29 Sep 2009

Carbonated Water

I newsletter that I receive (via TS) gave some useful context to the impact of carbon prices on water prices:
Based on analysis of national greenhouse gas production and the provisions of the bill contemplated by the Senate, the price of emitting one ton of CO2-equivalent gas is projected to be $15 in 2011 and rise to $26 by 2019.

To provide some perspective on this price, approximately 80% of the power used to move water through [Arizona's] CAP system comes from Navajo Generating Station (NGS). NGS emits about 1 ton of CO2 for every megawatt-hour (MWh) of energy it produces, and CAP consumes an average of 1.76 MWh for every acrefoot (AF) of water it brings into the three-county service area. If our calculations are correct, a CO2 allowance price of $15 per ton would increase CAP energy cost by approximately 50%; at $26 per ton, energy cost would nearly double.
With a carbon price of $20/ton CO2e, the cost of water would jump by $35/af. That's real money when the price of water to farmers is $45 [or $110/af pdf]

Bottom Line: As energy prices increase, so will water prices. Some prices will be high enough to make farming "uneconomic." Yes, that means that the price of food will rise.