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A new report paints a bleak picture of water demands in the Southwest outstripping supplies in the coming decades, and suggests some farmers in Utah and New Mexico would be better off selling water instead of using it to grow low value-crops such as cotton and grains. By Brendon Bosworth, 3-08-11

 An aerial view of New Mexico farmland. Photo by Flickr user <a target=
 An aerial view of New Mexico farmland. Photo by Flickr user laureskew.

The future of water supplies in the Southwest – Arizona, California, Nevada, New Mexico, and Utah – has been under close scrutiny by scientists, economists and policymakers. Already, the amount of water available each year from rain and snowfall is less than what is being used by farmers and homeowners in these states, with the deficit made up by pumping groundwater from underground sources.

Rising temperatures in future – a result of climate change – are predicted to put further stress on water reserves. As a new report, “The Last Drop: Climate Change and the Southwest Water Crisis,” by economists Frank Ackerman and Elizabeth Stanton from the Stockholm Environment Institute, bluntly states, “water demand in the Southwest will outstrip water supply in the near future.”

Water from the already strained Colorado River, which supplies 18 percent of the region’s water, and groundwater supplies, which account for 35 percent of water use, is projected to be unable to meet the needs of a growing population with increasing incomes in the next 100 years. Climate change exacerbates the problem. The researchers emphasize that “continuing the current trend in global greenhouse gas emissions will make the cost of the next century’s projected water shortage at least 25 percent higher.”

Ackerman and Stanton highlight that close to four-fifths of the Southwest’s water is used for agriculture. A fifth goes to homes and commercial businesses, while the electricity, mining and industrial sectors each use less than 1 percent.

Southwest states are responsible for 20 percent of agriculture’s share of the national GDP, with California making up 16.4 percent by itself. Even though agriculture drains nearly 80 percent of Southwestern water supplies, it makes up a small piece of the GDP pie, contributing just 1 percent of Southwest GDP. Overall, farming contributed 0.8 percent of U.S. GDP in 2005, according to the report.

Prioritizing Higher Value Crops Could Be Key

The economists suggest that cutting back on crops that don’t fetch enough value for the amount of water used to grow them is one way to help curb the growing demands for water. This, they write, would “have little impact on U.S. or world agricultural markets, but a big impact in balancing water use with water supply in the Southwest.”

Ackerman and Stanton ranked Southwestern crops based on their dollar value per acre-foot of water used to grow them. (An acre-foot of water is considered enough to meet the needs of two four-person families for a year).

Nursery and greenhouse products came out on top, earning $28,000 per acre-foot. Vegetables, fruits and nuts generally brought in sales above $1,000 per acre-foot. Dairy and cattle (with water for hay to feed them factored in) came in at $900 per acre-foot. However, there was a huge discrepancy between California, where dairy and cattle earn more than $1,200 per acre-foot, and Utah, where they earn less than $250 per acre-foot.

Cotton, wheat, corn, rice and other grains scored low, with values of under $500 per acre-foot.

Hay is somewhat of an outlier, since across the Southwest it fetches the lowest value per acre-foot of water used – $121 on average. But, as the researchers emphasize, it’s important since it’s grown chiefly to feed cattle and dairy animals.

Using data from the National Agricultural Statistics Service, Ackerman and Stanton calculate that hay saps 42 percent of the Southwest’s agricultural water, while dairy and cattle account for 31 percent of total agricultural sales in the region. This relationship differs by state.

In Utah 94 percent of agricultural water goes to hay growing, but cattle and dairy sales only bring in 45 percent of the state’s total agricultural sales.

In New Mexico the ratio is more evenly weighted. Seventy-six percent of the state’s agricultural water is funneled to hay growing, while dairy and cattle account for 74 percent of total agricultural sales.

“Hay is more complicated than the other crops. We’re not making any direct recommendation there,” said Stanton in a telephone interview.

However, Stanton said hay is usually not transported over long distances and tends to be sold through local markets, but looking at selling it more widely is something that could be considered. She also explained that there is room for research into more efficient uses of water in hay farming.

“This is an area where so much water is used in such dry areas that it seems like a priority area for government extension services and universities to get involved and say, ‘How can we grow this hay with less water?’” she said.

According to Ackerman and Stanton, “in most Southwest states, farming cotton, grains, oilseeds and dry beans and peas brings in less value per acre-foot of water than would the sale of the water itself.” In theory, this means some farmers would be better off selling water instead of using it to grow their crops, although in reality they seldom have the rights to do so.

While the cost of water varies for different users in different states, according to water rights, allocations and subsidies, the authors highlight that some municipalities pay $2,000 or even $3,000 per acre-foot to supply water to homes and businesses. In Utah utilities have paid up to almost $5,200 per acre-foot, according to the report.

The report also shows how different states exert different demands on water supplies. Utah, for instance, “uses more domestic water per capita than any state but Nevada per day.” New Mexico uses the least domestic water per capita in the Southwest, which means it ranks 16th in the country for domestic water usage. At the same time, New Mexico uses close to 90 percent of its water supply on agriculture.

The researchers suggest that “eliminating the lowest value-per-unit-water crops (excluding hay) would lower agricultural water use by 24 percent, while reducing farm sales by less than 5 percent.”

“We can’t say anything about the particular circumstances of particular farms, but the suggestion would be to switch from a lower value crop to a higher value crop,” said Stanton. “And these aren’t just crops that are lower value in terms of per-acre foot [of water used]. These are also lower value crops in general.”

In strictly financial terms, Ackerman and Stanton calculate that by 2050 increasing water shortages will cost the Southwest between $7 billion and $15 billion – about 0.3 to 0.6 percent of the region’s GDP for 2009. By 2100 projected costs hit between $9 billion and $23 billion.

“Adaptation,” they write, is “a bargain that the region cannot afford to ignore.”

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