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Water disrupts the West: Will business begin to look elsewhere?

Bart Taylor //July 26, 2012//

Water disrupts the West: Will business begin to look elsewhere?

Bart Taylor //July 26, 2012//

Until we have a government that understands we’re running out of water, we’ll get nowhere in the water discussion.”

–Participant in Colorado Cleantech Industry Association, Deloitte-sponsored ‘No Water, No Energy’ seminar, Denver, July 2012

One can say this about our current level of understanding about our water future: it’s incomplete, but getting better. We’ve known for some time we’re on an unsustainable path in the West. The Bureau of Reclamation’s Colorado River Supply and Demand Study has already determined that throughout the seven-state Basin, demand exceeds supply most years. Reservoir storage, and the occasional wet years like 2011 help meet short-term demand.  This fall, we’ll learn more on how the Colorado River system will stand-up to multiple supply and demand scenarios they’re modeled in the study’s final phase.

We may also see then, as our commentator suggests, whether state and local governments fully understand the scope of the challenge. 

But as the gap between supply and demand from the Colorado River grows – its forecast by the Bureau to be 4 to 6 million acre-feet by mid-century, roughly one-third its entire annual volume – the long-term implication is inarguable: change is coming to the Southwest U.S. Have water today? You may not in the future – and for some the near-future. We may not be “running out,” but a radically new supply regime could transform our economy – with new water have’s-and-have not’s, new means to regulate ownership and distribution, new projects and infrastructure, and profoundly, new industry that displaces water-intensive business that simply can’t operate in the West.

How disruptive will the change be? Among the questions:

Is business ruling out the West?  

Water prices are rising. Circle of Blue, a global water information resource, reports an 18 percent rise in 30 major U.S cities since 2010 – and a 7 percent increase last year alone. In south metro-Denver, in the suburbs of Phoenix and Las Vegas, in Albuquerque, they’re certain to rise more for consumers and business.

At the same time businesses are refining they way they assess water-related risk. The value of water – or the lack of it – is increasingly quantified. For businesses looking to expand or relocate here, the prospect of rising water costs and supply shortfalls may add up to trouble for economic developers in the West.   

For agriculture, how little is enough?

Ag’s the biggest user of water in the West by far – three of every four gallons. As it feeds the country, agribusiness is also selling water to urban users, to energy, to developers. But for how long? When will ag begin to push back? Of course agribusiness is already stressed – Weld County farmers in northeast Colorado can attest. At what point will growing communities, or shale gas producers, be asked to find water elsewhere? Who will water growth and energy development in the West?

Can local utilities survive?

Water delivery and wastewater management in the United States is a decidedly local affair.  A dizzying maze of water districts, associations, and civic authorities manage a network of over 55,000 water utilities and about 16,000 wastewater facilities. In Colorado alone, around 300 separate entities deliver water to residents and businesses.

But can the interests of local utilities dovetail with those of regional planners? Northern Water in Fort Collins, Colo., has a bright future, serving thousands of users in northeastern Colorado via a huge system of water assets including the Big Thompson and Windy Gap projects. Less than a hundred miles south, along I-25, the water future of communities like Castle Rock and Parker is far less certain – some would argue in crisis. Is there incentive for Northern to act in Parker’s interest? The governor of the state might say yes; residents of Ft. Collins, not so much. ‘Local control’ may hamper collective planning throughout the Southwest.

Also, is current water law incompatible with regional planning?

Coloradans can’t capture rain water to irrigate lawns or otherwise use the water. It’s already spoken-for.  A user senior to you or me claimed a prior right, put the water to beneficial use, and therefore owns it. Furthermore, if that users stops putting the water to use, they’ll lose their right in some cases.

Arguably, there’s little incentive to conserve. Or share. Or contemplate a new conservation paradigm. 

On a regional level, the Colorado River Compact, the law of the river in part, is straining under the weight of inexorable demand, of ninety years of change within the Basin. As durable and constructive as the Compact has been, questions continue to be asked about its relevancy as a blueprint for future allocation.

What’s the future of the West’s great dams?

It’s become fashionable to contemplate the decommissioning of the great dams along the Colorado River. But without them, meeting regional demand during dry periods is hard to imagine, all things remaining equal. In fact more storage is forecast to be needed by local and state planners. 

The massive impoundments are also terribly inefficient. It’s estimated a million-acre feet of water evaporate from their surface every year. In today’s American West, this represents a huge amount.

Water issues: at the forefront for business in the West.

More next time on how businesses are assessing water-related risk.

(Thanks to Steven Maxwell’s TechKNOWLEDGy Strategic Group for statistics quoted here.)