This paper will examine California water policy and the problems of the present policy. The first part of the paper will provide a background discussing the physical geographic attributes of California which make water a very important resource. The second part of the paper will examine the historical background of water policy in California and the shortcomings of these approaches. The third part of the paper will discuss the attributes of a market-based water policy and how such a policy could improve the allocation of water in California.
California's climate varies greatly, depending upon geographic location and annual weather patterns. The Northern section of the state receives much more precipitation than the Southern section, although in both regions annual rainfall totals are rarely consistent from year to year. The most historically prominent agricultural region in the state, the Central Valley, is crossed by two major rivers, the Sacramento River in the North and the San Joaquin River in the South. Draining the northern section of the Valley, the Sacramento River flows a larger volume of water than the San Joaquin River, although the San Joaquin drains a larger portion of the Valley. Prior to the development of the Central Valley by European settlers, the flood plains of both rivers encompassed virtually the entire floor of the Valley. Plant, animal, and human life in the Valley were sustained by the runoff from annual rainfall and snowfall in the bordering mountain ranges. This annual precipitation has produced about 200 million acre-feet of water each year on average. Average yearly rainfall in the state averages from 50 inches along the North coast, to 10 inches on the Southern coastal plain, to 2 inches or less in the vast inland desert valleys; almost all of this rainfall occurs between November and May, rather than during the summer growing season (Hundley, 1992, pp. 4-9).
The problem with this settin...