April 9, 2025

Limited Market Activity Expected in Areas With High Allocations

Potential market activity remains low as North of Delta (NOD) and Friant Division (Friant) contractors operate under a 100% allocation, and reservoirs remain near capacity.

Northern California experienced a wet winter this year, resulting in high allocations and reservoir. Current allocations NOD are 100% for the Central Valley Project (“CVP”) and 40-70% for State Water Project (“SWP”) contractors. Regular NOD market participants indicate that under current conditions, transfers of water are unlikely as water users have enough supply to meet their needs. This would mark the third year of minimal transaction activity in the NOD region through both the spot market and through multi-year agreements, as only 12 transactions occurred NOD between 2023-2024. In comparison, 35 transactions occurred in 2022, a critically dry year.

Southern California experienced a below-normal winter this year but retains high reservoir levels largely due to carryover supplies from 2023 and 2024. As a result, allocations for the SWP and CVP in the South of Delta (“SOD”) region are primarily 40% with exception to the CVP Friant Division who has a 100% allocation for Class 1 contracts.

Market participants holding large Friant Class 1 contracts are in a similar position to NOD participants and are unlikely to purchase water this year. Market participants with SWP or non-Friant CVP contracts are entering negotiations to purchase water this year. Suppliers are likely to include Friant Class 1 contractors, districts with reliable non-project supplies such as pre-1914 rights, and districts with banked water supplies. Additional sellers could include NOD contractors, but the ability to transfer through the Delta in 2025 has yet to become an option. Given the similarity to 2024, market activity is expected to remain minimal in the early spring and summer, picking up around July when irrigation demands are at their highest.

South-of-Delta (SOD) Market Outlook: Initial project allocations have been announced, and market participants are in discussion about potential transfers in 2025. Water transfer activity is expected to increase in the summer months as water demands increase based on irrigation needs.

North-of-Delta Market (NOD) Outlook: Initial project allocations have been announced, and market participants are in discussion about potential transfers in 2025. Water transfer activity is expected to be minimal as the NOD region experiences a wet winter. Prices and trading volumes will depend on reservoir storage and project allocations as the year progresses.

NOD-SOD Transfers Limited: Market participants are initiating discussions about potential transfers for 2025, including crop idling, reservoir release, and groundwater substitution transfers. Water transfer activity may increase in the summer when the through-Delta transfer window opens. Prices and trading volumes will depend on Delta conditions, reservoirs storage and project water allocations.

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