California’s major water projects face headwinds even as scientists say climate change increases the need for more storage and an improved conveyance system.
Nearly half the projects slated for funding from a long-delayed water bond have been shelved. The rising costs for developing such large infrastructure projects have also led to the downsizing and a bigger price tag for the most closely watched of the project proposals, Sites Reservoir.
Gov. Gavin Newsom’s highest priority for water projects is not immune either, with district politics stymying an effort to speed up the construction of a Delta tunnel.
The setbacks are creating anxiety in California’s water circles as the state prepares for a hotter, drier future.
Pacheco Reservoir stalls
The Santa Clara Valley Water District voted unanimously last month to suspend development of the Pacheco Reservoir Expansion Project and withdraw its application for the Water Storage Investment Program, the $2.7 billion fund voters approved in 2014 through the Proposition 1 water bond.
The proposed $3.2 billion expansion would have increased the reservoir’s capacity from about 5,500 acre-feet to about 140,000 acre-feet. But the cost ballooned by roughly $1 billion and the project ran into hurdles with environmental reviews, a complex permitting regime and increasing regulatory uncertainty.
At its monthly meeting last week, the California Water Commission — which has long faced the brunt of scorn over the delay in doling out the Proposition 1 dollars — was quick to distance itself from the fallout.
“The commission only has the authority to administer funding through the Water Storage Investment Program,” Executive Officer Laura Jensen told the commissioners, who have pushed staff for more expediency as project costs soar. “We do need to acknowledge the commission does not control project schedules. Each project proponent drives their own schedule.”
Executive Officer Laura Jenson (Water Commission photo)The Pacheco withdrawal fits a pattern of stalled Proposition 1 proposals. The Temperance Flat Reservoir for the upper San Joaquin River stalled in 2020 after failing to secure enough local financing.
Despite decades of planning, an expansion project for Los Vaqueros Reservoir in Contra Costa County suddenly collapsed last year under the weight of skyrocketing inflation, permitting delays, new state restrictions on tapping into the stored water, and uncertainty over a pending water quality control plan that could set strict new limits on the imported water needed to fill the reservoir.
Together the three projects would have expanded the state’s storage capacity by 1.4 million acre-feet — enough to be California’s eighth-largest reservoir, if it were a single project.
Delta tunnel trailer bill shelved again
Following on the heels of the Pacheco announcement, the Legislature in its final weeks of session refused to take up a trailer bill to expedite permitting and lawsuits challenging the Delta Conveyance Project, after lawmakers rejected the proposal in June as part of a large budget package.
The Delta lawmakers, environmental groups and sportfishing interests called it a major victory, thanking Assembly and Senate leaders for not bringing the bill up for a vote.
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“Once a short-sighted policy, always a short-sighted policy, and no amount of money, including the attempted $200 million payoff to Delta communities, can make up for the lasting harm this project would cause,” said Assemblymember Lori Wilson, D-Suisun City, in a statement. “This conversation has gone on for decades.”
State Water Contractors lamented that the bill was “caught up in the crush of high-profile legislative activities” at the end of the session and expects it to return in January, as the second half of the two-year session gets underway.
“Even if action is delayed this year, the need for modern Delta conveyance has never been greater, and the sooner we are able to make a decision on construction, the less that construction will cost,” said General Manager Jennifer Pierre in a statement. “The need is urgent, the support is broad, and the time to move forward is now.”
The association called the tunnel “California’s most important climate adaptation strategy” and calculated that expediting the project would have saved State Water Project customers $500 million. Inflation was the primary driver for the tunnel’s rising cost, which leapt by $4 billion in four years. As of 2024, it is projected to cost more than $20 billion.
“Delays are not good for significant projects, and the Delta Conveyance Project is no exception,” California Department of Water Resources Director Karla Nemeth told the commissioners.
Sharing her disappointment, Nemeth said that “there's just a lot of misinformation about what's happening.” She countered opposition claims that the proposal sought to circumvent environmental reviews and recognized the need for a more educated Legislature when it comes to water issues.
Addressing concerns that a water grab is underway, Nemeth pointed out that the largest reservoir in the state system, Lake Oroville, released 2.4 million acre-feet in 2022, at the height of the most recent drought. Yet just 1% of that outflow was exported. Another statistic that “stopped me in my tracks” was that in 2023, one of the wettest years this century, the state moved 5.4 million acre-feet out of Oroville and exported just 15%.
Yet Nemeth remains hopeful over the tunnel’s future. DWR is finalizing a cost-benefit analysis demonstrating that every dollar spent on the project results in more than $2 in benefits. The department is also revamping the design to lower the cost. Nemeth anticipates the state water board will soon grant a water right for the project.
The concerns over political delays resonated with the longest-serving commissioner.
“There was no debate. It was the old, ‘They're going to steal our water,’” said Daniel Curtin. “The fight was like, ‘Get the pitchforks out. You're not taking this water — period, end of discussion.’ With no sense of the reality of where we're all going to be in 20 years.”
Curtin pushed for educational outreach to lawmakers “that's [a] little less confrontational than the political process” with debating legislation and that accounts for water issues throughout the state, particularly with the Colorado River “drying up.”
The Imperial Irrigation District, the nation’s largest, formally backed the tunnel plan earlier this month with a resolution from the board of directors. Since IID relies exclusively on Colorado River water, the decision marks a rare alignment with State Water Project initiatives.
The district framed its support around system-wide resilience. Reinforcing Northern California’s water infrastructure “relieves pressure on the Colorado River, and that benefits us all,” according to IID board Chair Gina Dockstader.
Climate threat
The administration has ratcheted up the pressure for upgrading the Delta delivery infrastructure after releasing a new water supply strategy in 2022 that warned California stands to lose 10% of its supply by 2040.
John Yarbrough (DWR photo)“We have a system built for the climate of the last century,” said DWR Deputy Director John Yarbrough. “What do we do to be ready for the next century?”
He raised alarms over the latest delivery capability report for the State Water Project, which predicts up to a 23% reduction over the next 20 years. Factoring in the continuing damage from subsidence, the estimate jumps to as much as an 87% hit to water deliveries.
“If we do nothing, we've got a big problem,” warned Yarbrough, who later added that “solving every problem all at once” across the water delivery system would cost up to $40 billion.
Curtin found the numbers frightening.
“If that is accurate, in 20 years, you guys better be running for the hills, because society is going to collapse,” he said, while arguing that the cost of water by that point will outweigh political concerns over the cost of infrastructure upgrades.
Hope sits in Sites
Sites Reservoir, an off-stream storage proposal, is one of the five projects left in the funding program that stands to gain a portion of the remaining $480 million set aside for Pacheco.
Adding to that, the commission awarded Sites another $11 million in early funding, on top of $44 million already provided and spent by the project authority. The proponents requested more money to account for a recent spike in the cost estimate, which has risen from an initial $4.5 billion to at least $6.2 billion today.
“We are making great progress,” Jerry Brown, executive director of the Sites Project Authority, assured the commission. “The outlook is very strong for meeting our schedule.”
The authority is awaiting federal and state permits and expects to have a water right in hand by the end of the year. Despite spending cutbacks from the Trump administration and the Republicans controlling Congress, Brown said the Bureau of Reclamation has shared “100% commitment” for its investment of about $780 million in Sites. The state plans to provide more than a billion dollars from Proposition 1.
The authority hopes to break ground for the project in about a year.
“It’ll be a historic day,” said Brown.
