The basin is an international hotspot of biodiversity because of the unique habitats and ecosystems of the Santa Cruz Mountains. The San Lorenzo River and its tributaries nourish corridors of riparian growth as they traverse the mountainous regions of the watershed. The plant community of white alder riparian forest intergrades with upland redwood forest in moister locations and mixed evergreen forest in drier situations. Common understory species include five-finger fern,
coastal wood fern, small-leaved montia,
scarlet monkey flower, and
skunkweed. all of the genus
Oncorhynchus, are ocean fish that migrate up the rivers at the end of their life cycles to spawn.
Pacific lamprey, a
semelparous fish, migrates between the ocean and the upstream habitat to breed. Salmon and other fish populations declined dramatically after the establishment of water diversions, channelization, and dams that affect migration and rearing conditions. The San Lorenzo River was once one of the most popular steelhead trout and coho salmon rivers on the
Central Coast of California. Approximately of the San Lorenzo River, and at least nine of its major tributaries, support steelhead. Historically, the San Lorenzo River supported the largest coho salmon and steelhead fishery south of San Francisco Bay, and the fourth largest steelhead fishery in the State of California. Coho have returned as a result of stocking efforts at the Kingfisher Flat Hatchery on Scott Creek's Big Creek tributary. Coho salmon had not been recorded in the San Lorenzo River watershed since the early 1980s, until 2005, when at least a dozen adult coho were observed at the city of Santa Cruz Felton diversion fish ladder. In recent decades, continued growth has raised demand for water from the entire watershed system bringing attention to the need for further preservation of stream flows in order to protect young
salmon,
steelhead, and
lamprey. In 2014, coho captured from the lower river were transferred to the Big Creek hatchery to enable local genetics to be used for stocking.
Environmental impacts Reduction in flow caused by dams, diversions (Felton and Tait), and evaporation losses from
Loch Lomond Reservoir has had ecological consequences in the San Lorenzo River watershed and overall Santa Margarita Basin. Historically, the delta with its large freshwater outflow and salt marshes provided an important breeding ground for aquatic species in the Bay. Today's desiccated delta no longer provides suitable habitat, and populations of fish in the bay have seen a dramatic decline. Reduced flows have led to increases in the concentration of certain substances in the lower river that have impacted surface water quality. Nitrate impact from the more than 13,000
septic systems in the San Lorenzo River watershed is one of the major issues. The watershed has the highest septic system density of any comparable area in the state of California. Bacteria levels were dangerously high in the 1980s with 3% to 6% of the septic systems failing, discharging untreated sewage to the ground surface and another 7% to 9% of households illegally discharging greywater, which also had a high bacteria and pathogen level. Groundwater use impacts on surface water baseflow supporting anadromous fisheries for
coho salmon and
steelhead, particularly in Bean and
Zayante Creeks, is another issue. No flooding from the San Lorenzo River was reported when a flow event of nearly equal magnitude occurred in January 1982, but the water levels were much higher than one would expect, based on the original design. That was because a large amount of sediment had re-deposited in the channel after it was built. The original project design (1956) required periodic dredging of the bed sediment, which is both expensive and destructive to aquatic and riparian habitat. The flood control channel was not maintained regularly, presumably for those reasons. ==Scenic elements==