Could drought slow America’s most vibrant economy?

The answer, in our opinion, is yes.  Every economy depends on natural resources as part of the back bone.  Our financial resilience is keyed to the proper balance between growth rate of commerce and jobs and the preservation of the environment.  Our shift back to a better balance is paramount.   

Could drought slow America’s most vibrant economy?

Jim Tankersley

© Justin Sullivan/Getty Images A waterway off of Lake Powell is nearly dry on March 30, 2015 near Big Water, Utah. As severe drought grips parts of the Western United States, a below average flow of water is expected to flow through the Colorado…

It is a tantalizing question facing the future of the American West: What would happen if the Colorado River dried up?

The scenario, though unlikely anytime soon, is a stark way to consider the growing effects of climate change and drought on the region. And when researchers at Arizona State looked into it this year, they found a story of economic disaster.

The seven states that rely on the Colorado for at least some of their water supply — from Wyoming down to Southern California — would lose 16 million jobs, many in health care, high technology and arts and recreation. The fewest job losses would come in agriculture.

Nonetheless, in the West, it’s agriculture that still gets the lion’s share of the water.

That’s the great tension for Western states — and the U.S. economy — as global temperatures rise and drought intensifies in coming years. This region of the country has powered the recovery from recession, leading in job growth and the development of cutting-edge industries that drive innovation and deliver higher-than-average pay for all sorts of workers. But continuing that growth, economists and regional experts say, requires additional access to the dwindling supply of water that farmers are asserting a legal and historic right to.

In that sense, the drought is not just raising questions about how America can keep soil fertile and food plentiful, but about the future of jobs, cities and technology.

“American cities, particularly in the West, are generating well over 97 percent” of the region’s economic activity, said Ben Alexander, associate director of the consulting firm Headwaters Economics. “And they can’t get the water they need to grow and expand.”

The tension will pit some of the nation’s fastest-growing urban economies against some of its most troubled rural ones, where unemployment and poverty rates remain high. The struggle will be complicated by the West’s often-byzantine laws for allocating water. And it raises questions about whether the region and the country can afford to use so much of water for agricultural purposes.

“It’s a complete mess as far as how to make it work,” said Timothy James, an economist at the L. William Seidman Research Institute in Phoenix, who was one of the authors of the Colorado River study.

Along with Los Angelinos who are showering and watering their lawns less under restrictions from the governor, struggling growers of nuts, produce and other crops have received most of the attention as California’s monster drought has stretched into its fourth year. But other parts of the West are baking, too, and their industries are thirsty. Climate models suggest the entire region will be facing longer and harsher droughts in the decades to come, stoking increased competition for the West’s most precious resource.

Telecom companies need water to cool their network centers in New Mexico. Semiconductor fabrication plants in Arizona need it, and so will the new Tesla Motors factory outside Reno, Nev.
The snow center of Park City, Utah, has secured additional water supplies to prepare for more winters like the past one, when almost no snow fell on its slopes, forcing ski resorts to draw water to make their own.

“It’s a major concern,” said Jack Thomas, Park City’s mayor and a lifelong skiier. “Our ability to bring water into the community is a constraint on growth.”

Tech giants such as Google and Facebook draw relatively little water to support their headquarters in the San Francisco Bay area but use large amounts to maintain their cloud data-storage centers in places such as Oregon’s Columbia River Gorge. Silicon Valley relies heavily on the ­Sacramento-San Joaquin Delta, one of the nation’s most strapped water sources, for residential and commercial flows.

“I don’t know that I have a date and time for you when it will become a tipping point,” said John Schulz, associate vice president of sustainability operations at AT&T, which has offices and network centers across the region and is searching for ways to conserve water. “We’re feeling the urgency.”

Farmers feel it, too, but they warn that reducing water supplies for farms could devastate rural communities, hurt the U.S. economy and risk causing food shortages in an increasingly hungry world.

“We’re not doing a lot right now to keep farmers in business,” said Dan Keppen, executive director of the Family Farm Alliance, an advocacy group based in Southern Oregon. “Once you start taking out blocks of production, food prices are going to go up, and that’s going to have a ripple effect on consumer spending in this country.”

Farming declined as a share of Western state economies throughout the last decades of the 20th century, then enjoyed a mild uptick during and after the Great Recession. Today it represents a small fraction of the region’s economy and is expected to shrink further.

Only about 1.4 percent of the economic output in the Far West, the Rocky Mountain West and the Southwest came from agriculture in 2012, according to Commerce Department statistics. Information services made up 5.5 percent of those regions’ economies. Private services overall were about 64 percent.

In each region, both the information and overall service industries grew faster than farming from 1997 to 2012.

The new, fast-growing industries — and the cities that house them — have learned to use water more efficiently, virtually doubling how much they can do with a drop of water, according to calculations by Ellen Hanak, director of the Water Policy Center at the nonpartisan Public Policy Institute of California. Her work was based on government data.

In most states, however, farmers have made much smaller gains in efficiency. Agriculture continues to command most of the available water not set aside for environmental protection or power generation — more than 80 percent, on average, in Western states.

Some of that water grows high-returning crops, such as California almonds and pistachios, but not all of it does. Robert Glennon, a law professor and water expert at the University of Arizona, calculated last year that an acre-foot of water used for farming can yield $1,000 worth of alfalfa or $6,000 of lettuce. The same amount of water could produce $13 million worth of semiconductors.

Economists say there should be a simple solution to that problem: Industries that could put water to better use would pay farmers for their water rights. “People get super scared about this prospect of water moving from one sector to another,” Hanak said, but “you don’t have to move much to make a difference.”

The West’s often dysfunctional water markets can make even small moves difficult, however. Colorado has long struggled with the outcry in rural communities when growing suburbs pay farmers to divert their water. In California, coastal cities have grown rapidly in the past few years, while many farming counties across the Central Valley still struggle with double-digit un­employment.

Even rural communities that have developed more vibrant economies — particularly from the growing recreation and tourism sector — are worried about water shortages to come. Mountain cities are worried that drought could stall their ski industries and maroon their river rafting guides, said Diana Madson, executive director of the Mountain Pact, a nonprofit group that works with cities on conservation and adaptation measures. “In every town right now,” she said, “they’re thinking about how to increase new tech opportunities.”