Economic Impacts of the 2019 Drought Contingency Plan in the Lower Colorado River Basin: Water, Energy, and Recreation

Abstract

Climate change will reduce the availability of Colorado River Water (CRW) in the Lower Colorado River Basin (LCRB) and hydroelectric power generation at Lakes Powell and Mead. Efforts to stabilize reservoir levels in the presence of interdecadal drought are based primarily on shortages in water deliveries to LCRB states and Mexico per the 2007 Interim Guidelines (2007-IG) and later the LCRB Drought Contingency Plan (2019-DCP). When climate effects are considered, the expected energy generation (lakes Mead and Powell combined) is projected to decrease from 6500 GWH in 2024 to 5400 GWH in 2060, despite a 400–600 GWH annual increase consequent to 2019-DCP measures. 2019-DCP shortages decrease cumulative water deliveries to the LCRB states and Mexico during 2022–2060, increasing evaporative losses from lakes Mead and Powell. The cumulative present value of LCRB water deliveries during 2022–2060 dwarfs that of hydroelectric energy benefits. However, the differences in benefits under the two sets of measures reveal that the economic impact of water and energy are of the same order of magnitude. Under the 2019-DCP rules, energy production and recreation benefits are positive in all but one scenario, while overall water deliveries are reduced in two-thirds of all scenarios. The median difference in present value benefits under 2019-DCP compared with the 2007-IG is about +$100 M, but the full range of outcomes for all climate-related scenarios investigated is approximately ±$1 B. Mexico and the seven US states that take water from the Colorado River system have opened negotiations to reallocate Colorado River water ahead of 2026. The process will be contentious due to competing interests and uncertainties related to the projected flows and associated benefits. Here, the present values of Colorado River system water deliveries, hydroelectric energy generation at Lakes Powell and Mead and associated recreational benefits are projected through 2060. For purposes of comparison, the operations analyzed conform to requirements of either the 2007 Interim Guidelines (2007-IG) or the 2019 Drought Contingency Plan (2019-DCP). This offers a baseline and framework for economic evaluation of benefits resulting from river management alternatives beyond those of the 2007-IG and 2019-DCP. Results indicate that the present worth of water deliveries in the Lower Colorado River Basin (LCRB) during 2022–2060 will clearly exceed that of energy generation at Lakes Powell and Mead. However, differences in revenue show that the economic DCP-impact of water and energy are of the same order of magnitude (and larger than recreational benefits). The analysis and results described provide an avenue for proposing, comparing, and selecting rational river management measures in the presence of unavoidable uncertainties and competing interests.