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Executive Summary of water flows to preserve the natural environment to a reasonable degree. These are relatively junior water rights (post 1970) but because they are in-channel and non-consumptive rights, they are always in a position to call new junior rights or affect changes made to senior rights thereby maintaining the status quo. Some environmental interests would like to see more senior water rights available to guarantee minimum flows at all times. Recent legislation (SB 02-156) authorizes the CWCB to accept interests in water rights to preserve or improve the environment. Additionally, local governmental entities can appropriate flows for Recreational In-Channel Diversions (RICD) to preserve existing available flows for recreational uses such as rafting and kayaking. The desire to provide for enhancement of the existing environment in addition to the mitigation required by law has created significant conflicts between M&I and agricultural water users on the one hand, and environmental and recreational interests on the other. Given the complexity of project design and stakeholder negotiations, it may be difficult in some cases for stakeholders to clearly delineate required mitigation from desired enhancement. Since environmental and recreational interests often do not have the ability to pay for the acquisition of senior water rights, they often seek additional concessions, beyond the legal requirements, from water project proponents during the permit process. Seeking these additional concessions can create significant conflict and litigation, increase transaction costs, delay project permitting, and may render a project infeasible from an engineering or financial standpoint. Thus the failure of the project to move forward results in the loss of the potential enhancements, and increases the gap between supply and demand. In addition to M&I, the need for environmental and recreational enhancements will become more important with additional population growth. Unless a mechanism to fund environmental and recreational enhancement beyond the project mitigation measures required by law is developed, conflicts will continue. Water project proponents do not believe that they should have to fund or otherwise provide for environmental and recreation enhancements (beyond required mitigation) that benefit the general public beyond their direct customer base. Water providers have indicated during the SWSI process that they would be willing to consider the development of ~~ environmental and recreation features such as reservoir pools for environmental and recreational flow releases if the costs for these additional enhancements are not borne by the project proponents. A model of the concept to provide for additional environmental and recreational enhancements is shown in Figure ES-20. This concept is based on the federal model for water project development used in the past where recreational enhancements were not part of the project cost to be repaid by water users, since these enhancements benefited the public as a whole. Figure ES-20 Components of a Water Project Incorporating Environmental and Recreational Enhancements Under this example, the project proponent would pay for the storage needed for the proponent's own needs, plus mandatory mitigation measures. Additional storage could be constructed to provide for a permanent reservoir pool for flat-water recreation and fish habitat, plus yield to provide for enhanced stream flows for recreational and environmental purposes. These enhancements - beyond the proponent's needs and required mitigation - would come at additional costs that would not be borne by the project proponent, as the environmental and recreational enhancements would benefit the general public. Environmental and recreation interests, however, often do not have any other mechanism to provide for the desired enhancements except for seeking to make the project proponents pay for these enhancements as part of the permit approval process. These interests may contend that water development has impacted the natural environment and recreational opportunities available to the public, and thus the project proponents should provide for these enhancements as mitigation to the public. Under the above example, the project proponents would have significant project costs and the project might thus become economically infeasible to implement. ~~ Statew~itle Water Supply Inii'iative ES-40 S:\REPORT\WORD PROCESSING\REPORT\EXEC SUMMARY 11-10-04.DOC