Water Resource Scarcity: A New Reality Defining the 21st Century, PREA Quarterly, Winter, 2014

March 19, 2014

WATER IS THE CRITICAL INPUT TO ECONOMIC GROWTH that can no longer be taken for granted. Every sector of the economy—food and agriculture, housing and real estate development, power generation, oil and gas production, industrial manufacturing, mining, and data storage—all require reliable access to clean water. Global climate change and historically unprecedented droughts combined with pollution and inefficient water use have put reliable water supplies at risk.
The current water supply shortfall in the Southwest US may be more critical to growth than anywhere else in the world. Solutions to this water deficit require creative approaches backed by significant capital investment. Water resources in the West have been owned and sold as real property (water rights) for more than a century. At present, there is a substantial opportunity for private capital investment in water resources to facilitate voluntary water transfers to higher-value economic uses. These transfers will play an important role in adding market-driven allocation efficiencies to maximize the water that is available and to help solve the structural water scarcity problem. In the absence of these transfers, the $4.1 trillion of GDP1 in the Southwest states will be at risk.