Future water management will shift from building new water supply systems to better operating existing ones. Given these goals, hydro-economic models that show the dynamic variation of water values in time and space will be increasingly used to suggest ways to address water scarcity and reduce water conflicts. Hydro-economic models represent spatially distributed water resource systems, infrastructure, management options and economic values in an integrated manner. In these tools water allocations and management are either driven by the economic value of water or evaluated by that measure to provide policy insights and reveal opportunities for better management. A central concept is that water demands are not fixed requirements but rather functions where quantities of water use at different times have varying total and marginal economic values. This paper reviews techniques to characterize the economic value of water use and include such values in mathematical models. We identify the key steps in model design and diverse problems, formulations, levels of integration, spatial and temporal scales, and solution techniques addressed and used by over 60 hydro-economic modeling efforts dating back 45-years from all over the world. We list current limitations of the approach, suggest directions for future work, and recommend ways to improve policy relevance so promising management strategies and policy insights identified by hydro-economic models can be better employed.

cesses along by suggesting promising solutions, eliminating unfounded concerns, and forc ing a more rigorous and systematic view of problems and opportunities for policy makers.As in the case of Hetch Hetchy, mathemati cal models suggest insights that allow inter ested parties, media, and government officials to reformulate a classical water resource con troversy and envision potential new solutions.

The ability of California's water supply system to adapt to long-term climatic and demographic changes is examined. Two climate warming and a historical climate scenario are examined with population and land use estimates for the year 2100 using a statewide economic-engineering optimization model of water supply management. Methodologically, the results of this analysis indicate that for long-term climate change studies of complex systems, there is considerable value in including other major changes expected during a long-term time-frame (such as population changes), allowing the system to adapt to changes in conditions (a common feature of human societies), and representing the system in sufficient hydrologic and operational detail and breadth to allow significant adaptation. While the policy results of this study are preliminary, they point to a considerable engineering and economic ability of complex, diverse, and inter-tied systems to adapt to significant changes in climate and population. More specifically, California's water supply system appears physically capable of adapting to significant changes in climate and population, albeit at a significant cost. Such adaptation would entail large changes in the operation of California's large groundwater storage capacity, significant transfers of water among water users, and some adoption of new technologies.

Properties of optimal hedging for water supply releases from reservoirs are developed and discussed. The fundamental decision of how much water to release for beneficial use and retain for potential future use is examined analytically. Explicit correspondence is established between optimal hedging and the value of carryover storage. This more analytical view of hedging rules is useful for better understanding optimal hedging and simplifying numerical optimization of hedging operating rules. The derivations suggest the frequent optimality or near-optimality of two-point hedging policies for water supply operations.

This paper presents a short history of water resources systems analysis from its beginnings in the Harvard Water Program, through its continuing evolution toward a general field of water resources systems science. Current systems analysis practice is widespread and addresses the most challenging water issues of our times, including water scarcity and drought, climate change, providing water for food and energy production, decision making amid competing objectives, and bringing economic incentives to bear on water use. The emergence of public recognition and concern for the state of water resources provides an opportune moment for the field to reorient to meet the complex, interdependent, interdisciplinary, and global nature of today's water challenges. At present, water resources systems analysis is limited by low scientific and academic visibility relative to its influence in practice and bridled by localized findings that are difficult to generalize. The evident success of water resource systems analysis in practice (which is set out in this paper) needs in future to be strengthened by substantiating the field as the science of water resources that seeks to predict the water resources variables and outcomes that are important to governments, industries, and the public the world over. Doing so promotes the scientific credibility of the field, provides understanding of the state of water resources and furnishes the basis for predicting the impacts of our water choices.

Once a landscape has been established, its origins are repressed from memory. It takes on the appearance of an 'object' which has been there, outside us, from the start."Karatani Kojin (1993), Origins of Japanese Literature vi simultaneously. California needs to develop a strategic direction for the Delta before working out all the details of how to get there.

California's 5-year drought has ended, even as its aftermath lingers. From 2012-2016 much or all of California was under severe drought conditions, with greatly diminished precipitation, snowpack, and streamflow and higher temperatures. Water shortages to forests, aquatic ecosystems, hydroelectric power plants, rural drinking water supplies, agriculture, and cities caused billions of dollars in economic losses, killed millions of forest trees, brought several fish species closer to extinction, and caused inconvenience and some expense to millions of households and businesses. The drought also brought innovations and improvements in water management, some of which will better prepare California for future droughts. This paper summarizes the magnitude and impacts of the 2012-2016 California drought. The paper then reviews innovations arising from the drought in the larger historical context of water management in California. Lessons for California and for modern drought management are then discussed. Droughts in modern, well-managed water systems serving globalized economies need not be economically catastrophic, but will always have impacts and challenges, particularly for native ecosystems. In California and every other water system, droughts usefully expose weaknesses and inadequate preparation in water management. In this regard for California, managers of ecosystems and small rural water supplies had the most to learn.

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