23 July 2012

2050: How Texas saved its economy

Editor's note: James Workman taught "Unlocking the Real Worth of Water" as a visiting professor at Wesleyan University last semester. He told his students that they -- like all people -- needed to be "water resource managers" because water allocations are increasingly driven by subjective individual values, not top-down planing. The students addressed these ideas from different perspectives (local utility, energy/water nexus, and water and food trade); each choose one essay to post here. Please tell them what they got right or wrong.

Matthew Lichtash writes...

Welcome to 2050. 49 other States have collapsed from resource failures due to withering temperatures, stifling population, water shortages. Texas alone stands unscathed, having adapted in the wake of a catastrophe that occurred 39 years earlier.

In 2011, Texas endured one of the worst single year droughts in the state’s history. July was the warmest month documented since the records were first kept in 1895. Wildfires, livestock mortality, and crop loss contributed to massive, multibillion-dollar losses to the economy.

In hindsight, this was a blessing.

Texas slashed groundwater withdrawals by 30% while simultaneously growing a robust economy. Thermal power generation—almost entirely natural gas, coal, and nuclear—comprised 43.2% of water withdrawals in 2012, and demand was projected to increase 39.4% by 2025.

Rather than employ a traditional supply-side response, Texas instead pursued smart growth and demand oriented policies. Energy efficiency, the “low hanging fruit” of sustainability, supplemented certain renewable energy technologies—solar photovoltaic and wind—to reduce the need for new, thirsty power plants.

To boost new, clean, efficient generation, Texas upgraded transmission systems in order to bring power from the windy fields to the power-hungry cities. The smart grid’s new high-voltage power lines supplied the state with more electrons and, importantly, more H2O.

Local officials employed fuel source switching to provide further relief to groundwater resources. Learning from a study completed by the Virginia Tech Water Resources Research Center, Texas substituted natural gas-fired generation for coal-fired generation, which withdraws ten times more fresh water than its more efficient counterpart. By decoupling the relationship between energy and water, Texas liberated its scarce water resources for more efficient purposes.

Agriculture, the second largest source of water withdrawals, at 29.2%, had contributed $80 billion to the state’s economy in 2012. To build resilience against future climatic shocks, Texas incentivized industries to adopt high efficiency measures for cotton, wool, and hay. Some farmers even abandoned thirsty cotton to embrace indigenous crops more suitable to semi-arid climates.

Resource inefficiency had put cattle farmers at a competitive disadvantage. Corn-based feed had become increasingly scarce due to federal mandates; refineries were outbidding cattle for corn, which caused the price to skyrocket from $87/ton in 2002 to a peak of $315/ton in 2011. Texans were fed up with ethanol giveaways to the Corn Belt that were making their cows go hungry.

An unlikely catalyst of this policy change was former Gov. Rick Perry. After realizing the negative impacts of the agricultural policy, Perry mobilized the public to demand the abolition of ethanol tax breaks. Although income was reduced for farmers, more corn became available for consumption, more water became available to grow hay, and local cattle farmers remained competitive due to lower food costs.

True, some Texans, including Gov. Perry, remained skeptical that extreme weather was there to stay, but the cost of inaction proved too substantial to ignore.

The Potsdam Institute for Climate Impact Research concluded that there was almost no chance that both the Russian heat wave of 2010 and the Texas drought of 2011 could occur without human-caused climate warming. A groundbreaking study from Yale University displayed that 69% of the American public likewise understood that global warming had worsened the 2011 drought in Texas and Oklahoma. The public herded their elected officials into common sense reductions in water and energy consumption.

Further, in a historic trade agreement with Mexico, Texas reduced water withdrawals from the Rio Grande to boost Mexican corn productivity; Mexico reciprocated by selling the corn back to Texas at a below-market price, providing lower cost animal feed to Texas ranchers.

This win-win scenario was achieved after the two parties, who previously had bickered over immigration and gun control issues, realized that Mexico’s water gain was Texas’s energy gain.

Other states now regret ignoring the links between unsustainable water and energy consumption. For some it is now too late–extreme drought has ruined economies and destroyed the coherence of society. A mass exodus from California to the Lone Star State, reversing the Dust Bowl migration of a century earlier, has proven once again that nobody messes with Texas.

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