Growing population and environmental concerns are increasing the demand for California's water resources. Historically, the state has dealt with shortages by expanding supply. In the coming years, new strategies will be required to allocate water among existing and emerging uses and to create additional supplies by nontraditional means. Three techniques will form the foundation of water management in the next era: water markets, water-use efficiency and active conjunctive use. Such methods establish prices for water that more accurately reflect costs, encouraging conservation and more efficient use patterns.