Monday, December 9, 2019

Water Supply Reliability Out, Endangered Species Killing Incentives In With New Federal/State Delta Pumping Rules

Delta water exporters are lauding the new biological opinions released by the Trump administration and the state's new regulations known as "Trump lite" by many environmentalists.  Water exporters are praising the new rules for their use of real-time operations, as opposed to the old rules that were "calendar based."  It's great PR messaging, but lousy policy.  The message appeals on the surface - new rules are modern and with high-tech real time adjustments, while the old-rules are primitive and based on calendars.  Good political messaging, but I would argue that it does not conform to the best available social science and policy design as it reduces water supply reliability and generates strong incentives to harm endangered species.

Let's start with the goal of water supply reliability - made state law by the 2009 Delta Reform Act.  For years, I heard water exporters assure us that they didn't need more water - they needed more predictability about the operation of the water pumps so that they could plan with certainty.  Seeing a political opportunity to get more water at the expense of reliability, they have quickly changed their tune.  Calendars are old-fashioned, but they are extremely reliable, whereas real-time operations based on species location are highly uncertain, and are pretty much the opposite of reliability.

But the even bigger problem with the real-time operation of the Delta pumps are the incentives and reward structure it creates.  You do not need a Ph.D. in fisheries to realize that they lower the fish population, the less likely they will be detected, and the less restricted water pumping from the Delta will be.  On the other hand, if endangered species populations actually recover, they are more likely to be detected near the pumps, which would reduce water supplies to exporters under the proposed real-time operations. 

Scholars of the endangered species act have known for a long time that triggering regulations by the presence of endangered species creates scores of negative incentives.  During the 1980s and 1990s, there were many articles about the perverse incentives for economic interests.  These incentives became known colloquially by the acronym SSS, "shoot, shovel and shut-up," and preemptive habitat destruction in more academic circles.  I was a contributor to this literature in the 1990s and early 2000s, it was the subject of my PhD dissertation.  The policy response to this was not abandoning the ESA, but creating positive incentives through Habitat Conservation Plans (HCP) and safe harbor programs.

These new Delta policies claim to be science-based, I can't judge that, but they certainly aren't based on the best available social science or policy design.  They clearly create an incentive where water agencies are rewarded when protected species do poorly - and my understanding is that other parts of these new biological opinions create rules in other areas (like cold water habitat upstream from the Delta) that will be harmful to endangered Delta smelt and salmon.  If we wanted to save species, if they experience bad conditions somewhere else in their lifecycle (whether that was due to natural fluctuations of ocean conditions or human mismanagement of Shasta dam or other human managed parts of the system), then we would have stronger restrictions at the pumps to make up for it.  Under these rules, bad management upstream works to reduce protections at the Delta pumps, the very definition of negative incentives.

It seems to me that the appropriate policy approach for water supply reliability and species protection/ecosystem enhancement in the Delta would be a Habitat Conservation Plan.  This is something that the PPIC is currently talking about in their recent publications on ecosystem management (see I don't always disagree with them).  But sadly, the only time HCPs have been seriously proposed in the Delta is when they were being used as green gift wrap around 15,000 cfs Delta conveyance tunnels in the BDCP.  Environmentalists haven't been warm to HCPs in the Delta either, but perhaps that might change as the BDCP becomes a more distant history.

The state's own economic consultant's analysis showed the value of the BDCP was in the regulatory certainty produced by the HCP, not the tunnels themselves.  But under Governor Brown, the state decided to throw out the HCP and proceed with the tunnels only WaterFix.  If the Newsom administration wanted to correct course on the Brown administration WaterFix plan, it wouldn't downsize from two tunnels to one, it would bring back the concept of an HCP (rebrand it ecosystem management if you want) and throw out the tunnels. 

Do jobs per drop calculations support more use of water markets?

The UC-D Watershed Center counters crops per drop calculations with jobs per drop calculations and then makes a rather large leap to their conclusion ... we need more water markets - not rules and regulations.

I am not persuaded.  The biggest impact of expanded water markets, especially if combined with expensive conveyance infrastructure like Delta tunnel(s) also supported by the PPIC/Davis group, will be more ag-to-urban water transfers that direct water away from Central Valley agriculture.  The economic impact of the out-of-ag transfers on the Valley could outweigh any marginal efficiency benefits from reallocating water between higher and lower revenue farmers.  Coastal urban areas should be encouraged to develop alternative local supplies, so I would be more supportive of water transfers if ag-urban or out of basin transfers were limited.   

Water is not the only thing that can be moved around in the Valley.  As water becomes more scarce, I believe within basin transfers will be part of the solution, but it may be less costly and more efficient to move crops, farm workers, and capital to more water rich locations in the Valley than it is to move water long distances out of watersheds.  (an acre foot of water weighs 2.7 million pounds and is worth a few hundred dollars in agricultural use)     

I also wonder about the validity of these types of calculations that suggest water/jobs ratios are fixed.  Water/nut ratios cited by environmentalists might vary widely too, but I suspect their is even greater variation in water/job ratio based on local conditions and production technology.  In fact, I have long wondered the extent to which labor and water can be substitutes in the agriculture production function.  This could be part of the reason that farm job loss during droughts has generally been less than predicted by simplistic fixed proportions analysis.  For example,  Santa Clara researchers found nearly 34% of vegetable crops went unharvested in California fields during 2016-17, and that there was a lot of variation in the unharvested amounts by field even for the same crops, and that labor availability/costs was a factor.  I wonder if the unharvested percentage declines in a drought year, some fields might be fallowed, but more labor could be applied to the fields that are planted increasing the harvested crop per drop on the remaining fields.  And there might be other ways that water-labor could be substitutes, for instance in more closely monitoring/managing irrigation equipment.

I am very much a market oriented economist, but I am deeply skeptical about the potential of water markets to be a major part of California water solutions.  The transactions costs are extremely high (both transporation and regulatory), the potential for third-party impacts is large, and markets are unlikely to be competitive. 

And as water becomes increasingly scarce, I believe regulatory limits on planting decisions could be warranted some day, and could be part of long-run management plans.  We could use market principles to limit the cost of the regulations, for example if we have licenses that limit plantings of certain permanent crops - these could be transferable in markets.  I once heard a very smart salmon fisherman say (sadly I forget their name) something like "we have to deal with transferable catch limits and quotas to avoid the tragedy of the commons in the oceans, why not an ITQ (individual transferable quota) for trees to avoid the tragedy of the commons in groundwater."

The job per drop data also suggest reducing field crops like corn and rice that have low labor intensity and relatively low revenue per acre.  I worry if that were to go too far.  These crops often provide valuable wildlife habitat, and fallowing these types of crops in drought years provides an important buffer to reduce water use while minimizing economic disruptions due to their relatively low labor intensity and relatively high ability to substitute with imported crops.

Of course, these calculations of jobs per drop are based on 2010 data and probably already outdated.  The cost and scarcity of labor is having a much bigger impact on most farmers than the cost and scarcity of water.  As discussed above, labor scarcity could increase the jobs per drop calculation for vegetables but the change in that number would not necessarily be very meaningful for water management. 

While I have cautioned about drawing too many conclusions from these numbers above, I would also be very interested in seeing updated calculations for 2020 and the years ahead as data becomes available. 

Monday, October 7, 2019

Finally, some exciting news about water in California.

New $100M Innovation Hub to Accelerate R&D for a Secure Water Future: A research consortium led by Berkeley Lab, along with three other national labs, will head a DOE desalination hub to provide secure and affordable water

I would suggest the Governor borrow a few quotes from the LBL news release about NAWI when he announces a bold new vision for California water priorities.  For example, "NAWI’s vision for creating a stable and resilient water supply for agriculture, industry, and communities involves a circular water economy, where water is treated to fit-for-purpose standards and reused locally, rather than transporting freshwater long distances."

This big announcement is $100 million over 5 years.  How much does California spend on water technology R&D?  I know we will spend more than that just on planning for a single tunnel in the Delta, that's before the $10+ billion on the thing itself.  California will spend more than that on operations of the Delta Stewardship Council over the same period.  The state will spend ten times this much subsidizing the so-called "ecosystem benefits" of a single dam.

It's nice to have the headquarters of this new consortium in California, but there could be much more of this activity in the state.  California could totally dominate R&D, new technology development, and commercialization of alternative water technology with a relatively small amount of investment and policies to push local adoption.  I strongly believe supporting and adopting new technologies should be the focus of the state's future water vision, including any future water bonds. This would create lots of high-paying jobs, as we develop technologies to solve our own problems that have broad applicability and worldwide commercialization potential.  Most importantly, it could create new water in a sustainable and cost-effective manner while diversifying our sources so we are more resilient to climate change and natural disasters.

I find the current direction of state water policy very uninspiring.  Eventually, the administration will figure out that a single-tunnel in the Delta isn't viable, and that putting green window-dressing on last centuries concrete mega-infrastructure visions isn't very effective - economically or environmentally. It's time for a new vision focused on developing and deploying new technologies.

Governor takes opposite approach to the NCAA and water interests

I have long been a LeBron James' fan, so I was happy to see Governor Newsom appear on his new talk show to sign a bill taking on the NCAA for its restrictions on college athlete's ability to earn money for their talents through endorsements and other means.

LeBron praised the Governor for taking strong action in the face of political pressure to reject the bill and give time for leaders to negotiate incremental reforms.  The Governor was lobbied heavily by college presidents and others.  But the Governor thought a strong law was required to initiate real change as expressed in this interview with the New York Times.

"Unless we force their hand, they’re not going to reform. If we just let them do it voluntarily, they’ll come up with some window dressing — a nice thing here, a nice thing there — but they won’t fundamentally reform"

The Governor is taking a different approach on the environment and California water, encouraging plans and voluntary agreements while opposing strong regulatory (SWRCB) or legislative (SB1) actions by the state.  If the Governor continues on this path, the outcome is likely to be just as he predicts "they'll come up with some window dressing - a nice thing here, a nice thing there - but they won't fundamentally reform"

Thursday, May 16, 2019

Mayor Steinberg's Self-Managed Pension Bond Proposal

Sacramento Mayor Darrel Steinberg has recently proposed issuing bonds (long-term debt) as a mechanism to protect much of the revenue from a recently passed sales tax hike from going to employee compensation, primarily the City's rapidly growing pension costs.     

It's a bold and very risky strategy. 

It is not unusual for Cities to turn to risky bond strategies when pension obligations squeeze their budget, but Steinberg's approach to the bonding is very unusual.  Typically, city issued bonds to deal with pension costs take the form of pension obligation bonds - where cities issue large amounts of municipal debt and deposit the proceeds in their pension fund, such as CalPers, which invests the money to pay future pensions.  Pension bonds are essentially a bet that the investments made by the pension fund will grow faster than the interest rate on the bonds.  Borrowing money to invest in the markets is a very risky strategy.  The outcome often comes down to market timing luck.  Sometimes the bets succeed and sometimes pension bonds fail in a big way - like when Stockton issued over $100 million in pension bonds in 2007, contributing significantly to its 2012 municipal bankruptcy. 

Mayor Steinberg is not proposing a pension bond.  He wouldn't give the proceeds to CalPers to invest.  Instead, he would use the bonds to solve the city's long-term pension/budget ills by making investments in the City that he argues would grow the tax base enough to both pay the on-going debt service of the bonds and the Calpers debt.  Rather than gamble on the markets, he would gamble on his (and the City Council's) acumen in making investments in "inclusive economic growth" that would increase community prosperity and thus increase long-term tax revenue for the City. 

I am calling the Mayor's plan a self-managed pension bond since the budget logic is similar.  Rather than rely on outside investment managers, he is just putting himself in charge of a committee of investing up to $400 million in bond proceeds to achieve his civic and budget goals.  He is arguing that he should be in charge of the second half-cent of sales tax revenue, even borrowing so the revenues beyond his term can be spent/invested today, because it would not exist if not for his idea and push to go for the larger tax increase.  He believes he and the city council will make the right investments today that "change the economic arc of the City."

Below are some quotes from when the Mayor put forward his vision a few weeks ago for how to spend the second half cent of the Measure U sales tax,

By the end of the five-year budget forecast, the city will owe CalPERS an additional $39 million a year to pay for pension obligations for existing city employees.  We are also at the beginning of collective bargaining for nearly all of our city employees. Assuming modest wage increases, and we should always treat our employees with respect and real support, the additional outlay for the city will be at least $15-$20 million per year.
“These numbers are easily verified. Add them together – the pension obligation and the low end of the salary increases -- and they total at least $54 million. ...“The second half cent equals $50 million. If we keep the second half cent in the general fund, every penny will go to pension and salaries.
I will argue confidently throughout these next weeks that if I had not laid out a clear, inclusive economic agenda for the city in my first years as mayor, the city would have sought only to renew the original Measure U at half a cent, so there would not have been a second half cent to consider for pensions, or salaries, or basic services...
“Since we pass only one budget at a time, and you cannot bind future city councils, there is only one way I know of to guarantee that significant resources will be dedicated long-term to the promise we made to our voters and to our neighborhoods. I will ask the treasurer to come back over the next weeks with a proposal to securitize $25 million a year from the second half cent. A commitment of $25 million a year for 25 years would allow us to create a capital equity fund of more than $400 million.

Monday, January 14, 2019

"$7 an acre foot? No way, it's worth more than $200 to you." If California is going to adopt voluntary agreements over the regulation of Delta water, the fish need a real negotiator.

Recently, the California Department of Fish and Wildlife (CA DFW) and the CA Department of Water Resources announced a voluntary agreement, negotiated in secret, as a proposed substitute to new regulations in the Bay-Delta Water Quality Control Plan that would limit water diversions from the environmentally troubled Delta.

While the negotiations were secret, I recently obtained a training video that CA DFW leaders used to prepare for the high-stakes negotiations with delta water diverters.  (The yellow convertible represents the revised Bay-Delta plan that has been under development for nearly a decade.)       

O.K., that's a joke - but it isn't far off from the giveaway of the water quality control plan in this proposed deal, especially when it comes to the projects diverting from the south Delta (the CVP and SWP).  It does not appear that the CVP/SWP have offered any water or habitat projects that are not already required by existing regulations or plans, and it proposes an $800 million subsidy from state taxpayers to the deal by redirecting water bond funds.  As far as I can tell, the only new requirement on the CVP/SWP is some modest funding in the form of a $5 per acre foot fee to compensate upstream water diverters who may lose water supply in other components of the deal, and an additional $2 per AF for a science program they would control.

There has been confusion about whether the CVP/SWP contractors are actually giving up any water in this deal. For example, this Fresno Bee op-ed by two CVP executives, describes the CVP/SWP contractors as voluntarily giving up 300,000 AF for fish.  However, many environmentalists dispute this characterization and argue that they could actually get more water under this deal than under the current, decade-old biological opinions that are supposed to regulate delta pumping.  In comments to the Metropolitan Water District (MWD) board earlier this week, MWD staff seemed to confirm the environmental argument that the 300,000 AF is nothing more than compliance with existing regulations according to this account in Maven's Notebook.
In the settlement that was produced for the December 12 briefing, [the parties] put forth a proposal that had ... a commitment on the CVP and SWP of 300,000 acre-feet, largely met by incidental flows that are met through export constraints that are in the current biological opinions, so basically committing to those dedicated flows that are in the biological opinions, said Mr. Arakawa.
Considering that this agreement is proposed to substitute for a new Bay Delta water quality control plan that would likely require the CVP/SWP give up 1.3 million acre feet of current average annual diversions to allow more Delta outflows for environmental benefits, this is an enormous amount of regulatory relief for the bargain price of $7 per acre foot (about $30-35 million in a typical year).

Thankfully, the State Water Resource Control Board (SWRCB) did not accept the proposed agreement, but it did encourage further negotiation to complete the deal.  The environment and the fishing community deserve a stronger negotiator in the future.  How would a better negotiator respond?

"$7 an acre foot, are you kidding me?  You have told others that protecting this water supply from the new water quality control plan was worth $200/AF to you."

Why do I say that the water agencies value this protected water supply at 30+ times what they have offered?  Because they have been pushing the $20 billion Delta tunnels (aka WaterFix) that would provide a very similar benefit after this 15-year agreement would expire.  Water agencies have argued that the point of WaterFix is to protect 1.3 million acre feet of water supply from future regulatory actions like the water quality control plan.  And they* say they are willing to pay $1+ billion in annual debt service to protect this water supply.  Averaged across the roughly 5 million acre feet of water they hope to divert from the Delta in the future, this would be a $200 per acre foot charge on their diverted water.  WaterFix would provide a few additional benefits to these water agencies, but this voluntary agreement would generate about 80% of the benefits that WaterFix would, according to the water agencies' previous economic analysis of WaterFix.  Thus, the proposed voluntary agreement would provide about 80% of the annual benefits of WaterFix to SWP/CVP contractors for only 3-4% of the annual cost of the WaterFix.  What a deal!

I am not opposed to a negotiated agreement, and have actually recommended a settlement with these elements in the past.  In an October 2013 op-ed in the Sacramento Bee, I argued that the State's economic analysis of the tunnels-oriented Bay Delta Conservation Plan supported the value of a negotiated habitat conservation plan, but not the Delta tunnels themselves.  I argued that the State's own analysis showed that a habitat conservation plan with Delta exports in the low 4 million AF range with water agencies paying for the habitat measures was a better deal for all parties than the BDCP tunnels (now renamed the WaterFix).

Governor Newsom supported the concept of a negotiated agreement as Governor-elect.  If he continues this approach as Governor, he needs to install a much tougher negotiating team on behalf of the environment.  Based on the WaterFix proposal, my suggested counter-offer is something like a 20-40% reduction from the proposed water quality control plan regulations, and a charge of $50-75 per acre foot of diverted water to pay for all of the costs of the non-flow habitat measures (no taxpayer bond funding would be required).  Any funds collected in excess of the requirements to pay for the habitat restoration would be given to an independent third party to make grants for alternative water supply projects that would reduce demand for Delta water in the areas served by Delta exports.

If the SWP/CVP water agencies want better terms, such as a lower fees, then the environmental negotiators should ask them to drop the twin tunnels/WaterFix plan.  If they are unwilling to do this, then that is very revealing about their expectations for the tunnels.  It shows the water agencies aren't actually willing to pay costs on the order of the WaterFix project just to "protect" their existing levels of Delta water diversions.  If they will only pay at these levels to "protect" the water supply with tunnels, it suggests these agencies do not expect they will have to follow the constrained operations of the tunnels described in their voluminous EIR.  Thus, it confirms the fears of environmentalists that the tunnels' large capacity would be used to increase diversions after they are built - regardless of any current promises not to do so.

Not all environmentalists would be on board with a negotiation like this, as it does represent a concession on the environmental side relative to the Water Board's proposed regulations.  In fact, some of my environmental friends criticized me back when I wrote that 2013 op-ed proposing a no-tunnel BDCP since it included some substitution of non-flow measures for flow measures.  That is a scientific matter on which I have no expertise, but if there are no substitutes for flow at any level - then there probably is no point in negotiating at all.

The bottom line is that if we are going to have negotiated agreements, the fish need a much stronger negotiator.  If Governor Newsom wants to continue supporting an attempt at a negotiated deal, he must install better negotiators for the environment. 

* Yes, I know the CVP contractors have not said they are not willing to spend that much on WaterFix at this time.  But MWD approved financing the CVP share with expectation of being reimbursed by CVP in the future.  Thus, they have collectively approved spending at this level to protect delta exports from this regulatory cut.

Monday, January 7, 2019

The CVP "No Harm" deal for the Delta Tunnels does a lot of harm to MWD's business case for their $12+ billion investment.

Why did the Central Valley Project want a "Do No Harm" agreement about the delta tunnels?

Last year, Central Valley Project (CVP) contractors made a rational and predictable decision not to pay their share of the WaterFix.  To save the project, Metropolitan Water District (MWD) staff convinced their board to add a multi-billion dollar blank check to fill the enormous financial hole.  To do so, MWD staff argued that the extra funding would allow them to receive the benefits that the CVP would have gotten from their investment.  MWD staff did this with a highly speculative estimate of future water supply benefits from financing the second of the twin tunnels, the so-called "unsubscribed capacity".   Last June, I wrote...
"when MWD staff is using this speculative no-tunnel baseline assumption to define the additional water supply benefits they will receive for the extra investment, the additional water supply is water that goes to the CVP under current regulations.  Thus, in this unsubscribed capacity scheme, MWD staff is using this speculative future baseline to argue that financing the full WaterFix will give them control of water supply that CVP currently diverts from the south Delta...  MWD board members should be very, very skeptical that it will actually work that way."
In testimony before the State Water Resource Control Board this summer, I presented the following estimates of average annual water deliveries (in acre feet) derived directly from the information MWD staff presented to their board in order to persuade them to commit additional billions from their ratepayers.  The second line is the MWD staff scenario where CVP pays MWD to use all the 33% "unsubscribed capacity" and the 3rd line is the MWD staff scenario where CVP doesn't pay and the 33% capacity is utilized by MWD.

No Action Alternative
CWF (67% SWP/33% CVP)
CWF (67% SWP/33% MWD)

The second line shows no water supply benefit for CVP compared to No Action.  Comparing the first line to the last line where MWD pays for the CVP share shows that according to MWD staff, the primary effect of implementing WaterFix is to redistribute 450,000 acre feet of water from the CVP to MWD.  The incentive of the CVP to participate in WaterFix is to avoid this potential harm.  Thus, it's not hard to see why the CVP would want a "no harm" agreement regarding the future effects of California WaterFix (CWF).

MWD staff would argue that a "no harm" agreement doesn't change their water supply benefit because under the agreement, they only have to compensate CVP for impacts that are attributable to the WaterFix.  They would argue that the decreased CVP water supply is due to regulations on south Delta pumping that they argue are equally likely with or without the WaterFix, thus there is no problem.  Are they right? 

To answer this, you should look at the official WaterFix documents, and ignore the sales pitch from MWD staff and other WaterFix proponents.  That is certainly what a court will do.  The "No Harm" agreement states that the WaterFix is described by the Final WaterFix EIR/EIS, and that document clearly states that the new OMR regulations and other more restrictive operating criteria are part of the WaterFix project itself, and are included as a response to expected environmental changes caused by operating the tunnels and the new north Delta intakes.  As an example, here is a quote from the Final EIR/EIS
“These newly proposed OMR criteria (and associated head of Old River gate operations) are in response to expected changes under the PA, and only applicable after the proposed north Delta diversion becomes operational." (note: PA stands for "proposed action" which is the WaterFix)
Thus, it seems pretty clear to me that the "No Harm" means the CVP can't lose any water supply as a result of these new regulations that are clearly defined in the EIR/EIS as an integral part of the WaterFix project.  The agreement is not specific about how the CVP would be compensated, but it seems likely that they will have to receive water delivered through tunnels without paying for the tunnels.  Thus, the water supply benefits to MWD will be significantly less than the MWD board was told when approving the extra billions.

The "no harm" agreement also reduces the already remote chance that MWD will ever be reimbursed by the CVP for its investment in the second tunnel.  The argument pushed by MWD and DWR that farmers/CVP would pay them back for the 2nd tunnel has always been as laughable as President Trump's claims that Mexico will reimburse the cost of his border wall, and this "no harm" agreement makes it even more clear.

In addition to this "no harm" agreement, the new coordinating operating agreement between the SWP and CVP could also greatly affect the water supply benefits of the WaterFix to MWD.  Nine months ago, MWD staff described a "Master Agreement" with DWR that defined MWD's use and control of the 2nd tunnel, but that agreement still has not been made public despite MWD staff promises.  MWD staff description of this "Master Agreement" was key to the MWD board's funding vote, but it seems to conflict with this new "Do No Harm" agreement with the CVP.

The bottom line is that these new agreements appear to substantially reduce promised water supply benefits to MWD ratepayers while increasing their share of the costs.  In order for the MWD board to fulfill their fiduciary duty to their ratepayers, they need to fully review the effects of these significant new agreements on the WaterFix return on investment and potentially reconsider their previous funding commitments.

Wednesday, January 2, 2019

California population growth rate drops to all-time low: housing growth rate now exceeds population growth

Recent estimates from the U.S. Census Bureau show California population growth has dropped to an all-time low of 0.4% in 2018.  The U.S. population growth rate declined slightly to an 80-year low of 0.64% according to the Bureau.  California's pace of population growth is tied with Iowa, one spot below Indiana and one place above Wisconsin - state's that are rarely compared to California when it comes to demographics or economics.  This is the 3rd straight year California population growth has been slower than the U.S. even as job growth continue to exceed the U.S. average. 

As the housing crisis has worsened, it has become common for analysts, including me, to say that California is not building enough housing to keep up with population growth.  That is no longer true thanks to the combination of decreasing population growth and slow, steady growth in new permits.

Between 2017 and 2018, California's population grew by 158,000 people, and the state is on a pace for issuing permits for nearly 120,000 new residential units in 2018.  Even with the devastating number of homes lost to fire this year, that is still enough to keep up with population growth. 

This is contributing to the flattening out of home values and rents that is currently underway.  Of course, this doesn't mean that the housing crisis is solved - the exodus is largely driven by the pain endured by Californian's dealing with the housing crisis.  California still needs to prioritize efforts to expand supply and reduce housing costs.