This piece in Bloomberg News is about Sydney Chase, the founder of XavierC, the company which makes the "shade balls" in question (there are two other suppliers, Orange Products, Inc. and Artisan Screen Printing).
From the section of the XavierC site on how they work:
Two main causes of water evaporation in reservoirs are temperature and surface area. Our hollow plastic conservation balls address these two issues effectively and inexpensively.
The black conservation balls provide a floating cover on the reservoir taking up approximately 90% of the surface area. Simultaneously the balls prevent UV rays reaching the water and therefore reducing algae.
From the above-mentioned Bloomberg piece:
The Los Angeles Department of Water and Power has now dumped 96 million balls into local reservoirs to reduce evaporation and block sunlight from encouraging algae growth and toxic chemical reactions. The balls are coated with a chemical that blocks ultraviolet light and helps the spheres last as long as 25 years. Las Virgenes, north of L.A., now uses shade balls, too.
From the Los Angeles Times story on August 12, 2015:
What are they made of?
The 4-inch-diameter balls are made from high-density polyethylene, which is the same material you would find in a one-gallon milk jug. This plastic is approved to come into contact with drinking water.
Why are they black?
Carbon black was added to the plastic to stabilize the balls in UV light from the sun.
and, from another LA Times piece about the "shade balls" written in 2008:
The balls, which cost 40 cents each, are made of polyethylene. The coating contains carbon. Black is the only color strong enough to deflect ultraviolet rays, said Paul Sachdev, president of Orange Products.