Chino Basin Water Market Indicator 2026: Market Behavior Under Structural Tightness

A market has developed among members of the Appropriative Pool in the Chino Basin in Southern California. The Chino Basin has a long history beginning with the execution of a Memorandum of Agreement in 1974, a judgment adjudicating the basin in 1978, the development of the Optimum Basin Management Program in 1998, execution of the Peace Agreement in 2000—which established the parties’ intent to implement the Optimum Basin Management Program, and execution of another agreement, known as Peace II—which provided for reoperation of the basin.

The Judgment established an initial allocation of 145,000 AF per year, and divided it among three classes of users:

• The Agricultural Pool was allocated 82,800 AF per year.

• The Non-Agricultural Pool, which is composed of commercial and industrial water users, was allocated 7,366 AF per year.

• The Appropriative Pool, which represents cities, water districts and water companies, was allocated 54,834 AF per year.

The initial operating safe yield (OSY) was set at 140,000 AF per year in the Judgment. The 5,000 AF difference between the allocation and the OSY was to be met through carryover, storage, replenishment, and other management activities. A safe yield reset for 2011-2020 (approved in 2017) confirmed the OSY at 140,000 AF per year under the 2015 methodology. Another safe yield reset for 2021-2030 was approved in 2020.

The 2020 Safe Yield Reset reduced the basin’s Safe Yield to 131,000 AF per year. However, the amount of pumping available to the pools under OSY accounting is constrained even further by the Desalter Replenishment Obligation (DRO). Because Desalter production counts against Safe Yield, the Safe Yield available to the pools is reduced by the volume pumped by the Desalters. This increases the gap between allocations and OSY, and the pools must make up that larger shortfall through replenishment or storage.

Water market activity generally occurs in the form of annual leases among members of the Appropriative Pool. The watermaster records two additional types of transfers: 1) transfers that are recorded as the manner of utilizing water company shares and 2) exchanges for water from another basin. These transfers are excluded from Water Strategist’s analysis because they are administrative—not water market—transactions.