California’s system of water rights is referred to as a "dual system" in which both the riparian doctrine and the prior appropriation doctrine apply to water rights. There is also a separate doctrinal basis for ground water, as well as pueblo rights, so a more accurate classification of California’s system would be a "plural system". Water rights in California are use rights. All waters are the property of the state. A water right in California is a property right allowing the use of water, but it does not involve ownership of the water. California’s water law is contained in the California Code of Regulations, Title 23, and can found at: http://www.calregs.com/.

Riparian rights result from the ownership of land bordering a surface water source (a stream, lake, or pond). As a class, these rights are senior to most appropriative rights, and riparian landowners may use natural flows directly for beneficial purposes on riparian lands without applying for a permit.

Appropriative rights are acquired by putting surface water to beneficial use. Prior to 1914, appropriative rights could be claimed by simply diverting and using the water, posting a notice of appropriation at the point of diversion, and recording a copy of the notice with the County Recorder. Since 1914, the acquisition of appropriative rights has required an application through the State Water Board.

In addition to riparian and appropriative rights, California recognizes pueblo rights. These rights are derived from Spanish law whereby Spanish or Mexican pueblos could claim water rights. As a result, pueblo rights are paramount to the beneficial use of all needed, naturally occurring surface and subsurface water from the entire watershed of the stream flowing through the original pueblo. Water use under a pueblo right must occur within the modern city limits, and excess water may not be sold outside the city. The quantity of water available for use under a pueblo right increases with population and with extensions of city limits. In general pueblo rights are limited to use of water for ordinary municipal purposes.

In 1928, the California Constitution was amended to require reasonable diversion and use in the exercise of all water rights. The only exception to the point of diversion requirement is for instream flow rights. The State Water Board and the courts have concurrent jurisdiction to apply and enforce diversion and use requirements. The holder of an appropriative right may change the point of diversion, place of use, or purpose of use, so long as other rights are not injured by the change. In order to change an attribute of a water right in California, a change application must be filed with and approved by the State Water Board.

The vast majority of California’s groundwater is unregulated. The state does not have a comprehensive groundwater permit process to regulate ground water withdrawal. There are three legally recognized classifications of groundwater in California: subterranean streams, underflow of surface waters, and percolating groundwater. Subterranean streams and underflow of surface waters are subject to the laws of surface waters and are regulated by the State Water Board.

Water rights in California can be held by any legal entity. There are no restrictions on who can hold water rights, thus the owner can be an individual, related individuals, non-related individuals, trusts, corporations, government agencies, etc.. Water rights are considered real property (they can be owned separately from the land on which the water is used or diverted) and can be transferred from one owner to another, both temporarily or permanently. Any transfer (sale, lease, or exchange) is subject to approval by the State Water Board through the application process discussed above. Approval is granted upon finding that the transfer would not result in injury to any other water right and would not unreasonably affect fish, wildlife, or other instream beneficial use. An appropriative water right in California can be maintained only by continuous beneficial use, and can be lost by five or more continuous years of non-use. Riparian rights, on the other hand, cannot be lost through non-use. Appropriative rights can also be lost through abandonment, but to constitute abandonment of an appropriative right, there must be the intent not to resume the beneficial use of the water right. As a result, abandonment is always voluntary. The rights to waters lost through abandonment or non-use revert to the public, but only after notice has been given and a public hearing is held.

In 1991, California adopted changes to its water laws which permitted the transfer of existing consumptive water rights to the purpose of instream flow. These transfers can be made for the purposes of enhancing wetlands habitats, enhancing fish and wildlife resources, or increasing recreation on the water. California law allows transfers to be either permanent or temporary changes in use; therefore instream flow rights can be both purchased and leased. New instream flow rights retain the priority date of the original right. California state law does not permit new appropriations of water for instream flow. The State Water Board may attach conditions requiring bypass flows to new consumptive use appropriations, but these conditions do not constitute newly appropriated instream flow rights. When a new water use permit application is submitted, the State Water Board must notify the Department of Game an Fish, which has the authority to recommend amounts of water necessary to preserve fish, wildlife, and recreation in the affected stream. The board then considers these recommendations and may set instream flow requirements as conditions for the new permit. In this way, current flows can be protected even though new appropriations for instream flow rights are prohibited.

Recognized beneficial uses of instream flow in California include enhancing wetlands habitat, enhancing fish and wildlife resources, increasing recreation on the water, and protecting water quality.