Arizona State University study: Drought and the economic impact ($1.4 trillion) of the #ColoradoRiver


Here’s the release from Protect the Flows:

A first-ever comprehensive report by noted economist Tim James at W.P. Carey School of Business at Arizona State University, commissioned by business coalition Protect the Flows, identifies the economic value and number of jobs dependent on the river for all the basin states and major economic sectors that use water from the river.

The study reveals that hanging in the balance of the health of the Colorado River system are more than $1.4 trillion in economic activity, $871 billion in wages, and 16 million jobs. Put into perspective, an estimated 64.4 percent of the combined value of each basin state’s output of goods and services – could be lost if Colorado River water is no longer available to residents, businesses, industry, and agriculture. Read the Executive Summary here.

From The Wall Street Journal (Jim Carlton):

A new study for the first time quantifies the economic importance of Colorado River water to seven Western states—and the dire outcome should ongoing droughts dry up even a portion of it.

The river’s water fuels $1.4 trillion in annual economic activity in California, Arizona, Nevada, Utah, Colorado, New Mexico and Wyoming, says the research by economists at Arizona State University. With just a 10% reduction in the water available for human use the gross economic product of those states would fall by $143 billion and cost 1.6 million jobs.

At a 20% drop, those numbers would shoot up to $287 billion in lost economic activity and 3.2 million jobs, according to the study.

The study assumes that no increase in water from other sources would be available. Those states, all of which have contractual rights to water from the Colorado, so far have managed to largely offset reductions in river flow brought on by a 15-year drought by drawing from underground reserves and stepping up conservation, among other measures.

The researchers warn that real economic pain could occur when shortfalls no longer can be made up as population continues to grow and climate change affects rainfall.

“We are getting to the crunch now,” said Timothy James, an Arizona State economics professor who led the study. “The Colorado River is the lifeblood of the entire region.”

California’s drought, for example, has forced municipalities to draw so much more water from underground that some wells have gone dry. The state relies on the Colorado River, along with the snowpack in the Sierra Nevada, to meet much of its water needs.

The river’s troubles are well documented elsewhere. The water level at Lake Mead—the largest reservoir for the Colorado River—has fallen more than 100 feet over the past decade to an elevation of 1,089 this week, according to Bureau of Reclamation figures.

So far, the declining flows haven’t significantly affected the region’s economy, though farmers have suffered cutbacks and boating and other river-related businesses have taken a hit.

More Colorado River Basin coverage here.

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