Finds that state water resources management in the Columbia river basin must immediately initiate the development of new water supplies to meet the economic and community development needs of people and the instream flow needs of fish.

Declares that a Columbia river basin water supply development program is needed, and directs the department of ecology to aggressively pursue the development of cost-effective water supplies to benefit both instream and out-of-stream uses.

Provides that, to support the development of new water supplies in the Columbia river, the department of ecology shall work with all interested parties, including but not limited to, interested watershed planning groups working adjacent to the Columbia river and tribal governments, to develop a Columbia river water supply inventory. The inventory must include: (1) A list of potential conservation and storage projects in the Columbia river basin;

(2) Estimates of project costs and benefits;

(3) A ranking of projects from the least expensive per acre-foot to the most expensive per acre-foot;

(4) A ranking of projects from the most beneficial to fish and other instream values to the least beneficial to fish and other instream values; and

(5) A ranking of projects from the most beneficial to agriculture to the least beneficial to agriculture.

Requires the Columbia river water supply inventory to consider long-term trends in water supply and demand, rely on existing project data already completed by local planning groups, and supplement existing information as necessary to develop a useful inventory.

Requires the department of ecology to complete the first Columbia river water supply inventory by November 15, 2006, and shall update the inventory annually thereafter.

Makes appropriations to carry out the purposes of the act.