HOMEWOOD – As if on cue, a big, bronze moon rose over the rim of Lake Tahoe as the evening's speaker – California Sen. Dianne Feinstein – stood at the podium.

"Oh my goodness," Feinstein said, as beams of silvery light rippled across the lake and her audience at the West Shore Cafe and Inn on Monday night. "Is that something – or is that something? Wow!"

Feinstein was on hand the next day to host this year's Tahoe Summit, an annual gathering of public and private officials held at the Homewood Mountain Resort. The event, launched in 1997 by former President Bill Clinton and Vice President Al Gore, serves as a both a pep rally and environmental status report for the health of the world-class lake on the California-Nevada border.

This year, despite the moon's serene glow, there were reasons for concern, from dwindling federal funds for restoration at Lake Tahoe to rebellious Nevada politicians who – frustrated with Tahoe's tough development rules – this year passed a law threatening to pull out of the 42-year-old Tahoe Regional Planning Agency.

The lake itself took a turn for the worse, too. Water clarity dropped from 68.1 feet in 2009 to 64.4 feet in 2010, the second-lowest clarity level on record. The decline caught many by surprise.

But Feinstein and others, including California Gov. Jerry Brown, showed no discouragement. They unveiled more plans and strategies to restore the lake, and shared hopes of moving beyond litigation to innovation aimed at swapping out the lake's ailing, pollution-prone infrastructure with more environmentally sound development.

"If we plan too much, we're never going to build anything," Brown said. "And if we build too much we're not going to have very good plans. Somehow we've got to have the builders and the environmentalists ... come up with a game plan that will keep Tahoe economically and environmentally sane, sound and sustainable."

More than 70 miles around, Lake Tahoe has long dazzled nearly everyone who has laid eyes on it, including Mark Twain, who called it "the fairest picture the whole earth affords."

Twain, though, would surely be disappointed by the lake today, with its ring of strip malls, highways and other development, much of it decades old and deteriorating. And that urban zone, scientists say, contributes the most damaging kind of pollution – fine-grained sediment in the form of erosion. In just four decades, Lake Tahoe's renowned clarity – measured by suspending a white disk into its cobalt-blue water until it disappears – has declined by 38 feet.

On Tuesday, Brown and Nevada Gov. Brian Sandoval signed an agreement aimed at restoring Lake Tahoe's clarity back to 100 feet over the next 65 years. "We have to collaborate to preserve this incredible splendor," Brown said. "But it's not going to be easy.

"We have developed, in all our affluence and progress, a lot of habits that don't work so well for the natural balance on which this lake has depended for eons."

While improving clarity is critical, Sandoval – who signed the law threatening to withdraw from the Tahoe Regional Planning Agency – said better planning is vital, too.

"The (Tahoe) basin needs a regional plan that sets a framework for success in achieving water clarity targets but also creates an environment of certainty for homeowners and private sector investment," Sandoval said.

Few have done more to try to protect Lake Tahoe than Feinstein, a co-author of the 2000 law that has brought more than $450 million in federal money to Lake Tahoe for environmental restoration over the past decade. She introduced a similar bill earlier this year – seeking $415 million over the next decade – but is not hopeful it will succeed.

"I don't think I can get the money," she said Monday at an inaugural fundraising dinner for the Tahoe Fund. The new nonprofit group formed last year to raise private money for collaborative restoration projects.

"That's the bad news," she said. "That's where the private sector has to come in."

Feinstein and her husband, Richard Blum, are contributors themselves. On Monday, she announced they would give $50,000 – a sum quickly matched by two other donors from Nevada. In all, about $200,000 was raised.

Scientists believe more stable water conditions created by climate change have led to an aquatic explosion of tiny diatom-algae cells that scatter light, reducing clarity.

They also said the algae growth is likely to be temporary and that erosion-control efforts remain critical. UC Davis Tahoe Environmental Research Center said in its report, "Tahoe: State of the Lake Report 2011": "There is every reason to believe that if it were not for the decades of watershed management and water quality restoration projects, the lake's transparency would be worse than it is today."