The American West's water crisis has a governance problem

The American West is drying out. Over the past two decades, a relentless cycle of drought, scorching temperatures, and record-low reservoir levels has accelerated aridification across the region. This winter marked one of the hottest and driest on record in the Western U.S., leaving snowsport enthusiasts grieving and water managers bracing for a strained summer supply.

As climate impacts intensify, managing limited water resources has become one of the defining challenges of the century. At a conference hosted by Stanford’s Water in the West program, researchers, government officials, and water industry leaders from throughout the western U.S. emphasized a key message: the West’s water crisis is not only a climate problem, it’s also a governance problem. Solving it will require new policy design and political leadership as well as scientific innovation.

Murky waters

Water districts, the local agencies created to pool resources for large-scale irrigation, now control most of the water flowing to farms across the West and are increasingly in charge of groundwater regulation. Dave Owen, professor at UC Law San Francisco, mapped the governance structure of every groundwater sustainability agency in California’s Central Valley, and found that much of the groundwater is now controlled by boards elected by landowners rather than voters at large. The result, Owen found, is a system that limits the political power of the communities most vulnerable to drought and limited water supply. 

This dynamic can compromise even the most promising solutions. Replenishing aquifers through groundwater recharge is an increasingly popular tool. Michael Kiparsky of UC Berkeley found that without deliberate policy intervention, recharge projects may tend to benefit large landowners and established water districts, undermining their potential to serve broader community goals. Rosemary Knight, professor of geophysics in the Doerr School of Sustainability, found a more fundamental problem: the sensor network her lab is deploying across the San Joaquin Valley reveals that GSA boundaries don't reflect how water actually moves underground.

Lack of accountability also undercuts infrastructure mitigation efforts. Karrigan Bork, professor at UC Davis, found that when developers build dams or drill gas wells, they’re required to offset the damage by restoring a wetland or building a fish ladder. But if that mitigation fails, the developer is often long gone. Bork pointed to a fish ladder on Santa Paula Creek destroyed by a single storm, and a California water agreement 30 years old that has delivered only half of what it promised. Two approaches, he argued, could change this: financial assurances that force developers to post money upfront — like a Wyoming natural gas project that created a $36 million mitigation fund — and contingent regulations that trigger mitigation responses when environmental monitoring data hits a set threshold. "Cross your fingers and hope," he said of the current approach, "is our more traditional method."

Markets as a solution 

On the Colorado River, where 90% of native fish species are extinct, endangered, or threatened and where a new round of mandatory water cuts could be triggered — or litigated — as soon as 2027, Philip Womble of the University of Washington showed that voluntary water markets – paying farmers to temporarily leave water in the river – could restore fish habitat at lower cost than forced cutbacks. Spending just 8% more than the minimum needed to conserve water, his modeling found, could nearly triple ecological benefits.

In the San Francisco Bay, Stanford researchers Daly Wettermark and Sinan Abi Farraj showed that a trading market among Bay Area wastewater plants could cut the cost of reducing harmful nitrogen discharge, the kind that caused an algal bloom in Oakland’s Lake Merritt in 2022, by nearly 40% by letting the most efficient plants do more of the work and sell credits to the others.

But both of these markets are fragile. In Colorado, successful markets depend on legal protections that prevent other users from diverting conserved water – without them, markets are 29% less cost-effective at improving fish habitats. In the Bay, three wastewater plants have already taken out nearly $1 billion in loans rather than wait for a market that might never materialize. 

Over the coming decades, an already overburdened water system could reach a breaking point. Throughout the discussions, the question hanging over the panelists was often the same  – solutions exist, but can governance keep up?

The Water in the West Program is jointly hosted by the Stanford Woods Institute for the Environment and the Bill Lane Center for the American West.