Drought, Mega Drought

Aug. 18, 2021

What's with the Colorado River Basin? 

About the author:

Will Sarni is the founder and CEO of water strategy consultancy. Sarni can be reached at [email protected].

The Colorado River Basin (CRB) and, in general, the American West, is in the midst of a water crisis. This crisis has been in the making for a long time as the watershed is over-allocated, infrastructure is outdated and underfunded, and the impacts of climate change are taking a toll. Public policy at the state and federal levels cannot adapt fast enough to the realities of water scarcity in the basin. Water stress and scarcity are impacting water utilities, businesses and the ecosystem at large. In addition, there is a significant portion of the population within the region that does not have reliable access to safe drinking water.

In addition to its environmental role, the economic importance of the CRB cannot be overstated. The Colorado River supports $1.4 trillion in annual economic activity and 16 million jobs in California, Arizona, Nevada, Utah, Colorado, New Mexico and Wyoming, which is equivalent to about 1/12 of the total gross domestic product in the U.S. It is estimated that if 10% of the river’s water were unavailable there would be a loss of $143 billion in economic activity and 1.6 million jobs, in just one year.

The CRB supplies more than 1 in 10 Americans with much of their water for municipal use, including drinking water. It provides irrigation to more than 5.5 million acres of land and is an essential resource to at least 22 federally recognized tribes. In addition, dams across the Colorado River Basin support 4,200 megawatts of electrical generating capacity, providing power to millions of people. It has become clear, however, that under current and projected conditions, the Colorado River is no longer able to meet the demands of its many users.

The Federal response to the water crisis or “megadrought” will likely be a Water Shortage Declaration. The low levels of precipitation in the western mountain ranges are predicted to lead to less snowmelt, the primary source of water for much of the watershed. The Bureau of Reclamation, which oversees water management in the American West released updated projections that are finally gaining attention. The recent predictions indicate water levels in Lake Mead will fall below 1,075 feet in June 2021. This event will trigger the water shortage declaration, prompting cuts in water allocation with Arizona and Nevada automatically subjected to significant reductions in access to water.

But what are the interventions that can be scaled at speed that can address water scarcity, quality and equitable access within the watershed? We cannot afford to rely upon changes to public policies to adjust to the current realities within the watershed. We need to create a “catalytic community” of entrepreneurs and investors within and outside of the watershed to scale technology solutions for water utilities, communities and industries. Below follow a couple of examples:

First, in response to the harsh realities of the water crisis in the CRB and the American West, the Nasdaq Veles California Water Index (NQH20) was launched to improve the management and transparency in the water sector. The Index tracks the price of water rights leases and sales transactions across the five largest and most actively traded regions in California.

Second, the Colorado River Basin Fund was launched to identify and scale solutions for water utilities, communities and industries within the CRB. The fund aims to identify, invest in and scale early-stage water sector technology innovations in categories including satellite data acquisition and analytics, IoT and edge computing, artificial intelligence, and water-smart agriculture, homes and cities. The CRB serves as a strategic testbed to determine the feasibility of emerging solutions for application in the global water sector.

Hope is not a strategy. We cannot sit back and wait for rain. We need to take action to solve the pressing water challenges facing the American West and beyond. Twenty-first century technologies, innovative funding and financial market tools present a promising combination. They will support the public sector and utilities in scaling solutions for water conservation, aquifer recharge, water trading, water reuse and recycling and increased investment in water and wastewater infrastructure.

There is much to do by the public sector, utilities, civil society, entrepreneurs and investors. We can no longer wait to act.

About the Author

Will Sarni

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