BILL ANALYSIS Ó SENATE COMMITTEE ON NATURAL RESOURCES AND WATER Senator Fran Pavley, Chair 2015 - 2016 Regular Bill No: AB 2480 Hearing Date: June 28, 2016 ----------------------------------------------------------------- |Author: |Bloom | | | ----------------------------------------------------------------- ----------------------------------------------------------------- |Version: |June 13, 2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Dennis O'Connor | | | | ----------------------------------------------------------------- Subject: Source watersheds: financing BACKGROUND AND EXISTING LAW The California Water Code contains a number of statements of state water policy. These include: The water resources of the State [are to] be put to beneficial use to the fullest extent of which they are capable, and that the waste or unreasonable use or unreasonable method of use of water be prevented. CWC §100. All water within the State is the property of the people of the State, but the right to the use of water may be acquired by appropriation in the manner provided by law. CWC §102. It is hereby declared to be the established policy of this State that the use of water for domestic purposes is the highest use of water and that the next highest use is for irrigation. §106. It is hereby declared to be the established policy of the state that every human being has the right to safe, clean, affordable, and accessible water adequate for human consumption, cooking, and sanitary purposes. CWC §106.6. On March 8, 2016, this committee had an oversight hearing titled "Assessing California's Chronically Under Funded Water Needs: Options for Moving Forward." The hearing included a panel that described different approaches to resolving some of these funding challenges. Among the panelists was Laurie A. Wayburn, AB 2480 (Bloom) Page 2 of ? Co-founder, Co-CEO, and President of the Pacific Forest Trust. In her testimony, she described an approach to invest in healthy watersheds and provide more water supply. ( http://sntr.senate.ca.gov/content/2016-informationaloversight-he arings ) PROPOSED LAW This bill would: Declare it to be "the established policy of the state that source watersheds are recognized and defined as integral components of California's water infrastructure." State that source watersheds that supply the state and federally operated systems, the State Water Project and the federal Central Valley Project, collectively provide 80 percent of state reservoir capacity and are of particular importance to maintaining the reliability of California's water supply. State that to the extent feasible, the maintenance and repair of these watersheds and associated projects shall receive financing consideration on the same basis with other water collection and treatment infrastructure. Limit eligible maintenance and repair activities pursuant to this bill to the following forest ecosystem management activities: 1. Upland vegetation management to restore the watershed's productivity and resiliency. 2. Wet and dry meadow restoration. 3. Road removal and repair. 4. Stream channel restoration. 5. Conservation of private forests to preserve watershed integrity through permanent prevention of conversion and degradation, achieved through conservation easements. 6. Other projects with a demonstrated likelihood of increasing conditions for water and snow attraction, retention, and release under changing climate conditions. ARGUMENTS IN SUPPORT AB 2480 (Bloom) Page 3 of ? According to the author, "California's water system is highly complex and sophisticated. 80% of its reservoir supply is held in two dam facilities, the Shasta and Oroville Dams, which are the built infrastructure foundation for the State and Central Valley Water Projects." "[T]hese projects rely on more than the built infrastructure to function. They rely on the five watersheds above the dams to collect, treat and deliver that water to the dams. These are the Feather, Pit, McCloud, Upper Sacramento and Trinity River watersheds. While there is recognition that watersheds play these functions in various parts of the water code, there is no policy or system of support for this natural infrastructure which is integral to, and supplies and complements, the built infrastructure of these water systems." "Further, there is substantial scientific recognition that watershed condition affects the quality and quantity of water delivered by watersheds to dams. The condition of these five watersheds is distinctly suboptimal. Enhancing that condition would increase water quality (reducing sediment such as ash & soil), lowering temperatures, and likely quantity (from 5-20% or more depending on conditions) as well as fundamental function." "Restoration and conservation in these watersheds has been sporadic, inadequate and supported by general obligation bonds. There has been no comprehensive plan developed for their restoration and conservation to enhance our water security. Such efforts to date have been both limited and uncoordinated and fiscally inefficient." "AB 2480 therefore recognizes the fundamental water system infrastructure role of source watersheds, and set the foundation for a comprehensive plan of restoration and conservation, with the potential of future financing to be appropriately classed as revenue bonds and similarly financed as the built infrastructure improvements and maintenance are." ARGUMENTS IN OPPOSITION According to the Association of California Water Agencies (ACWA), "AB 2480 would declare state policy that source watersheds are recognized and defined as integral components of California's water system. As amended, this bill would now AB 2480 (Bloom) Page 4 of ? require that, to the extent feasible, the maintenance and repair of source watersheds and associated projects would receive financing consideration 'on the same basis' with other water collection and treatment infrastructure and would specify that the maintenance and repair activities that are eligible for funding are limited to certain forest ecosystem management activities. This bill does not define what 'on the same basis' would mean. The bill also does not include language prohibiting the imposition of a public goods charge to finance the provisions of this bill." "With respect to financing, much of the land within these source watersheds is federal national forest lands. If we are going to enhance these watersheds, we need to support a federal-state partnership in the funding portion moving forward." "ACWA supports watershed funding that is paid for through the General Fund, the Greenhouse Gas Reduction Fund (Cap and Trade), or a future General Obligation Water Bond. We do not support a public goods charge or statewide water tax to fund watersheds or any other priorities." "For these reasons, ACWA opposes AB 2480 and respectfully requests your "NO" vote when the bill is heard in the Senate Natural Resources and Water Committee on June 28, 2016." COMMENTS ACWA Headwaters Framework. On March 20, 2015, the ACWA released a policy framework aimed at effectively managing headwaters areas such as the Sierra Nevada, source of much of the state's water supply. According to ACWA's press release, "The formal release of the document, 'Improving the Resiliency of California's Headwaters,' comes the day after Gov. Jerry Brown and legislative leaders outlined an emergency drought package to mobilize state resources to deal with a fourth year of drought. Given the severity of the drought, the risk of more destructive wildfires this summer and ongoing climate change, ACWA believes it is time to elevate headwaters issues and engage partners at all levels 'Improving the Resiliency of California's Headwaters - A Framework,' makes nearly 30 specific recommendations in the areas of improved planning, coordination and implementation, AB 2480 (Bloom) Page 5 of ? managing headwaters resources, research and financing headwaters improvements." Among the recommendations in ACWA's report were: Improved headwaters management must become a high priority for state, federal and local agencies. Agencies at all levels should find ways to help public and private landowners restore meadows and watersheds to improve their critical functions and reduce wildfire impacts. Stakeholders at all levels should invest and participate in landscape-level research that explores water and forestry relationships, including ecological forest thinning which can have multiple benefits for water supply reliability, water quality and ecosystems. ( http://www.acwa.com/Headwaters ) What Does The Science Show? While studies show a water supply benefit to different watershed restoration activities, the economics are a bit less clear. For example, a recent study by the Nature Conservancy titled Estimating the Water Supply Benefits from Forest Restoration in the Northern Sierra Nevada, found: "This assessment is a first attempt at calculating the water supply benefits from watershed-scale forest restoration in the northern Sierra Nevada. These watershed level results suggest that the economic benefits from water yield increases may be an important argument in favor of additional forest restoration investments. Nevertheless it is important to emphasize that such actions do not represent a solution to California's water crisis, but rather a sensible investment in forest management that is likely to create benefits for water users downstream." (Podolak, K., D. Edelson, S. Kruse, B. Aylward, M. Zimring, and N. Wobbrock. 2015. Estimating the Water Supply Benefits from Forest Restoration in the Northern Sierra Nevada. An unpublished report of The Nature Conservancy prepared with Ecosystem Economics. San Francisco, CA.) ( http://www.nature.org/ourinitiatives/regions/northamerica/united states/california/forest-restoration-northern-sierras.pdf ) SUGGESTED AMENDMENTS: None SUPPORT AB 2480 (Bloom) Page 6 of ? Audubon California Bear-Yuba Land Trust California League of Conservation Voters California ReLeaf Defenders of Wildlife Former Legislator, Wesley Chesbro Lutheran Office of Public Policy Mono Lake Committee Pacific Forest Trust Sequoia Riverlands Trust Trust for Public Land Wholly H2O OPPOSITION Association of California Water Agencies San Diego County Water Authority -- END --