Hydroelectric production was born in the Bear River watershed. The Pelton Wheel was invented and patented in Nevada City in 1880, and was first used effectively in 1887 to generate electricity with small 100 volt equipment at the Idaho-Maryland Mine in Grass Valley. The new technology soon spread and new companies flourished: Nevada County Electric Power Company, South Yuba Water Company, and Central California Electric Company used the water and the ditches to build hydroelectric plants throughout the area. The Bear River Canal, first built in 1852 for diverting water from above Colfax to Auburn for mining and then agriculture, now supplied new hydropower plants in Newcastle (1896) and Auburn (1898). The Alta Powerhouse (1902), presently owned by PG&E, is the oldest functioning hydroelectric plant in California.

Hydropower continued to develop to modern times, rebuilding the old ditch systems, building new reservoirs and power plants, and is today the dominant influence on the waters of the Bear River.

Hydroelectric power and water supply are the most prized ecosystem values in the watershed today, succeeding mining, timber, and agriculture in the past. Rising in significance are the ecosystem values of recreation and open space. With climate change, carbon sequestration in forests may emerge as a strong driver of watershed economics.