This chapter contributes to efforts to improve the accuracy of estimating damages resulting from climate change. It examines potential hydrological impacts on California, and how the state might adapt. For a doubled-CO2 scenario, general circulation models coupled with California hydrological data predict increased winter precipitation and dryer summers, elevated snowlines with correspondingly reduced snowpack, shifts in seasonal peak runoff patterns, increased numbers and intensity of extreme weather events, increased evapotranspiration, and declining soil moisture. Adaptations by water managers could include de-emphasizing the role multi-purpose reservoirs play in flood control in order to enhance their water-storage capabilities, making firm long-term commitments to provide water to wetlands and other ecologically-sensitive areas, and increasing the management flexibility available to local water agencies through intraregional contracting and mergers. In its conclusion, the chapter notes that while the water sector is accustomed to adapting to climatic variation, adaptations may not be consistent with an integrated assessment model's least-cost path. A region's gain or loss of overall water supplies should be evaluated in the context of its ongoing reallocation of water among competing uses. And in order to capture an appropriate level of detail, the scale of impact studies needs to be reduced to the national or sub-national level.