State Water Project Drives California's Economy

If the State Water Project’s service area was its own nation, it would rank as the eighth largest economy in the world.

The California State Water Project is the backbone of California water infrastructure – delivering water supply, protecting against floods, generating clean hydropower, providing recreational opportunities and environmental benefits, and driving California's economy.

For the last 60 years the State Water Project has supported a service area with an economy worth $2.3 trillion. According to a study published in December 2023 by the California Department of Water Resources and the Berkeley Research Group – a global economic consulting firm – the State Water Project's service area would be the eighth largest economy in the world if it were its own nation.

“The State Water Project provides a critical water supply to a majority of California’s households and supports an economy between the size of France and Italy,” said Professor David Sunding, lead author of the report. “Maintaining the reliability of the State Water Project is critical to California’s wellbeing as the Project's water is inexpensive relative to the cost of developing alternative supplies.”

The State Water Project’s sustainable water supply will become even more critical to the state’s economy in the face of climate change impacts. According to California’s Water Supply Strategy: Adapting to a Hotter, Drier Future, California could potentially lose up to 10 percent of its overall water supply by 2040.

“The State Water Project’s clean, reliable, and affordable water supply will be vital to adapting our economy to the impacts of climate change,” said Department of Water Resources Director Karla Nemeth. “California’s disadvantaged communities are particularly vulnerable and State Water Project water will be essential to preserve human health and safety.”

State Water Project economic benefits

The State Water Project supplies water to 27 million people and 750,000 acres of irrigated farmland. This water supply supports an economy that provides 8.7 million full-time jobs, contains 800,000 businesses, and employs 160,000 farmworkers. The agricultural land irrigated by the State Water Project water produces $19 billion in crops and agricultural products every year.

The Berkeley Research Group’s study also found that the State Water Project is one of the most affordable and cost-effective sources of water in California. Compared to alternative water sources, including desalination, water recycling, stormwater capture, and water conservation, State Water Project water is significantly cheaper and can be provided at a higher scale.

California’s disadvantaged communities are especially reliant on this affordable water. There are 8.2 million people in disadvantaged communities that receive some of their water from the State Water Project. That’s about 75 percent of California’s residents that live in a disadvantaged community. One-in-three people who receive water from the State Water Project are residents of a disadvantaged community.

To learn more about how the State Water Project helps drive California’s economy, read the report written by the Berkeley Research Group in collaboration with DWR.

A brochure summarizing the report’s findings is available here.