California’s famous moniker – the Golden State – is becoming all too accurate as the state enters the fifth year of drought and the summer heat begins to dry out its rolling hillsides. A lackluster El Niño failed to deliver a promised deluge of rain and ultimately brought only an average amount of precipitation – far from what was needed to make up for several years of record low rains and snow packs.

California’s natural drought cycles are made worse by ineffective water management policies – policies that drown water managers in top-down, command and control regulations. The byzantine set of rules and pricing requirements mandated on water at all stages of distribution across the state create absurd market inefficiencies. These regulations prevent markets from doing what they do well – allocating scarce resources.

Last week, the Pacific Research Institute’s Center for California Reform, assembled some of the nation’s most knowledgeable voices on water policy. Experts from the Water Foundation, the Public Policy Institute of California, the Association of California Water Agencies, the Environmental Defense Fund, Assemblymember Kristin Olsen (R-Modesto) and Wade Crowfoot, Deputy Cabinet Secretary and Senior Advisor to Governor Jerry Brown gathered in the State Capitol to discuss the benefits of a California water market and to highlight legislative and regulatory challenges and solutions needed to do so.

Conference highlights include:

The current drought is not California’s first. It certainly will not be its last. There’s no panacea to California’s ever-fluctuating cycles of wet years and dry years. But, some common sense steps can be taken to alleviate this vexing challenge that impacts families, businesses, farmers and the environment. One important first step is the creation of a statewide water market.

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Sally C. Pipes is President, CEO and the Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute, headquartered in San Francisco. Download PRI’s e-Book with background materials on water markets.