Why so few water markets in the West?

The Four Corners Generating Station in northwestern New Mexico draws water from the San Juan River. 2014 photo/Allen Best

The Four Corners Generating Station in northwestern New Mexico draws water from the San Juan River. 2014 photo/Allen Best

Water intensity of energy but also why the West has so few water markets

by Allen Best

The value of water depends upon context. To somebody in a desert, absent a drink for three days, nothing could be more valuable. In a flood, the value of the water would lie in its absence.

In Western states, where scarcity more generally prevails, we’re still fumbling with how much value to assign water. Stacy Tellinghuisen brings this observation to her work in evaluating water issues at the nexus with energy for Western Resource Advocates, an environmental non-profit. WRA in 2011 issued a report “Every Drop Counts: Valuing the Water Used to Generate Electricity.”

Stacy Tellinghuisen

Stacy Tellinghuisen

In a conference call sponsored by The Biomass Monitor, Tellinghuisen said that one of the few water markets exists in northern Colorado. There, in the area north from Denver, many cities and farms get water diverted from the Colorado River via an elaborate diversion structure called the Colorado-Big Thompson project. Completed after World War II, the C-BT was intended to provide water to expand agriculture. Now, the water has mostly been purchased for municipal use in the Boulder-Greeley-Fort Collins area.

Water prices spiked between 2000 and 2008, said Tellinghuisen, reviewing the report that WRA did several years ago. “The price increased significantly, and that was largely due to significant drought in 2001 and 2002, combined with additional population growth in the region,” she said.

“I think that trend is a really relevant when you think about climate change and continued municipal growth across the West,” she added.

Why does this more highly developed market exist in northern Colorado? And why is it absent elsewhere?

Tellinghuisen explained that she thinks it’s because of the unusual nature of the C-BT. The project was finished at one time, water becoming available in the form of shares. This is in contrast with water availability in so many other places governed by the doctrine of prior appropriations. Appropriation dates vary greatly, as do allotments and other factors.

Tap fees are one way of measuring the value of water. They are the costs of getting the right to hook into the water-delivery infrastructure of a city or other jurisdiction. In theory, tap fees would be more-or-less uniform across a metropolitan area, just as the price of bread varies only marginally from one store to the next. In practice, said Tellinghuisen, there is great variability. She cited the example of Denver, which charges $5,000 for a tap fee, as compared with one of Boulder’s suburbs, where the cost is $25,000.

Even within individual cities, water can be valued very differently. Southern Nevada Water Authority has specified rates for existing users. How then to explain the current efforts by Las Vegas to extend pipelines hundreds of miles away to tap aquifers along the Nevada-Utah border? The cost of that water would necessarily be much higher.

Water consumed in generating electricity also varies greatly. Coal-fired power plants used significant quantities, typically 500 to 600 gallons per megawatt of production, while nuclear power plants use on the order of 700 gallons per megawatt. Combined-cycle natural gas plants use less, 180 to 200 gallons per megawatt.

Dry-cooling techniques for fossil-fueled generation can reduce water use by up to 90 percent, and more electrical production now comes from natural gas, instead of coal, resulting in a net reduction in the water footprint of energy.

In the renewable sector, biomass plants vary greatly, between 400 and 500 gallons per megawatt. Wind and solar use virtually none, except for concentrated solar—which uses a lot of water.

Solar panels, such these at the Garfield County Airport near Rifle, Colo., need virtually no water, once they are manufactured. Photo/Allen Best

Solar panels, such these at the Garfield County Airport near Rifle, Colo., need virtually no water, once they are manufactured. Photo/Allen Best

Recent years have brought greater awareness of the water intensity of various forms of electrical production. Investor-owned utilities, the primary providers of electricity in Colorado and other states, are governed by state-appointed public utility commissions, and those utilities in recent years have begun describing water impacts in the resource-planning documents they are required to submit to regulators.

Arizona Public Service was among the first to begin disclosing water impacts, but others now do so, too. Statutes delegating authority to PUCs provide authority to consider water, said Tellinghuisen, but there’s also a broadening understanding of the water-energy nexus among energy companies and government regulators.

Why does it matter?

“It comes back to a zero-sum game,” said Tellinghuisen. Virtually all rivers in the West are tapped out. For expansion of water use for one purpose, other water uses must be curtailed. While there are laws that govern the transfer, meaning a new power plant couldn’t just seize water, causing cities and farms to go dry, it is part of societal choices. WRA obviously thinks that the minimal water use of renewables is a major argument for increased renewables.

 

 

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About Allen Best

Allen Best is a Colorado-based journalist. He publishes a subscription-based e-zine called Mountain Town News, portions of which are published on the website of the same name, and also writes for a variety of newspapers and magazines.
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