News Feature | January 25, 2016

Economic Crisis Could Follow Colorado River Cuts

Sara Jerome

By Sara Jerome,

As the threat of water scarcity looms over the West, so does the prospect of water cuts on the Colorado River, an essential water source for large swaths of the country. Cuts could force an economic crisis on the region.

“Between them, the seven basin states have an annual Gross Domestic Product of $3 trillion to $3.5 trillion per year. That puts the region between the sixth-ranked United Kingdom, at $2.86 trillion GDP in 2015, and the fifth-ranked Germany, which hit $3.8 trillion GDP in 2014 and $3.37 trillion in 2015, according to International Monetary Fund statistics,” the Arizona Daily Sun recently reported, citing Jeremy Aquero, an economic analyst for the Las Vegas-based consulting firm Applied Analysis.

“Looking at only the areas within the seven states that use river water, their total GDP is $1.4 trillion, he said, citing figures from an Arizona State University study this year. But economic impacts in areas that use river water would have a significant ripple impact in parts of those states that don’t use the water,” the report said, citing Aquero.

What would water cuts mean for surrounding states?

“If you disrupt agriculture, manufacturing or housing because of a water-induced interruption, the implications will reach well beyond that specific industry or that specific location,” Aquero said, per the report.

Population growth is putting an increasing strain on the Colorado River.

“State officials have long said they are in good shape due to water conservation efforts decades ago, but with more people flooding the West the demand will grow,” Phoenix Business Journals reported. “Arizona gets 1.5 million acre-feet annually from the Colorado River. The earliest shortages could impact the state's supplies would be in 2017 or 2018.”

One sign of stress on the Colorado River is the effects on Lake Mead, one of the river’s reservoirs.

“By the end of October 2010, data from the U.S. Department of the Interior Bureau of Reclamation indicated that the level of Lake Mead had dropped to 1082.36 feet, which is the lowest level since the lake was filled in the 1930s. The previous lowest level was 1083.57 feet, reached in March 1956 during the peak of the 1950s drought. This has serious implications for water supplies in Arizona and Nevada,” according to the federal NOAA.

To read more about the impacts of drought, visit Water Online’s Water Scarcity Solutions Center.