Cal. Water Code § 11973

The department shall determine whether a local water conservation project described in Section 11970 is economically competitive by comparing, in an engineering and economic analysis, the local conservation project with alternative new water supply sources constituting either reservoirs located north of the delta or off-aqueduct storage reservoirs located south or west of the delta designed to supply water to the California Aqueduct. The analysis for the alternative new water supply sources shall use the average cost per acre-foot of yield in the latest studies made for those sources by the department and shall compare those facilties with the proposed local conservation project using commonly accepted engineering economics. In the case of a local conservation project to be funded in part by the department as part of the system and in part from other sources, the economic analysis shall be applied only to the portion to be funded by the department as a part of the system.