Water – How to identify the source of a leak at the hot water heater

I ran out of space composing an comment response to Rick's last comment, so I'm going to just make everything into an answer. First my original comment:

This heater appears to be much more than 20 years old! I agree a new installation is the best option. However, if money is tight, the valve alone should be replaceable for little money and will fix the leak, but not the other deficiencies. But with old plumbing, you are as likely to break something as to take it apart, so you may end up with a new heater anyway.

And my response to Rick's comment:

I doubt the water is very hot by the time it drips out, any hose should work, use a washing machine hose if you want one that is heat resistant in case the valve actually blows. You will need a male pipe thread to male hose thread adapter fitting to connect a hose to it. Alternately you could fabricate a drain out of CPVC pipe and fittings.

To replace the valve, take the old one out and take it to a hardware store and find a "Domestic Temperature and Pressure Relief Valve" of similar configuration. Ensure the pipe thread that goes into the heater is the same size and gender. Also insure the temperature probe is similar in length or at least is long enough to extend through the heater's internal insulation and protrudes into the tank proper. While you're there, get some pipe dope and enough CPVC pipe, glue and fittings to extend the outlet to near the floor. You don't want a family member sprayed with scalding hot water should the valve release when someone is nearby.

Honestly, you should avoid the sink/hose drain option and replace the valve, they are not that expensive. Just don't break anything removing it. If something feels like is about to break on disassembly, then maybe the hose/sink option makes sense. But for your own sake, please start saving money to replace the entire installation. It's not going to last a lot longer.

I can't imagine a code that would prohibit flexible water lines, but all building codes are up to the local jurisdiction so it is possible. In earthquake country on the west coast, flexible water lines are required in some places and optional but recommended in others.

Looking at, for example, Daly City water heater requirements (http://www.dalycity.org/Page192.aspx) say flex lines are recommended but not mandatory. In either case, "A union or flared connection is required on hot and cold water lines to facilitate removal of the appliance (CPC 609.5)". Flex lines give you the flare connection.

There are two common types of flexible lines for water heaters: copper and rubber+steel. It could be that in your jurisdiction, one type is allowed but the other is prohibited.

A union is a pipe joint with matching threads, made specifically for allowing disconnection of a hard connection. Whoever installed yours without a union didn't know what they were doing. You can easily add a PVC union to the existing setup if you want to avoid adding a flex line for any reason.

But personally, I would install the copper flex lines on both hot and cold, until a local inspector told me specifically it was not allowed.

And while you're at it, if this is a gas heater, make sure it is 18 inches off the floor too. :-)