Texas Water 2013

Texas Water 2013 is this week in Galveston.  The largest water trade show in the southwest and one of the largest in the world, it is an annual event where water resources meets the everything-is-bigger mentality of Texas culture.  It is also the place where our current situation, much of Texas in a drought since the fall of 2010, meets a collective reality - - no water equals no business.

Water engineers, managers, and policy makers ought to run out and get a copy of "Big, Hot, Cheap and Right: What America Can Learn from the Strange Genius of Texas" by Erica Grieder, before they head to the coast for Texas Water 2013.  Ms. Grieder is a onetime correspondent for The Economist who now writes for the Texas Monthly.  The book covers the Texas Model - - weak state government, with few taxes and fewer regulations and services.  Ms. Grieder writes that our key to economic growth is because we are "pragmatic, fiscally conservative, socially moderate and slightly disengaged", with people that are "tolerant, optimistic, and results-oriented."  We are sometimes viewed as obnoxious right-wingers, but in 2009 Houston became the country's largest city to elect an openly gay mayor.  The book is correct - - "Texans are, ultimately, a pragmatic people."

It will be interesting to see how water resource development and management interfaces with the notions of big, hot, cheap, and right.  In the context of water resources, "bigness" can be a burden (it also produces opportunities).  Half of Texas has historically been water rich with the other half water poor.  But getting rich to poor is difficult - - just driving from east Texas to west Texas takes more than a day.  Also, our geographic bigness produces huge opportunities for population growth.  My part of Texas (North Texas of Dallas and Fort Worth) is expected to grow from six million to almost ten million over the next 20 years.  The Texas population of 26 million is expected to grow by 80% by 2060.

The hot part has gotten the recent attention.  We are hot, dry, and parched over most of the state.  Texas is under water restrictions, in some cases severe, in most parts of the state.  The state's water plan, released last year, recommends spending $57 billion (in 2013 dollars) over the next half-century to ensure there is enough water to go around.  Hot is forcing the state to look north and south.  Texas is suing neighboring states to get more water.  The United States Supreme Court is scheduled to hear arguments in two weeks in one of these cases, in which the authority that supplies water in Fort Worth and fast-growing surrounding communities is demanding more water from Oklahoma.  With abundant natural gas resources and leadership that understands the "water-energy nexus" - - look for the Texas coast becoming the Silicon Valley of desalination technology.  Texas isn't a straight pro-business state.  It is (and will always be) pro-Texas business - - Texas businesses will work hard to solve Texas problems.

Cheap is going to be a challenge given big and hot.  Don't expect Texas to consider wild and expensive ideas, like piping water from the Missouri River.  Texas leadership does understand a simple fact - - water is increasingly becoming a national concern.  Economics will rise and fall on the availability of water, whose price is inexorably marching upward. 

Cheap and right are going to become more intertwined.  The "right" part will allow Texas to look outside the box.  Texas has a long tradition of looking outside the government for support  - - and often finding it (as we are currently doing in the transportation markets).  This predates the Texas revolution and was reinforced by the rise of the cattle kingdoms and the oil booms.  Public-private partnerships are coming to the Texas water markets, but their impact on cheap will be debated.  Despite growing interest in public-private partnerships, these bring no new money to the table that is not available from traditional municipal bonds.  These water public-private partnerships will work only if the public sector makes astute decisions about which risks are best handled by the public sector, and which are not.

Yesterday the New York Times had an excellent story on Texas water problems, Getting Serious About a Texas-Sized Drought.

From the article:

“Texas does not and will not have enough water” in a bad drought, the state’s water plan warned last year. More than two dozen communities could run out of water in 180 days, according to the Texas Commission on Environmental Quality. Looking ahead, the already-dry western half of the state is expected to be hit particularly hard by climate change. State leaders generally accept such projections, even as they question the scientific consensus that humans are a major cause of climate change.
      

Officials from Gov. Rick Perry on down are focused on expanding water supplies. Doing nothing could create “a reputation that Texas is not a business-friendly state,” State Representative Lyle Larson, a Republican, warned fellow lawmakers last month. Bill Hammond, president of the Texas Association of Business, agrees. “Clearly, not having an adequate water supply will harm us in terms of bringing jobs to Texas and is doing so now, already,” he said recently.

 

From the same article and an excellent way to start Texas Water 2013:

Wes Perry, an oilman who doubles as Midland’s mayor, put it this way recently: as valuable as oil and gas are, he said, “we are worthless without water.”