1. To San Francisco The Delta Sacramento River  Stockton San Joaquin River California Aqueduct Clifton Court Forebay California depends on fresh water from the Sacramento-San Joaquin Delta to: Supply more than 22 million Californians, plus industry and agriculture Support $400 billion of the state’s economy Harbinger of Potential Catastrophic Loss of Water

2. Water Supply Uncertainty Earthquakes, wind or flooding could cause a Katrina-like levee collapse flooding much of the Delta. 6.5 quake estimated to cause collapse of 30 levees. Studies predict a 66% chance of a 6.5 quake in next 50 years. Salt water would rush in from the bay to fill collapsed islands. Delta water supply becomes unusable within hours, potentially for years. The state’s water supply flows though the Delta’s levee system. Pumps

3. 6.5 Earthquake – The Beginning (Delta Looking Southwest over Sacramento)

4. 6.5 Earthquake – The Aftermath 20 Islands Flooded - Saltwater Intrusion (Delta Looking Southwest over Sacramento)

5. To San Francisco The Delta Sacramento River  Stockton San Joaquin River Clifton Court Forebay Isolated Canal Would Protect Water Supplies and Contribute to Northern Economy Eliminates levee failure as a threat to water supplies Improves water quality Provide flexibility to address potential impacts of climate change on water supply Provide better protection for Delta fish while protecting California’s economy Provide a mechanism for reliable water marketing by northern Californians Building a canal around the Delta will reduce risk: Water would move around the Delta in a canal

6. Wet Dry Percent of time at or above Annual Delivery (maf) 4.1 3.7 3.3 2.9 2.5 2.1 1.6 1.2 0.8 0.4 0 Percent of Contracted Deliveries 100 90 80 70 60 50 40 30 20 10 0 1009080706050402010030 Current SWP Reliability Supply Gap Reliable Supply Repeat of 1987 to 1992 drought = 40% supply Repeat of 1977 (critical-dry year) = 20% supply

7. Water Banking: An Environmentally Friendly Physical Solution Legal Foundation: The ability of a district or city to import water into a groundwater basin for later extraction and use without abandonment or prescription by others.

8. Water Districts: Important Participants in Water Supply Control

9. Applicable Legal Principles: Water Law of Surface Streams Water Rights: Usufructory Rights Riparian Water Law - Origins in England Appropriative Water Law - Western U.S. California Water Law - A Blend of Both –Pre 1914 –State Water Resources Control Board & Predecessors –Constitutional Prohibition of Waste Prescription (analagous to adverse possession) Abandonment

10. Applicable Legal Principles: Water Law - Groundwater Groundwater Doctrines - –Correlative Rights –Overdraft –Public Agencies and Prescription –Groundwater Banking Physical Put & Take “In-Lieu” Banking

11. Applicable Legal Principles: Miscellaneous Water Law Issues Public Trust Doctrine Conservation/Transfer

12. Related Legal Issues Federal Endangered Species Act California Endangered Species Act CEQA - CA Environmental Quality Act NEPA - National Enviro. Policy Act Contract Law

13. Key Transfer Concepts Physical –Moving water across Delta often key –But, south of Delta transfers helpful in some situations Often requires some storage capability south of Delta –Physical layout important - not necessarily a deal killer due to Exchanges Legal –Pre-1914 & others subject to environmental regulation –Appropriative - subject to SWRCB approval –Riparian - complicated mechanism

14. Market Players “Wholesale” Water Agencies – e.g. Kern County Water Agency “Retail” Water Districts – e.g. Wheeler Ridge-Maricopa WSD Mutual Water Companies – e.g. Westside Mutual Water Co. Investor Owned Utilities –e.g. California Water Service Co. City water departments – e.g. LA DWP Joint Powers Agencies – e.g. Kern Water Bank Authority Private owners

15. Transfer Issues Risk regarding regulatory approvals and ownership issues Risk of hydrological problems Risk of facility failures Points of delivery Power costs Water quality