Canyon Lake is situated around the Canyon Lake Reservoir. A drinking water reservoir, with water and beach areas owned by the Elsinore Valley Municipal Water District, provides a recreation playground for residents who live within the private, gated community. Flows of the water move through the San Jacinto River Watershed and are eventually stored in Canyon Lake. In 1927, the Railroad Canyon Dam was built to keep flows stored in the lake. During times of heavy rain events, water can spill over the dam and pour into Lake Elsinore. Sedimentation from the upper watershed moves through Canyon Lake and eventually Lake Elsinore, which can impair quality in both lakes.
Historically, Canyon Lake has been known to suffer from algal blooms. As a body of water situated at the end of a watershed, it is susceptible to high levels of nutrients from run off, such as nitrogen and phosphorus. These nutrients encourage algae growth. By adding alum to the water, it immediately binds to the phosphorus, causing it to neutralize and become inactive. The alum process was chosen as a means to improve lake quality due to its proven effectiveness in lakes throughout the country. LESJWA has been responsible for organizing the alum treatments, which have proven to be successful in minimizing algae growth.