The Department of Water Resources concluded in its 1994 California Water Plan Update that California's annual water supplies are generally adequate to meet current demand in "normal" (nondrought) years. However, the department forecasts a shortage in the year 2000 for California's water users as a group (domestic, industrial, agricultural, and environmental) that will increase in subsequent years. The projected shortage results both from factors that reduce supply and those that increase demand. Among the most important factors reducing water supply for nonenvironmental users are recent federal limits on water diversions in order to protect fish and wildlife habitat. Projected population growth adds most to future increases in demand.