According to Valley Water News, annual issue 2007, for the Santa Clara Valley Water District:

A network of aging and eroding levees, subsiding islands, climagte change, wastewater discharge, toxics, mounting regulatory uncertainties, and a struggling ecosystem plague the Delta. Studies predict a 60 percent chance that an earthquake in the Delta region over the next few decades could cause a possible Katrina-like collapse of miles of levees. This could halt water supply deliveries through the Delta for a year or more, resulting in an estimated $40 billion loss to the state’s economy.
The water district uses imported water to supply our treatment plants as well as replenish and stabilize our groundwater basins, which were over-drafted in the early 1900s and caused land subsidence.

The governor-initiated “Delta Vision” process is currently under way and major Delta decisions are expected to be made in 2008. A cabinet-level committee will make a recommendation to the governor in October 2008. The legislature will also weigh in on the policy. Finally, there could be a bond measure on the ballot in 2008 to provide funding to advance a comprehensive Delta solution and infrastructure investment program.