This chapter examines California's water management projects, which represent an important exception to its leadership in the area of environmental protection. California's approach to water management is distinctive from its other environmental policies in three important respects. First, the threats to the state's aquatic environment came from government, not business. Second, with the notable exception of the battle over the damming and flooding of Hetch Hetchy around the turn of the century, until recently neither conservationists nor environmentalists challenged California's wide-ranging water management initiatives, despite the fact that many had deleterious environmental consequences. Third, historically, business interests were not divided with regard to what to do (or not do) with California's water. Both agricultural and urban commercial interests were united in their strong support for the continued expansion of the state's hydraulic infrastructure. Thus, in this case, the public and business were on the same side. As was the case with the protection of forests and scenic areas, the federal government has also played an important role in shaping California's approach to water management. The federal government's initial legal backing of and subsequent financial support for the state's water management system has been critical in promoting the exploitation of not only the state's but the region's water resources.