Policy could be key in dealing with the West's historic drought
The historic drought that the West is currently experiencing is changing how people think about water. There have been labor-intensive ideas to help solve or at least ease the drought. But what about potential water policy changes? Of the potential policy changes, there's one favored by economists: water markets.
"Economists love markets, of course, because it allows us to create value," said Jason Shogren, an economist and professor at the University of Wyoming (UW).
He thinks a water market would really help with supply problems.
"It's just that water is so essential to everything, there's no substitute [for] it. That makes it almost a very inelastic demand," he said. "So, if you need water, you need water. We all need water. Right?"
According to Shogren, in a water market, people who own rights to water, like farmers, can buy more as needed, say, for example, if they're growing a really thirsty crop. Or, they can sell their right to the water to others who need it, like cities. But, Shogren added, it can be difficult to convince people that creating a water market is the right move because a lot of people view water as a basic right.
"We'll [economists] make the case for a water market saying it's just a commodity like anything else. It's not a fundamental sacred right to you," he said.
He said a market would create a fair "going rate" for an acre-foot of water without having to create restrictions on the people using it.
"What markets do well is ration things to people who value them more. But if you don't want to use markets to do the rationing, then you've got to put in quantity constraints," said Shogren.
The challenge is finding the right price.
"It becomes more difficult to think about prices for natural resources, like, what is the right price for a gallon of water?" he asked. "What is the right price for an ecosystem service? What's the right price to protect an endangered species that live in that water?"
Even if you could figure out a fair rate, you have to make sure you can get water to everyone who needs it, not just those who have a lot of money.
"So there's the classic trade-off between efficiency, which is making the economic pie as big as possible, and equity, who shares and what share do you get of that economic pie," Shogren said. "So markets themselves shouldn't be considered the king."
He said you have to take specific action to make the market more equitable, maybe by creating something like subsidized low-income water. But then you have to make sure that's not abused.
"As long as you can prevent that, then you can be both equitable and you can allocate resources more efficiently," he added.
Shogren admits a market between states would be difficult to set up because laws and regulations over water ownership are different from state to state. But, water markets are already in small scale use in a couple of places and have been shown to be effective at distributing water.
But you can't have a water market if you don't have access to water to distribute. Especially in the west, where a majority of the precipitation falls during the winter as snow, capturing that moisture and saving it for later is really important. That's where reservoirs and dams come in. According to Dr. Tom Minckley, a professor at UW who studies water in the West, dams and reservoirs are basically water bank accounts.
"And they're put in for one of two reasons. Mainly for irrigation and flood control," he said. "Let's say you have a two or three-year-long drought, you can store water, distribute it, and still have production on the landscape when you want it."
According to him, dams and reservoirs are especially important during droughts. But, just like a bank account, you can't just keep making water withdrawals and not adding more to it.
"The problem that we've encountered is since around the year 2000, we've mostly been in water deficit conditions," said Minckley. "Commonly we've called that a drought. And so we haven't been adding to that bank account of water."
And not only are these reservoirs being used for irrigation and drinking water, but the dams holding some of them in are producing hydropower. That means those reservoirs have to stay at a certain level to keep producing electricity, which leads to other reservoirs upstream having to be drained.
And to make it even more complicated, according to the Colorado River Compact, not all of a state's water stays in that state. The states in the upper river basin are contractually obligated to share a certain amount of their water between each other and with those in the lower basin. They use Lake Powell and Lake Mead to do that.
"And so at Lake Mead, that's kind of where the distribution of a lot of water happens [to] Arizona, [a] little bit to Nevada, and California," Minckley said. "So Lake Powell's our bank account, and we're trying to, you know, put a couple coins in there, keep it up high enough, so that we can maintain our obligations downstream."
And according to Minckley, that compact was created in 1922, when the west was in an unusually wet period, with no thought to the droughts the west was known for, even at that time.
"We knew we were negotiating off of a false positive water flow. Yet, we still did it. And we've known for a long period of time that we were going to have a drought because we knew that they existed," he said. "Once we created the infrastructure of managing the river through the dam-building projects, from the 1930s up until about 1970, we started a clock that said that we need to come up with a new management strategy. But we've never acted on that yet. "
Minckley said that time is coming fast because the current version of the compact expires in a few years.
"And so now we're coming up on the new negotiation in 2026. But the conditions are changing faster than the people who are going to negotiate for those new conditions want to deal with," said Minckley. "That's my citizen's opinion."
Both Shogren and Minckley agree that as climate change makes droughts longer and more intense, there needs to be change. Whether that's in the form of a new treaty, water use restrictions, a water market, or even an infrastructure plan. But for the most part, they agree that the change will have to come as we just learn to live with and adapt to climate change and long, intense droughts.