Water Crisis in the Southwest U.S.

Earlier in April, Gov. Brian Sandoval stood on the shores of a shrinking Washoe County lake and signed an executive order creating the Nevada Drought Forum. The group is comprised of water experts and officials from around the state; it will study Nevada’s ongoing drought and recommend state policies. Though not as badly off as California, where Gov. Jerry Brown has ordered a 25 percent reduction in water use, Nevada is the driest state in the nation—and is getting drier with each passing year.
Washoe Lake has shrunk from about 8 square miles to less than a quarter acre. Lake Tahoe dropped below its natural rim last fall. Lake Meade has dropped more than 120 feet since 2000. None of this is good news. Happily, due to drought restrictions and water-efficiency programs, Southern Nevada’s annual water consumption decreased by more than 32 billion gallons between 2002 and 2013, despite a population increase of nearly 500,000 during that same time span.
The challenge of water scarcity in Nevada and the nation has both economic and political ramifications. Water shortages are already straining relationships between states and portions of states, and industries that use a lot of water are coming under fire in headlines and news reports. For agriculture, extended drought is disastrous; scarce water can threaten the viability of billions of dollars worth of crops. The corresponding potential loss of jobs in agriculture and other industries heavily reliant on water is staggering. Additionally, meat prices – the production of which accounts for approximately 30% of U.S. water use – are directly tied to water supply.
If good policy is to be implemented, it is important for the facts to prevail and panic to be kept to a minimum. Here are a few realities:

  • Per capita rates of U.S. water use are comparatively high. Domestic water use is approximately 100 gallons per person per day compared to 37 gallons in the United Kingdom and 32 gallons in Germany.
  • The net consumptive water use in Southern Nevada in 2014 was 118 GPCD. (This number includes all customer sectors but refers only to the portion of water that is consumptively used since direct and indirect reuse allows the water to be used more than once. Net GPCD is more representative of Southern Nevada’s water footprint on the Colorado River.)
  • On average, 70% of U.S. water use occurs indoors, with the bathroom being the biggest consumer, followed by the kitchen.

LakeMeadJuly2014How can these facts help us shape wise water policy?

First, conservation efforts can make a big difference. Reducing U.S. per capita water use by even 25% – never mind by two-thirds, which would bring us in line with other developed countries like the UK – would make a tremendous impact. Second, we can no longer rely on traditional supply-related solutions like building dams and reservoirs, diverting rivers, and drilling wells. Reallocation can play a role, but many long-standing legal agreements and management norms along with scarcity limit the trading of water. Third, we have to acknowledge that in too many places in the U.S., water pricing is based neither on the actual cost of providing water nor on its relative scarcity in a geographical area. Low costs have led to elevated use and have also limited the money available for provider-driven conservation efforts and investment in new water technology and infrastructure. Prices need to come up while being balanced with other economic considerations.
In summary, many of the economic mechanisms that are typically used to allocate a scarce resource—such as trading, pricing, and investment in technology—are largely absent from our nation’s water markets. It is time for that to change. We can’t control the weather, but we can to some degree mitigate water shortages and foster sustainable systems. Pragmatic regulations that encourage or require more efficient use of water combined with incentives for technology innovation can also position our economy to handle the demands of the growing imbalance between water supply and demand.

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