Levine Introduces Bill Creating a Centralized Water Market Exchange for California

On February 24th, Assemblymember Marc Levine (D–Marin County), Chair of the Assembly Committee on Water, Parks and Wildlife, introduced AB 2304, which would establish the California Water Market Exchange.

The exchange would be a publicly-available online platform and would be governed by a five-member board, which would be composed of the Secretary of the Natural Resources Agency and four members appointed by the governor.

The stated intent of the exchange is to:

  • * Provide sustainability, resiliency, and adaptability to drought and climate change
  • * Provide benefits and opportunities for disadvantaged communities and environmental resources
  • * Increase transparency and decision-making capacity
  • * Facilitate water transfers
  • * Enable and encourage investment in water use efficiency through participation in the exchange
  • * Establish transfers as an effective mechanism for sustainable water resource management

Levine is benchmarking his idea off of the Australian water exchange, which was developed in response to a devastating 14-year drought known as the Millennium Drought.

“Our precious water supply is very limited. Californians need a market-based system to maximize the best and most efficient use of each drop,” said Assemblymember Levine. “This drought has taught us that California must explore best practices used in other drought-devastated areas of the world. For example, Australians dealt with a 14-year drought by developing a market-based water trading system. The Australian system improved cooperation between water users and focused on water efficiency. We must look at similar solutions here in California.”

One of the key points of AB 2304 is transparency. The exchange will be set up so that the public can access the data and information collected, including:

  • * Names of the buyer and seller
  • * Quantity of water
  • * Price
  • * Duration of the transfer
  • * Nature of the underlying water right
  • * Origin of the water and the proposed place of use
  • * Description of conveyance and storage facilities to be used
  • * Third party impacts

In addition, transfers processed through the exchange would have to meet the state’s value of protecting and enhancing environmental and community benefits.

David Festa, Senior Vice President of Environmental Defense Fund, lauded the modernization that the bill would bring to California water management.

“This bill lays the foundation for a modern water transfer system that will allow California to use water more efficiently and to meet the needs of the environment and disadvantaged communities,” said Festa.

Speaking about the current system in California, Festa told the Marin Independent, “The problem is over time those rules have become more and more complicated so it has become expensive to participate in a water transfer market.”

“Also, there is not a lot of good information about who has water to sell or who wants to buy water,” he continued. “It’s very much like the olden days before there was an Internet and you wanted to sell your car.”

AB 2304 has been referred to the Assembly Committee on Water, Parks and Wildlife.


Written by Marta L. Weismann