First is regulation that could strand assets in several ways: direct regulation on carbon led by authorities at the local, national, regional, or global level; indirect regulation through increased pollution controls,
constraints on water usage, or policies targeting health concerns; and mandates on renewable energy adoption and efficiency standards.
On top of this large natural climate variability, California's
water supply system is notoriously convoluted and subject to a bewildering array of environmental, legal, political, and
usage constraints.