Efficient Water Use in California

Water Rights, Water Districts, and Water Transfers

by Charles E. Phelps, Nancy Young Moore, Morlie Hammer Graubard


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This report, commissioned by the California State Assembly, reviews the operations and legal basis for water rights allocation within the State of California, with particular emphasis on the incentives arising within that structure to use water efficiently. Two generic sources of inefficient water use are discussed: (1) the presence of external and internal subsidies to water prices in water agencies at all levels of water supply and (2) lack of both opportunity and incentive for users to engage in voluntary water trades (sales). Modifications are suggested in pricing structures of water supply agencies, legal and institutional restrictions on water sales, authorization for resale of Bureau of Reclamation water in the Central Valley Project, average cost pricing of water supplies, groundwater extraction, and rights to return flows of water.

This report is part of the RAND Corporation Report series. The report was a product of the RAND Corporation from 1948 to 1993 that represented the principal publication documenting and transmitting RAND's major research findings and final research.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.