California's Flood-Control Challenge

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But increasingly they are becoming new communities for people priced out of San Francisco and San Jose 75 to 90 minutes away. Less than 10 miles downstream from Jones Tract, developers are plotting 500 homes on Bethel Island.

Builders in Sacramento are putting houses in flood plains, too. While state and federal authorities say Sacramento's levees are inferior to the pre-Katrina revetments in New Orleans, an estimated 100,000 people now live on what may have been a dry lake bed called the Natomas plain. So far, these homes, with values of $350,000 and up, have been protected. But someone who stays put through his 30-year mortgage would face a 26% chance of a 100-year flood. If the levees broke, waters would deepen to 25 feet, enough to dunk even two-story residences.

Altogether, an estimated 500,000 people now are in danger of flooding in the Sacramento and San Joaquin River basin. A 200-year flood would cause $35 billion in damages to greater Sacramento, the state forecasts, and it would take at least 2.5 months just to pump out flooded areas.

Issues of Support

As disastrous as these breaches may be, they are not the worst-case scenario. Authorities say a 6.5-magnitude earthquake under the delta islands would cause dozens of earthen levees to liquefy. If enough were flattened, salt water would be sucked upriver as fresh water bled into the lower-lying land. This onrush could contaminate water supplies unless the state turned off intake pumps. Either way, much of California would soon run dry. Scientists say an earthquake this severe is probable over the next 50 years. "This is like a ticking time bomb," warns Lester Snow, director of the California Water Resources Dept.

California has long known its levees were in dangerous disrepair. What made the state pay attention was a series of occurrences, beginning with the jolt from the 2004 flood in Jones Tract, through Katrina's devastation of New Orleans, to a near-miss in early 2006 when rivers reached flood stage following extraordinarily heavy rains and mountain snowfalls. Schwarzenegger declared an emergency that freed up $100 million to fortify badly eroded sections of levees. He then campaigned for a sustained effort to firm up other sites. Last November, voters authorized almost $5 billion in bonds for a multiyear flood-control project.

Even with broad support, the initial steps haven't always been easy. The Republican governor asked for federal assistance in early 2006, noting that the U.S. Army Corps of Engineers typically funds such work. But while President George Bush declared the sites federal disaster areas, he offered only an IOU, promising to try to reimburse California later for these emergency fixes.

Money vs. Mother Nature

More tests of will are inevitable as the state reassesses its entire levee system and determines what should be built instead. Should the state stick with today's generally accepted standard, requiring that levees be strong enough to guard against a flood that would happen once in 100 years? Or would it be wiser to build against a 200-year flood? Which sites should get top priority? People must come first, of course, but if the state redoubles dikes around flood-prone developments, isn't it just rewarding foolhardy behavior? Indeed, should the state go further and override municipalities and ban residential construction in high-risk areas?

There'll almost certainly be squawks from taxpayers, too, as the repair bill climbs. When all is said and done, Brigadier General John McMahon of the U.S. Army Corps of Engineers says, the price tag might hit $40 billion. "My hat's off to their leadership and the way they're approaching the problem; they're not giving in to political whims," McMahon says. "But that money is only a down payment."

Whether all this money will buy safety depends in large part on Mother Nature. Though emergency work has repaired 33 sites, much of the levee network is still vulnerable to a 100-year flood and virtually none of it could withstand a 200-year flood. A significant earthquake might wreck even recent fortifications. But given somewhat normal weather and stability underground over the next several years, California's Central Valley will be better off than it is today.

With Christopher Palmeri in Los Angeles and Tom Sawyer of Engineering Record News in New York.

Arndt is a senior correspondent in BusinessWeek's Chicago bureau.