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CONTEXT

California faces a fundamental tension between its housing crisis and its water supply reality. The state has committed to building 2.5 million new homes by 2030 under the Regional Housing Needs Allocation process, while simultaneously managing the effects of a decades-long drought cycle that scientists describe as a “megadrought” — the driest 22-year period in the last 1,200 years. This isn’t a temporary inconvenience; climate models show the American Southwest becoming permanently drier, with snowpack runoff projected to decline 40-60% by 2070. Current state water infrastructure was designed for a climate that no longer exists. The State Water Project, which delivers water to 27 million Californians, operates on allocations that have averaged just 40% of requested amounts over the past decade. Yet the housing element of every city’s general plan treats water availability as an afterthought — a brief environmental review section that assumes future supplies will materialize through conservation magic. The complication is that voters and legislators talk about these issues in separate rooms: housing advocates focus on zoning reform, and water agencies focus on groundwater management, but no single body coordinates the two. The question then becomes: if California builds housing at the pace demanded, where will the water come from, and what happens if it doesn’t materialize? The answer, based on comparable states, is that inaction now forces emergency rationing later — the worst possible outcome for both housing stability and economic growth.

PROBLEM

The core problem is a governance failure: California has no integrated 50-year plan linking water supply expansion to housing production targets. This disconnect creates multiple cascading harms. First, new housing developments face permitting delays and lawsuits when environmental reviews reveal uncertain water supplies — the California Environmental Quality Act has been used to block projects precisely over this issue. Second, the state’s existing water portfolio is shrinking: the Colorado River, which supplies Southern California, is in crisis with Lake Mead at historically low levels; the Sacramento-San Joaquin Delta, which supplies the State Water Project, faces increasing environmental restrictions that reduce pumping capacity; and groundwater basins, which provide 40% of supply in dry years, are being pumped faster than they recharge. Third, the cost of inaction is immense — economic losses from drought already exceed $3 billion per year in agricultural revenue alone, and housing construction delays driven by water uncertainty push construction costs higher, making housing less affordable for everyone. Fourth, the urban-rural political conflict intensifies: agricultural water users, who consume 80% of developed supply, view new housing as a threat to their allocation, creating a zero-sum political dynamic that blocks both housing and water infrastructure projects. California’s own Department of Water Resources projects that without new storage and conveyance, the state will face a 4-8 million acre-foot annual shortfall by 2040 — enough water for 16-32 million people. The cost of continuing without a plan means accepting that housing development will stall, or worse, that new residents will be approved for homes whose water supply is a legal fiction.

PROPOSED SOLUTION

The proposal is to establish a California Water and Housing Coordination Act — legislation requiring that the state’s housing element updates be paired with a binding 50-year Water Supply Development Plan, approved by the Department of Water Resources, before any Regional Housing Needs Allocation targets can take effect. This Plan would include three specific actions: (1) accelerated permitting for seawater desalination plants at up to 10 coastal locations, with a target of adding 2 million acre-feet per year of new supply by 2040, using lessons from the Carlsbad Desalination Plant in San Diego, which currently produces 50 million gallons daily; (2) expansion of groundwater banking and recharge infrastructure in the Central Valley and coastal basins, using flood flows that currently run to the ocean — California loses an average of 8-10 million acre-feet of storm runoff annually that could be captured through managed aquifer recharge; and (3) construction of new above-ground storage at Sites Reservoir and expansion of Los Vaqueros Reservoir, adding 2.5 million acre-feet of storage capacity. Rejected alternatives include relying solely on conservation, which cannot close the gap given population growth; and doing nothing, which guarantees crisis. The implementation mechanism would be a dedicated bond measure funded by a parcel tax on new developments and a per-acre-foot surcharge on agricultural water use above baseline, creating a dedicated funding stream of approximately $2 billion annually. A California Water and Housing Commission would oversee the plan, reporting annually to the legislature on progress against milestones, with automatic mitigation triggers if targets are missed — for example, mandatory outdoor watering restrictions for agricultural users before residential users are affected.

EXPECTED IMPACT

If implemented, the direct impact would be measurable. The desalination component alone could add 2 million acre-feet of new supply by 2040 — enough to support approximately 8 million new residents at current per capita water use levels, or roughly 3 million new housing units. The groundwater recharge program could capture 4-6 million acre-feet of currently lost storm runoff annually, restoring depleted aquifers and reducing land subsidence in the Central Valley — the state’s primary agricultural region, which has seen land subside by as much as 30 feet in some areas due to overpumping. The expanded storage would provide drought resilience, allowing the state to carry over 2.5 million acre-feet from wet years to dry years, reducing the frequency of emergency rationing from “every 3-5 years” to “every 10-15 years” based on climate modeling. The economic impact is substantial: construction of these projects would create an estimated 150,000-200,000 jobs over 15 years, while avoided drought costs would save the state economy $2-4 billion per year. The environmental benefits include reduced pressure on the Delta ecosystem, because desalinated and banked water would replace some Delta exports; and improved habitat for endangered salmon runs, because managed aquifer recharge mimics natural floodplain hydrology. The political impact is equally important: by linking housing production to water supply expansion, the proposal breaks the zero-sum framing that currently pits urban and agricultural interests against each other. Farmers gain reliable groundwater recharge; developers gain certainty for housing projects; and the state gains a coherent, fundable plan that aligns housing and water policy for the first time.

DECISION LENS

PRECEDENTS

EXAMPLE: Carlsbad Desalination Plant, San Diego County — What: The largest seawater desalination plant in the Western Hemisphere, opened in 2015, produces 50 million gallons per day (56,000 acre-feet per year) at a cost of approximately $1 billion. The plant uses reverse osmosis technology and includes extensive environmental mitigation for marine life. — Outcome: Provides 10% of San Diego County’s water supply, reducing dependence on imported Colorado River water by 30% since 2015, with water costs approximately $2,500 per acre-foot — higher than imported water but cheaper than emergency alternatives during drought. — Outcome: Provides 10% of San Diego County’s water supply, reducing dependence on imported Colorado River water by 30% since 2015, with water costs approximately $2,500 per acre-foot — higher than imported water but cheaper than emergency alternatives during drought. EXAMPLE: Orange County Groundwater Replenishment System — What: The world’s largest wastewater-to-groundwater purification system, operating since 2008 and expanded to 130 million gallons per day in 2023. Uses advanced microfiltration, reverse osmosis, and ultraviolet light to treat recycled water to drinking water standards, then injects it into the groundwater basin. — Outcome: Provides enough water for 1 million people annually, has reduced OC’s imported water dependence by 75%, and prevented seawater intrusion into coastal aquifers that threatened to permanently damage the basin. — Outcome: Provides enough water for 1 million people annually, has reduced OC’s imported water dependence by 75%, and prevented seawater intrusion into coastal aquifers that threatened to permanently damage the basin. EXAMPLE: Sites Reservoir Project, Colusa County — What: Proposed off-stream reservoir in the Sacramento Valley that would capture storm runoff from the Sacramento River during wet periods for use in dry years. Estimated 1.5 million acre-feet storage capacity, currently in environmental review with a target completion date of 2035. — Outcome: If built, would store enough water for 3 million households annually, reduce Delta pumping during dry periods by 40%, and provide operational flexibility for both agricultural and urban users. Estimated cost $4 billion, with 65% of water dedicated to environmental flows under current proposal. — Outcome: If built, would store enough water for 3 million households annually, reduce Delta pumping during dry periods by 40%, and provide operational flexibility for both agricultural and urban users. Estimated cost $4 billion, with 65% of water dedicated to environmental flows under current proposal.