The Sacramento-San Joaquin Delta is in a state of inevitable transition. Physical and financial pressures are likely to transform parts of the Delta into open water within the next 100 years. Because flooded islands have different habitat, water quality, and hydrodynamic implications depending on location, depth, orientation, and other physical factors, the state may decide to intentionally flood one or more Delta islands in an effort to better manage the Delta’s ecosystem and valuable water supplies. This paper outlines three sets of near term actions the state would have to take to begin transitioning towards intentional island flooding, and discusses legal and political challenges to those actions. Several key findings include the following: (1) amendments to California’s water code and revisions to the Delta Land Use and Resource Management Plan may help the state ensure the legal authority to differentiate levee policies within the Delta; (2) permits for a first, experimental flooded island will likely require the State Water Resources Control Board to revise the Delta Water Quality Control Plan to allow for more short-term flexibility and deal with conflicting ecosystem and water supply uses; and (3) the state may want to prepare mitigation plans for private landowners on neighboring islands whose levees could face new threats of erosion and/or seepage from a nearby flooded island in order to avoid inverse condemnation lawsuits. If the state decides to shift its levee policies in the Delta, serious consideration will need to be given these and additional common, regulatory, statutory, and constitutional laws.

California’s Sacramento-San Joaquin Delta has fragile levees subject to several trends that make them increasingly prone to failure. To assess the likely extent of Delta island flooding, this study presents an economic decision analysis approach for evaluating Delta levee upgrade and repair decisions for 34 major subsided agricultural islands that make up most of the Delta’s Primary Zone and include all subsided, non-urban islands. The decision analysis provides a quantitative framework to address several relevant questions about reasonable levee upgrade and repair investments. This initial analysis indicates that it is economically optimal not to upgrade levees on any of the 34 subsided Delta islands examined, mostly because levee upgrades are expensive and do not improve reliability much. If upgrades can improve reliability more, it becomes optimal to upgrade some levees. Our analysis also suggests that, accounting for land and asset values, it is not cost effective to repair between 18 and 23 of these islands when they fail. When property values for all islands were doubled, only four islands originally not repaired become cost effective to repair. The decision analysis provides a quantitative framework for addressing several relevant questions regarding reasonable levee upgrade and repair investments. These initial results may act as a springboard for discussion, and the decision analysis model as a working framework for islands of high priority. An inescapable conclusion of this analysis is that maintaining the current Delta landscape is unlikely to be economical from business and land use perspectives.