The institute, in its infancy at the University of La Verne, came up in discussions at the university's third annual Water Technology Conference.
Water will play a critical role in California's future, said developer Randall Lewis, an executive with the Lewis Group of Companies, who participated in Thursday's conference.
"If there's not enough water, we won't be able to have growth," he said after his talk.
In San Bernardino County, work is being done to conserve water and use it more efficiently.
The institute will be able to do work in water conservation but it will also do much more and became the source of research that leads to best practices in the water field and attracts companies developing water-related products and services, he said.
That kind of work will lead to the creation of much-needed jobs in a region with high unemployment, Lewis said.
In addition the institute can play a role in the education and training of people in the water field in the future, he said.
The idea for the institute came out of a discussion that included representatives of the Metropolitan Water District, local water companies, local government, Lewis and Philip Hawkey, executive vice president
La Verne and the region can be "a national center for a new industry," Hawkey said.
Through the collaboration of public and private sectors the institute will be able to do work that includes research that leads to new technology in addition to preparing people who will work in different areas of the water industry, including the development of policy, Hawkey said.
The institute will also play a role in preparing people to fill water-related job vacancies.
In the coming years many people who currently work in the water industry will be retiring and the demand for people prepared to fill openings at all levels will be high, Hawkey said.
Part of the institute's work will include helping Southern Californians understand the importance of water.
"We don't appreciate the essential nature of it," Hawkey said.
The work of the institute will "help Southern California understand how we can live a prosperous life with less water," he said.
Among the steps that will be taken in the months to come will be bringing together people from various areas related to water to create the mission and the vision of the institute, said Gregory Dewey, the university's provost.
Within a year, the institute will be on track to share what its first projects will be, he said.
Reach Monica via email, follow her on Twitter @PomonaNow, or call her at 909-483-9336.