SWRCB to extend users holding senior water rights, to meet health these restrictions if drought conditions continue. and safety requirements, and for environmental The board recently extended the conservation and wildlife preservation needs. requirements until October 2016, however it made DFW also has been active in drought-related some modifications to how they are implemented. regulatory activities. For example, the department For example, water agencies that are located in has closed some streams and rivers to fishing in particularly hot and dry areas, or that have invested order to protect fish in low water flows. Specifically, in developing recycled or desalinated potable DFW and the state’s Fish and Game Commission water supplies, will be eligible for somewhat lower implemented emergency fishing closures on conservation requirements. Board staff estimate 11 distinct stretches of creeks, streams, and rivers this could have the net effect of lowering the across the state for portions of 2014, and in parts statewide reduction target to between 20 percent of the Lower Merced and Sacramento rivers for and 25 percent. portions of 2015. (The Fish and Game Commission The state also enacted some permanent enacted emergency regulations for the latter half of statutory and regulatory changes in order to address 2015 allowing DFW to close any water to anglers both the current and future droughts. Two notable in cases of significantly degraded environmental examples include legislation authorizing SWRCB conditions for fish. Previous DFW authority was to consolidate small water systems that consistently limited to certain waters and certain times of year.) fail to meet drinking water standards and to require These instances represent the first time the state that surface water rights holders measure and report has ever implemented emergency fishing closures on the amount of water they divert from the state’s due to drought. Additionally, DFW has enhanced streams and rivers. Additionally, DWR (working enforcement of existing laws to protect fish and through the regulatory authority of the California wildlife that drought conditions have rendered Water Commission) increased state requirements especially vulnerable. Efforts have included for water efficiency in new and retrofitted outdoor increasing investigations and citations of poachers landscapes. and of marijuana growers who illegally divert water Drought Has Triggered Curtailments and from streams. Other Regulatory Responses. In addition to the State Has Limited Deliveries From Water aforementioned policy changes, state regulatory Supply Projects. The drought also has affected agencies have exercised their existing authority in the State Water Project (SWP) and federal Central responding to drought conditions. In particular, Valley Project (CVP). Since the construction of SWRCB has ordered and enforced that less water the projects several decades ago, agricultural and be diverted from some of the state’s rivers and municipal users from the central and southern streams. Over the past two years, the board has parts of the state have contracted with the SWP curtailed diversions for some users (particularly and CVP to provide them with a specified those holding more junior water rights) in portions amount of water from Northern California rivers of the Scott, Eel, Russian, Sacramento, and San channeled through the Delta. The amount of 20 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET water the projects actually are able to deliver decisions for the projects based on water conditions in a given year, however, is affected not only by and fish needs. the quantity of mountain snowmelt, but also by SWRCB Relaxed Delta Water Quality regulatory requirements to protect river conditions Standards. The Drought Operations Plan that state for endangered fish species and to preserve water and federal agencies developed for the SWP and quality. The drought’s adverse effects on both CVP included releasing less water from upstream runoff and aquatic ecosystems therefore have reservoirs than was needed to meet existing combined to restrict the amount of water available Delta outflow and water quality standards. The for export. interagency team determined that additional water Figure 7 shows how much water the SWP should be held in reserve to enable future fresh delivered to its contractors in 2000 through water releases to support migrating fish needing 2015 as a percent of total contracted amount. As cold water, meet health and safety needs south shown, water scarcity and regulatory restrictions of the Delta, and repel salt water from intruding resulted in notably decreased allocations in recent into the Delta from the San Francisco Bay. The years, including a historically low delivery of SWRCB enabled this by approving (with some Graphic Sign Off 5 percent of contracted amounts in 2014. The modifications) several petitions from the Bureau of Secretary SWP has announced plans to allocate 15 percent Reclamation and DWR to temporarily relax flow Analyst of contracted amounts for 2016, although that and water quality requirements within the Delta MPA amount could increase or decrease depending and allow the projects to modify the volume and Deputy upon how much water ultimately is available for timing of reservoir releases. The board also allowed export this year. Federal CVP deliveries also have short-term installation of a rock barrier to keep been curtailed, including delivering 0 percent of salt water from flowing too far into the Delta and contracted amounts to agricultural contractors in affecting water quality. 2014 and 2015. Throughout 2014 and Figure 7 2015, the SWP and CVP have State Water Project Delivers Less Water in Dry Years been managed based on a Percent of Contract Amount special Drought Operations Plan developed collaboratively 120% by a “Real-Time Drought 100 Operations Management Team” consisting of SWRCB, 80 DWR, DFW, the federal Bureau of Reclamation, 60 the U.S. Fish and Wildlife 40 Service, and the National Marine Fisheries Service. This 20 group also has met frequently during the past two years to 2000 2005 2010 2015 make day-to-day operational www.lao.ca.gov Legislative Analyst’s Office 21 ARTWORK #150595 Template_LAOReport_mid.ait 2016-17 BUDGET 2016-17 BUDGET PROPOSALS AND NEXT STEPS Despite storms in the early part of 2016, the budget proposals for 2016-17, then provide our current drought’s impacts likely will persist into analysis and recommendations both for those at least the budget year. Even when the current proposals and for steps the Legislature can begin drought dissipates, history has shown that droughts taking now to prepare for future years of drought. will reoccur, and science indicates future droughts Governor’s 2016-17 Budget Proposals may be more frequent and intense. Below, we discuss some of the decisions and considerations Governor Proposes $323 Million for the Legislature faces related to drought. We begin Drought Response Activities in 2016-17. Figure 8 by describing the Governor’s drought-related summarizes the Governor’s drought response Figure 8 Governor’s 2016‑17 Drought Spending Proposals (In Millions) General Other Department Activity Fund GGRF Funds Totals Emergency Response CalFire Expand/enhance fire protection $74.5 — $2.9a $77.4 DWR Install/remove Delta emergency rock barriers 42.0 — — 42.0 OES Provide emergency drinking water 22.7 — — 22.7 DSS Provide food to drought-affected communities 18.4 — — 18.4 SWRCB Provide emergency drinking water — — 16.0b 16.0 DWR Conduct drought assistance and response 12.0 — — 12.0 CSD Assist drought-impacted farmworkers 7.5 — — 7.5 SWRCB Monitor/enforce water rights and conservation 5.4 — — 5.4 DWR Assist with drinking water shortages 5.0 — — 5.0 OES Coordinate statewide drought response 4.0 — — 4.0 CDFA Study economic impact of drought 0.2 — — 0.2 Subtotals ($191.7) (—) ($18.9) ($210.6) Water Conservation CEC Rebates/install efficient appliances — $30.0 — $30.0 CEC Water and energy technology program — 30.0 — 30.0 CDFA Increase agricultural water efficiency — 20.0 — 20.0 DWR Increase water efficiency, reduce energy use — 10.0 — 10.0 DWR Save Our Water campaign $5.0 — — 5.0 DFW Improve efficiency at wildlife refuges 3.0 — — 3.0 Subtotals ($8.0) ($90.0) (—) ($98.0) Environmental Protection DFW Emergency fish and stream activities $12.7 — $2.0c $14.7 Totals $212.4 $90.0 $20.9 $323.3 a State Responsibility Area Fire Prevention Fund. b Clean-Up and Abatement Account. c Hatchery and Inland Fisheries Fund. GGRF = Greenhouse Gas Reduction Fund; CalFire = California Department of Forestry and Fire Protection; DWR = Department of Water Resources; OES = Office of Emergency Services; DSS = Department of Social Services; SWRCB = State Water Resources Control Board; CSD = Department of Community Services and Development; CDFA = California Department of Food and Agriculture; CEC = California Energy Commission; and DFW = Department of Fish and Wildlife. 22 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET proposals for the budget year. The total proposed These programs would provide rebates for water ($323 million on a one-time basis) is notably efficient appliances or allocate grants for projects lower than the amount provided in the current that reduce both water and energy usage and year’s drought package ($1.8 billion). The primary therefore are estimated to result in reduced difference is the absence of Proposition 1 bond greenhouse gas (GHG) emissions. Specifically, funds for drought-related projects, which made the budget proposes appropriating $20 million up the majority of the 2015-16 totals. As shown in to the Department of Food and Agriculture for Figure 8, the 2016-17 proposal primarily consists an existing program that allocates competitive of $212 million from the General Fund, along with grants to agricultural operations for purchasing $90 million from the Greenhouse Gas Reduction more efficient water irrigation treatment and/or Fund (GGRF)—auction revenue from the state’s distribution systems. Another program ($10 million cap-and-trade program. The remainder comes from through DWR) would modify a previously three other special funds. funded initiative and provide grants for water Activities Primarily Focus on Continued and energy efficiency upgrades in the commercial Emergency Response. Nearly all of the drought- and institutional sectors. (The previous program related activities the Governor proposes funding in focused on the residential sector.) 2016-17 are continuations of initiatives funded in The other two GGRF-funded efficiency recent years (and described earlier in this report). programs ($30 million each) would be run by the Unlike the 2015-16 budget, the Governor does California Energy Commission (CEC), and are not propose any new funding for major long-term the only entirely new activities included in the water supply infrastructure projects. Rather, the 2016-17 drought proposal. One program would majority of funds and activities would be dedicated (1) issue rebates to residents who purchase efficient to addressing the anticipated continuation of washing machines and (2) install water-efficient emergency drought response needs. Specifically, fixtures and appliances for low-income households the proposal includes a one-time augmentation of in disadvantaged communities. (The latter effort $77 million for CalFire based on assumptions that would use the existing CalEnviroScreen process to dry conditions and dead trees will again contribute determine eligible residences.) The other program to prevalent and intense wildfires in the coming would fund emerging technologies to save water year. The Governor also dedicates $70 million to and energy across various sectors. (In April 2015, continue various forms of human assistance in a gubernatorial executive order directed CEC drought-affected communities (such as drinking to initiate such a program, however associated water, food, financial assistance, and housing and funding has not yet been provided.) employment services). The proposal also allocates In addition to the four GGRF-funded a combined $21.4 million to DWR, SWRCB, and initiatives, the budget includes $5 million to OES to continue statewide drought coordination continue the Save Our Water public education and response activities. campaign designed to improve statewide water Proposal Also Includes Funding for Water conservation, and $3 million for DFW to continue Conservation Projects. As shown in the figure, the improving water supply and water use efficiency at budget includes $98 million for water conservation state wildlife areas and ecological reserves. and efficiency efforts. This consists primarily of Continues Funding to Address Drought’s $90 million from the GGRF for four programs. Effects on the Environment. As shown in Figure 8, www.lao.ca.gov Legislative Analyst’s Office 23 2016-17 BUDGET the Governor also proposes to allocate $14.7 million diminish the need for a few of the proposals. For for DFW to continue urgent and immediate example, high flows in the Sacramento River would drought-related environmental protection negate the need to install and remove a salinity activities. This amount includes: (1) $5.4 million barrier in the Delta, for which the Governor to continue monitoring and providing emergency budgeted $42 million. Conclusive information as services for at-risk aquatic and terrestrial species as to which drought response activities ultimately will needs arise, (2) $4 million to upgrade equipment be needed may not be available by the legislative at state hatcheries to help eliminate disease and budget deadline, however. The administration has develop safe refuge locations for fish in need of indicated it may adjust some proposals at the May relocation, and (3) $3.5 million for increased Revision based on precipitation rates and snowpack monitoring and assistance for specific endangered levels this spring, but it anticipates a continued native fish species that have experienced particular need for most of the proposed funding. stress during the drought (winter- and spring-run Governor’s Proposals Mostly Well-Focused. Chinook salmon in the Sacramento River, and delta We believe the Governor’s approach to focus and long-fin smelt in the Delta). primarily on the most urgent human and environmental drought-related needs makes sense. LAO Analysis Evidence supports the continued need for these Funding Continued Drought Response Makes response activities. Groundwater basins can take Sense. We believe the Governor is prudent to many years to replenish. As such, drinking water budget for continued drought response needs shortages and other emergency needs for residents in 2016-17. While winter storms have brought living in the most severely drought-affected some much-needed precipitation in the early part communities likely will continue in the coming of the year, how much snow and rain the state year and should be a high priority for the state. ultimately will receive in 2016 remains uncertain. Supporting the state’s vulnerable fish and wildlife Additionally, as discussed earlier in this report, also should be prioritized, particularly given the severity of the current drought is such that an recent evidence of high mortality rates for several extensive accumulation of precipitation—likely already endangered salmon and smelt species. The across multiple years—will be needed to fully prolonged dry conditions, proliferation of dead mitigate drought impacts. Specific conditions trees, and anticipated new vegetation growth from indicating the current drought will continue to recent rains all suggest the state could experience have effects in the coming year include: (1) below another extreme fire season. average reservoir storage levels; (2) dry conditions The Save Our Water campaign and improving and dead trees in the state’s forests that diminish efficiencies at state wildlife refuges also seem wildlife habitats and increase fire risk; (3) degraded worthy of continued funding support in 2016-17. aquatic conditions in the state’s rivers; and These activities likely would result in immediate (4) depletion of groundwater basins, including dry benefits by reducing water usage during this wells in several residential communities in the current drought, and have the potential for Central Valley. long-lasting effects in future years. While most of the proposed funding likely We also believe the Governor’s focus on will be needed even if the state experiences notable near-term, rather than longer-term, projects storms this winter, high precipitation rates could in this budget has merit. Although large water 24 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET supply infrastructure projects will help the state significantly modified initiatives. As such, details mitigate the effects of future droughts, they have still are lacking as to exactly how they would little influence on current conditions. Moreover, be structured, and their potential effectiveness given the large amount of Proposition 1 funding remains unproven. appropriated in 2015-16 and the often lengthy In addition to uncertainty about the water and process for developing, soliciting, and allocating energy savings associated with these programs, grants, we believe appropriating additional funding we also have questions about how effective the for longer-term infrastructure now would be proposed initiatives would be at reducing GHGs— premature. Waiting to appropriate additional the primary requirement of the existing law that Proposition 1 funds provides time for the grantees governs expenditures of cap-and-trade auction to incorporate the 2015-16 funding and plan revenues. We will discuss these proposals in the for future projects, for departments to complete context of the state’s broader GHG-reduction allocations for the initial projects, and for the efforts as part of our upcoming analysis of the administration and the Legislature to gather Governor’s 2016-17 cap-and-trade expenditure information about outstanding needs and about plan. how best to roll out remaining funds. Governor Proposes One-Time Funding, but Case for Specific Cap-and-Trade Funded Some Needs May Be Ongoing. All of the proposals Proposals Is Less Conclusive. While conservation in the Governor’s drought package represent projects can lead to both immediate and one-time funding to support limited-term persistent reductions in water use, we have some activities. This approach is consistent with questions about the merits of the Governor’s four previous drought appropriations in recent years. GGRF-funded proposals. Specifically, whether the Some statewide needs that have emerged during proposals represent the best approach to achieving the drought, however, may persist even after the water and energy savings is unclear. For example, current drought dissipates. research has found that a similar appliance rebate For example, dry residential wells in the program administered a few years ago rarely Central Valley may take many years to naturally resulted in behavioral changes, but rather largely recharge, and the geology is such that some subsidized purchases that consumers would have overdrafted wells may never recover. While made without the rebate. Moreover, while the the state has both provided temporary support agricultural efficiency program provides incentives (such as water bottles and tanks) and helped for grantees to save water in one area of their farm, initiate permanent solutions in certain areas, the program does not monitor whether they then ensuring residents have a dependable source of use that freed up water to grow additional crops in safe drinking water likely will require additional another area, which would not result in net water state staff and funding for a number of years. or energy savings. Additionally, the state already (Although recently passed legislation eventually supports separate agricultural and urban water should result in more sustainable management efficiency programs with Proposition 1 funds practices for groundwater basins, addressing dry through DWR, raising questions about duplicative residential wells requires more near-term action.) efforts and the need for multiple similar programs. Additionally, the state likely will want to continue Unlike the rest of the Governor’s drought package, funding some of the fish monitoring DFW has three of these four projects represent new or undertaken during the drought to ensure at-risk www.lao.ca.gov Legislative Analyst’s Office 25 2016-17 BUDGET species recover and identify if additional action include efforts to reduce urban water consumption might be needed. The SWRCB’s drought-related (for example, how best to structure conservation efforts to gather information about water rights and incentives and requirements across the state) and develop minimum flow criteria for streams around how to coordinate responses to water shortages in the state are other activities that likely would be rural communities (for example, which agencies worth sustaining and may require some ongoing should assume which roles). resources. In addition to evaluating the effectiveness of There is a notable example within the the state’s urgent response efforts, reviewing the Governor’s budget of providing ongoing funding bond-funded water supply infrastructure projects for drought-identified needs. Separate from his undertaken during this drought also is important. one-time drought package, the Governor has Detailed oversight over the outcomes from the proposed $550,000 from the General Fund to initial allocations of Proposition 1 funding can help support three positions at DWR to plan for how the guide the Legislature in how best to appropriate state might effectively manage water shortages (due remaining bond funds. Again, data collection to drought or other causes such as earthquakes will be essential to this exercise, including the or climate change) in the future. We believe this specific characteristics of funded projects and makes sense, but that some additional activities what quantifiable results they have accomplished supported with one-time drought funds also may in terms of water saved or made available. Formal merit sustained funding. gathering of feedback from stakeholders as to Limited Data Available on Effectiveness of remaining statewide needs and projects showing State’s Drought Response. Because the state still effective results also can help inform statewide is in the midst of addressing the drought crisis, decisions for future allocations. evaluating the effectiveness of the overall response Additional Policy Changes May Be Needed is both difficult and somewhat premature. Yet to Help State Prepare for Future Droughts. As ensuring that such an evaluation takes place shown in the appendix, the state has implemented is essential to informing and improving the numerous policy changes to facilitate drought state’s approach to handling future droughts. response efforts. The majority of these actions, Formal reflection and documentation of “lessons however, were enacted on a temporary basis. Along learned”—such as which specific state activities with continuing some funding and activities, were successful and essential, which proved to be the state also may benefit from extending some unnecessary or ineffective at meeting needs, and short-term drought-related policies, such as what issues emerged that were unanticipated—can certain reporting requirements. Moreover, there help the state be better prepared in the future. likely are initiatives not yet enacted that could be For example, alarming numbers of fish have died put in place now to improve the state’s ability to during this drought due to high temperatures respond to future droughts. For example, the Public in the state’s rivers. Knowing this might happen Policy Institute of California recently released again, what kinds of monitoring procedures, flow a report suggesting several ways the state could criteria, and rescue contingency plans has the improve its approach to allocating water. Those state ultimately employed that might be initiated recommendations included requiring that all surface sooner in a subsequent drought? Other examples of water rights holders be brought under SWRCB’s recent activities the state should carefully examine permitting system, streamlining the process for 26 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET approving voluntary transfers among water users, needs and that are likely to result in immediate and allocating more water for environmental water conservation. This would include all purposes. Additionally, many local governments of the proposals supported by General Fund and water agencies have expressed a need for ($212 million) and non-GGRF special funds additional tools to generate local funding to support ($21 million). Before final adoption of the budget stormwater infrastructure, and for greater ability to later this spring, however, we recommend revisiting set water rates that encourage conservation. these proposals to assess whether winter storms There may be other drought-related issues have negated the need for certain components (such that could be expedited, facilitated, or clarified by as the Delta salinity barrier). additional legislation or permanent regulation. For Request Additional Information to Evaluate example, are there statutory barriers to maximizing Merit of GGRF-Funded Conservation Proposals. recharge of groundwater basins during strong We recommend the Legislature delay deciding on rain events? Are policies needed to clarify how the Governor’s four water and energy efficiency far the state’s responsibility extends related to programs until the administration has provided privately owned individual wells? Does SWRCB additional information to justify the request. need additional authority to collect evidence of Specifically, we recommend that the administration water rights held to inform permitting and (when provide additional information as to (1) how needed) curtailments? Identifying such issues and specifically the programs would be structured (such enacting needed statutory changes now would help as criteria by which projects would be selected for position the state to respond more effectively in funding); (2) what specific outcomes are expected future droughts. (such as the levels of anticipated water and energy savings and GHG reduction); (3) how outcomes Recommendations will be measured, evaluated, and reported; and Based on our analysis, we offer five drought- (4) how these programs would differ from other related recommendations, which are summarized existing efficiency programs. Once this information in Figure 9 and which we discuss in more detail is provided, we recommend the Legislature weigh below. the anticipated benefits of these proposals against Adopt Governor’s Emergency Response and Figure 9 Environmental Protection Summary of Recommendations Funding Proposals for 9 2016-17. Because of the Adopt Governor’s emergency response and environmental protection likelihood of continued funding proposals for 2016-17. drought conditions, 9 Request additional information to evaluate merit of Greenhouse Gas we recommend the Reduction Fund conservation proposals. Legislature adopt the 9 Identify issues that require longer-term funding and strategies. components of the 9 Governor’s drought Require departments to assess and report on effectiveness of state’s drought response. package that meet 9 essential human Identify and enact additional steps the state should take now to prepare and environmental for future droughts. www.lao.ca.gov Legislative Analyst’s Office 27 2016-17 BUDGET potential benefits that could be achieved by funding assessment of the drought response, the Legislature other GHG-reduction projects. could expand this reporting requirement to Identify Issues That Require Longer-Term encompass outcomes from activities funded prior Funding and Strategies. We recommend the to 2015-16 as well. Legislature ask the administration and stakeholders Second, once the major effects of the current to report on activities supported by temporary drought have concluded, we recommend requiring drought funding that may represent ongoing needs. that the administration compile and submit a While such issues represent funding decisions for comprehensive report on lessons learned from the 2017-18 and future years, the Legislature could state’s response to this drought. This requirement consider signaling now that certain funding will would ensure that departments undertake the continue. This could help departments prepare vital task of reflecting on and documenting for longer-term efforts (such as by assigning how the state can improve its response to future more permanent staff and developing multiyear droughts. Such an effort could be coordinated by implementation plans). the Governor’s Interagency Drought Task Force Require Departments to Assess and Report and could include a compilation of reports that on Effectiveness of State’s Drought Response. We individual departments already have initiated (such recommend that the administration report on as the SWRCB’s “Dry Year Program Report” that how it plans to evaluate and document the state’s summarizes and assesses its implementation of drought response efforts. While this could be done water rights in 2014, and DFW’s Drought Response informally during legislative hearings, we also quarterly reports). recommend requiring that the administration To the degree possible, departments should submit two formal reports. collect, evaluate, and report data to support this First, we recommend requesting a formal assessment of drought response effectiveness. update of the “Outcomes of Drought Expenditures” Additionally, departments should recognize report the Legislature requested through the information gaps and identify data that should Supplemental Report of the 2015-16 Budget be collected to improve drought response in the Package. That report (submitted in December 2015) future. Examples of data that could be used to described projected outcomes and benefits from evaluate drought response include: the number and the 2015-16 drought expenditures as well as the locations of dry wells in each county (including metrics the administration intended to use to how many have been addressed and how many measure such effects. Subsequent updates should remain); a comprehensive summary of water rights include actual data measuring the degree to which holders, diversions, and curtailments by watershed; those intended objectives were met. Data reported rates of groundwater extraction and rates of land on the numerous Proposition 1 projects funded in subsidence by location; stretches of rivers and 2015-16 would be particularly helpful for informing streams where fish and wildlife experienced severe future bond allocation decisions. The Legislature stress or die-offs; the number and location of could request such updates on an annual basis for water transfers that occurred among users during the next several years, as the drought dissipates the drought; and areas of the state that conserved and departments have time to reflect on response the most water and the specific strategies they efforts, and as longer-term projects are more fully employed. implemented. To allow for a more comprehensive 28 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET Identify and Enact Additional Steps the State recommendations. We recommend the Legislature Should Take Now to Prepare for Future Droughts. spend the coming months and years vetting We recommend the Legislature continue to gather proposals for their potential benefits and trade-offs, information from departments and stakeholders and enacting changes around which there is regarding policy changes that would improve widespread and/or scientific consensus. This could the state’s ability to manage drought. Legislative include both changes that remove existing barriers committees have held several informational to effective drought response, as well as proactive hearings in recent months to begin exploring this changes that improve water management across the topic, and researchers such as the Public Policy state. Institute of California have put forth several CONCLUSION Despite welcome storms early this winter, might be similarly intense, we also recommend statewide drought conditions appear far from over. the Legislature continue to plan for the future. We recommend that the Legislature’s first priority Learning from the state’s response to the current be continuing to address the urgent drought- drought can help California be even more prepared related needs of residents and wildlife. Given the to endure the inevitable return of dry conditions in certainty that droughts will reoccur, however, future years. and the possibility that subsequent droughts www.lao.ca.gov Legislative Analyst’s Office 29 2016-17 BUDGET APPENDIX: SIGNIFICANT DROUGHT-RELATED POLICY CHANGES Below, we summarize major policy changes the state undertook in response to the drought. We begin with those that were implemented on a temporary basis, then describe permanent actions. In most cases, regulations adopted by state departments were in response to direction contained in gubernatorial executive orders. Temporary Implemented by Gubernatorial Executive Order • Suspend California Environmental Quality Act (CEQA) review requirements for several categories of drought-related projects (including changes to Central Valley Project [CVP] and State Water Project [SWP] flow requirements, adoption of statewide water recycling requirements, certain water transfers, habitat restoration projects, projects to address drinking water shortages, and installation of Delta salinity barriers). • Suspend certain provisions of the state Water Code—such as certain requirements related to water quality control plans and the Delta Plan—for several categories of drought-related projects (including certain water exchanges, habitat restoration projects, and installation of Delta salinity barriers). • Suspend certain state contracting requirements—such as provisions related to advertising and competitive bidding—for several categories of drought-related projects (including certain habitat restoration projects and provision of emergency drinking water). • Suspend certain statutory noticing and approval requirements for landowners to remove dead, dying, or diseased trees. • Prohibit homeowners’ associations from fining or penalizing residents for implementing water conservation measures. • Expedite timeline for reviewing and permitting certain projects, including water transfers, Delta salinity barriers, and projects to increase local water supplies and improve drinking water systems. • Require 25 percent reduction in urban water use compared to 2013. Implemented by Regulation or Administrative Agency Order • Require urban water suppliers to decrease water use in service area by specified amount (between 4 percent and 36 percent compared to 2013, depending on previous usage) to meet statewide mandate of 25 percent. • Require urban water suppliers to report water use and water conservation enforcement efforts each month. • Prohibit certain outdoor uses of potable water, including watering sidewalks or driveways, irrigating after rainstorms, and watering ornamental turf on public street medians. • Prohibit certain business uses of water, including requiring restaurants to serve water only on request and hotels to offer guests the option of not laundering linens every day. 30 Legislative Analyst’s Office www.lao.ca.gov 2016-17 BUDGET • Allow water rights holders to temporarily deviate from the terms of their existing permits in order to provide relief from drought conditions. (Includes modifying Delta flow and water quality requirements for SWP and CVP.) • Require immediate compliance for junior water rights holders who receive orders to stop diverting water. • Increase Department of Fish and Wildlife’s (DFW’s) authority to close waters to fishing based on drought conditions. Implemented by Legislation Chapter 2 of 2015 (AB 92, Committee on Budget) • Suspend certain state contracting requirements—such as provisions related to advertising and competitive bidding—for drought-related projects. Chapter 27 of 2015 (SB 88, Committee on Budget and Fiscal Review) • Suspend CEQA review requirements for several categories of drought-related projects (including certain groundwater, recycled water, and well projects). Permanent Implemented by Regulation or Administrative Agency Order • Expand authorized uses of recycled water. • Increase water efficiency standards for new and retrofitted landscapes. Implemented by Legislation Chapter 3 of 2014 (SB 104, Committee on Budget and Fiscal Review) • Increase penalty amounts for illegally diverting water during drought conditions. • Expand emergency drought rulemaking and enforcement authority for the State Water Resources Control Board (SWRCB). Chapter 2 of 2015 (AB 92, Committee on Budget) • Authorize DFW to issue penalties for obstructing fish passage in streams and rivers. Chapter 27 of 2015 (SB 88, Committee on Budget and Fiscal Review) • Authorize SWRCB to require water systems that consistently fail to meet standards to consolidate with, or obtain service from, a public water system. • Require measurement and reporting of water diversions exceeding ten acre-feet per year. • Enhance penalty authority for local public entities to enforce water conservation • Expand emergency drought rulemaking and enforcement authority for SWRCB. Chapter 62 of 2015 (AB 1, Brown) • Prohibit municipalities from imposing fines for failure to water a lawn or for brown lawns when the Governor has declared a drought state of emergency. www.lao.ca.gov Legislative Analyst’s Office 31 2016-17 BUDGET LAO Publications This report was prepared by Rachel Ehlers and reviewed by Brian Brown. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 32 Legislative Analyst’s Office www.lao.ca.gov