Demand Offsets: Water Neutral Development in California

California's water struggles in 2015 highlight the erratic nature of water availability in the state. Supply concerns are expected to worsen in the future as a result of population growth, increased ecological demand, and uncertainty caused by climate change and other factors. In recognition of the pressing need for careful water planning and innovation, some local governments have adopted a requirement that new development be “water neutral.” Water neutral policies require new projects to offset their water demand through conservation or new supplies. Water providers praise water neutral policies for increasing water efficiency and sustainability. Water neutral programs facilitate economic development, jobs, and housing, and have the potential to benefit disadvantaged communities. If properly designed, the programs may result in more reliable long-term conservation, and help achieve statewide conservation targets. Water neutral programs also provide incentives for developers to maximize efficiency, encourage investment in technology improvements, and inspire creative thinking about water management. At the same time, economic, practical and political factors can affect the value of water neutral programs. Good design and enforcement are critical to ensuring that water neutral programs achieve real water savings. Although not a good fit for every jurisdiction, regional and local water neutral programs have the potential to play a larger role in California’s urban water efficiency portfolio.This article describes the structure of water neutral programs through a survey of existing policies in California and elsewhere, explores the legal framework for adoption of such programs, and identifies key design and policy issues.