Many water special districts receive property taxes in order to support their operations, while others are funded primarily through user fees. Some special districts can also issue local general obligation bonds backed by property tax levies in order to fund capital investments . In some areas of California, there are also private utilities that provide these services. Private water companies are closely regulated by the Public Utilities Commission to ensure responsible behavior . For example, strict requirements of justification must be met before they are allowed to raise their prices . The sheer number of water policy authorities greatly complicates the state’s recent efforts at integrated water management. In recent decades CADWR has made strides in moving to regional water management. Today much of the water resource management is divided among 9 sub regions which are defined by the natural geography rather then political borders . In 2002, the legislature created the Integrated Regional Water Management Program to promote inter agency cooperation . Under IRWM, local agencies together submit to the state a regional water management plan that comprehensively addresses water issues—including water supply reliability, water use efficiency, storm water, groundwater, flood control, etc. These projects then become eligible for funds from water bonds. IRWM is jointly managed by the Department of Water Resources and the State Water Resources Control Board . Many IRWM projects have been funded by the successive water bonds approved since 2002.

Although the program has been hailed as a step towards integrated water management,hydroponic gutter my interviews indicated that agencies have found its implementation to be difficult. One project manager complained about its complexity and the uncertainty of funding. Regardless, people agreed that it has led to some improvement in inter agency cooperation . In the Western United States, water agencies have historically been the central agents in water management. The journalist Robert Gottlieb and geographer Margaret Fitzsimmons, have together written a history of California agencies arguing that the relatively undemocratic water agencies have often served as a “hidden government” directing the growth of the state from behind the scenes . Gottlieb and Fitzsimmons focus on the Metropolitan Water District of Southern California , the regional water wholesaler that is responsible for more than half the regions water supply. MWD is a special district regional wholesaler that delivers water to 26 member public water agencies—14 cities, 11 municipal water districts and one county water authority. These agencies in turn serve more than 300 cities and numerous unincorporated communities in the six counties of Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura . MWD was established by an act of the California legislature in 1927 and incorporated in 1928 . MWD’s stated mission is to: “provide its service area with adequate and reliable supplies of high quality water to meet present and future needs in an environmentally and economically responsible way” . In a region with world famous water agencies such as the Los Angeles city owned Department of Water and Power , MWD is the major water agency of Southern California.

The district imports water from the Colorado River and Northern California—through contract with the State’s DWR—to supplement local supplies. MWD’s 2013 annual budget is projected to be $1.78 billion . It owns and operates an extensive system of water infrastructure including 16 hydroelectric facilities, nine reservoirs, five water treatment plants—four of which are among the 10 largest plants worldwide— and nearly 1,000 miles of large diameter pipes . MWD contracts with thousands of firms to build, manage, and supply this vast infrastructure . Metropolitan is governed by a 37-member board of directors representing the 26 member agencies. The board operates under a weighted voting system, with voting share determined by assessed property valuation . MWD’s existence has allowed growth throughout the region regardless of local water conditions. New developments simply have to hook up to the MWD system and purchase water imported from the Colorado River or northern California. The MWD’s model has been remarkably successful in procuring water and promoting regional growth. Since MWD’s founding, its service area has exploded from 625 square miles to approximately 5,100 square miles . However, it is not without significant challenges. In particular, late comers to the MWD cooperative, such as San Diego County Water Authority , have grave concerns about their water security, as they are last in line should significant shortages ever occur. San Diego received as much as 95% of its total water supply from MWD as late as the early 1990s . To alleviate this risk SDCWA has recently bypassed MWD to purchase water directly from Imperial valley farmers in order to diversify its water supplies. However, SDCWA must use MWD’s infrastructure in order to “wheel”, or move, the water, and MWD charges for this separately—at a price that SDCWA objects. This has led to several clashes between MWD and SDCWA in the past and is a major source of simmering tension today. In fact, in April of 2012, SDCWA filed a lawsuit to stop the MWD from raising its water rates, arguing that San Diego is being unfairly penalized by the increase. SDCWA not only claims discrimination, but claims it is being conspired against by other agencies . SDCWA has begun a very loud public campaign against MWD.

The water economist, David Zetland, wrote his dissertation on the earlier 1995 dispute between SDCWA and MWD’s other member agencies. Zetland points out that MWD’s cooperative structure is not conducive to settling disputes among members, since conflicts over policies are determined by median votes which are heavily weighed towards early members . Zetland argues that MWD’s structure was much more effective in its early history when water was abundant and costs were subsidized for most members,hydroponic nft channel but today as the region faces potentially declining supply, it is no longer effective as water is growing more expensive and therefore should be priced to reflect its true current costs. Furthermore, Zetland found that despite MWD’s great successes in promoting regional growth it has been remarkably inefficient in its allocation of water . MWD charges the same price for delivery anywhere, regardless of delivery costs. It mixes fixed and variable costs into one price, and sets that price a year ahead of time without knowledge of the future water supply conditions. This inevitably leads to some inefficiencies as some regions get water for bargain rates compared to the costs of extracting it, while others pay much more dearly. However, this cooperative structure has also succeeded in promoting regional growth, as developers were ensured of a guaranteed water supply at a stable price regardless of conditions. In recent decades, MWD has begun revising its role from strictly procuring additional supplies to also helping member agencies develop increased local water resources through water conservation, recycling, and water storage. In addition to management expertise, it provides financial incentives to its member agencies for local investments in water management projects and programs. MWD has also established groundwater banking partnerships and water transfer arrangements in order to secure additional supplies . Through a partnership with the Bureau of Reclamation, the MWD administers an Innovation Conservation Program . ICP has annual research grants for technologies and innovative management approaches that promote water conservation . Additionally, MWD has several business outreach programs designed to educate businesses about contracting and supply opportunities . Recently, after recommendations from the Blue Ribbon Committee, MWD has slightly expanded its role to include fostering local regional economic development and spur technological innovation through the introduction of a “Managing Your Innovation” program. The program has several goals, to research and promote innovative solutions to water issues, to help innovators commercialize their products, and to build regional networks in order to promote knowledge spillovers . Managing Your Innovation hosts quarterly events, bringing inventors together with entrepreneurs, financial experts, and government agencies. The program is a much smaller version of other successful innovation initiates that have worked elsewhere to promote innovation, such as Singapore’s SWA. However, the tiny scale of these programs—simply a few annual meetings in thecase of Managing Your Innovation—demonstrates that local business development is not a major priority of local water agencies.

My interviews strongly collaborated this finding, despite the laments of MWD employees who were actively working to improve the local business climate. They agreed that it was not a primary goal of the organization. One entrepreneur with a lauded efficiency product who was interviewed complained of the difficulty reaching the right people They pointed to the sheer number of local agencies and the task of tracking down the appropriate people to speak with, and that many were unwilling to take chances on newer products, or really any chances at all. They also noted the dated websites of MWD and other regional agencies . There are several additional points one should take away from this brief discussion of California’s water governance. First, water prices are often subsidized. For example, water end-users in Southern California often do not pay for the Federal or State agencies that are working to procure their water, nor do they regularly pay for the infrastructure that moves the water—although maintenance costs and new infrastructure are generally covered. Even projects where local agencies built and financed the initial infrastructure, such as LADWP’s Los Angeles Aqueduct, those capital costs were paid long ago, resulting in current prices that are far below replacement costs. This is a major dampener to developing new sources, or new technologies to more efficiently use our current supplies. Next, even with regional cooperative organizations such as MWD and state efforts to coordinate diverse entities such as the IRWM program, the incredibly complicated water market leads to a multitude of water pricing regimes. Some water districts have a protected groundwater supply that is cheap to pump, and thus, might charge very cheap prices. Others might not have groundwater at all, or groundwater which is heavily polluted, and they are under court order to clean the water resulting in very high local prices. This results in vastly divergent water prices which makes it difficult for entrepreneurs to make return on investment decisions, and thus, limited potential investment in new technology . Some local agencies have implemented effective tiered pricing regimes that effectively promote conservation and efficiency, while many others have not. Agencies in politically progressive areas tended to be the most advanced in this regard . An additional point needs to be made about water agencies in general, and that is that they are paid by volume of water produced. Therefore, they have little incentive to invest in conservation measures, or in new technology which may make them more efficient, since every reduction in water use will result in a reduction of revenue. During the energy crisis of the 1970’s, the State of California recognized the perverse incentives that these “irony of conservations” gave energy firms. Therefore, the state began the process of “decoupling” natural gas and energy revenues from volume of sales in order to increase investment in conservation and efficiency . This has widely been credited with spurring California’s renewable energy and clean technology industries. . Numerous critics, such as Ingram and Fraser , have argued that water agencies are intrinsically path dependent on heavy infrastructural solutions at the cost of ignoring other viable solutions. Path dependency refers to the limiting of options that naturally occur as a result of previous decisions. Today, our water agencies already have invested in water infrastructure and are staffed by professional engineers trained to support the infrastructure. They are managed by leaders who are both straddled with the long term repayment of capital costs and under pressure by current vested interests in continuing business as usual. Therefore, it is not surprising that water agency leaders are most likely to make new decisions that utilize that infrastructure rather than promote innovative solutions. There is a large volume of critical literature that chronicles the process of institutionalizing the paths that serve to benefit the long term interests of certain participants. For example, the aforementioned Gottlieb and Fitzsimmons collaboration that pointed to political benefits for land developers. In practice, this often results in the adoption of technological solutions, usually heavy water infrastructures, over alternatives.