Industrialized watersheds have elevated water risk and limited opportunities to mitigate risk through water trading
Businesses are increasingly concerned about water scarcity and its financial impacts, as well as competing needs of other stakeholders and ecosystems. Industrialized watersheds may be at more serious risk from water scarcity than previously understood because industrial and municipal users have inel...
| Autores principales: | , , , , , , , , |
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| Formato: | Journal Article |
| Lenguaje: | Inglés |
| Publicado: |
Elsevier
2015
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| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/65950 |
| _version_ | 1855527369039675392 |
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| author | Reddy, Sheila MW McDonald, Robert I Maas, Alexander S Rogers, Anthony Girvetz, Evan Hartunian Molnar, Jennifer Finley, Tim Leathers, Gená DiMuro, Johnathan L. |
| author_browse | DiMuro, Johnathan L. Finley, Tim Girvetz, Evan Hartunian Leathers, Gená Maas, Alexander S McDonald, Robert I Molnar, Jennifer Reddy, Sheila MW Rogers, Anthony |
| author_facet | Reddy, Sheila MW McDonald, Robert I Maas, Alexander S Rogers, Anthony Girvetz, Evan Hartunian Molnar, Jennifer Finley, Tim Leathers, Gená DiMuro, Johnathan L. |
| author_sort | Reddy, Sheila MW |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Businesses are increasingly concerned about water scarcity and its financial impacts, as well as competing needs of other stakeholders and ecosystems. Industrialized watersheds may be at more serious risk from water scarcity than previously understood because industrial and municipal users have inelastic demand and a high value for water. Previous water risk assessments have failed to sufficiently capture these economic aspects of water risk. We illustrate how hydro-economic modeling can be used to improve water risk assessments at a basin scale and we apply the methodology to the industrialized Brazos River Basin (85% municipal and industrial withdrawals) and consider implications for The Dow Chemical Company׳s Freeport Operations in Texas, US. Brazos water right holders pay only operating and maintenance costs for water during normal periods; however, when shortages occur, leasing stored water or reducing production may be the only mitigation option in the short-run. Modeling of water shortages and the theoretical cost of leasing water under nine combined scenarios of demand growth and climate change suggests that water lease prices to industry could increase by 9–13X. At best, a more developed water rights and storage lease market could result in lower lease prices (2–3X); however, given that transactions would be limited it is more likely that prices would still increase by 4–13X. These results suggest that markets are unlikely to be a robust solution for the Brazos because, in contrast to other watersheds in the Western US, there is little reliable water to trade from low value users (agricultural) to high value users (industry and municipalities). Looking at demand trends across the contiguous US as an indicator of water risk, 2% of watersheds have municipal and industrial demands that outstrip total surface and ground water supplies and in these watersheds industry has historically paid higher lease prices for water. This study provides new ways for businesses to characterize water risk and forecast water prices that uncovers hidden water risk and highlights the positive but diminished mitigating effects of water markets in a highly industrialized basin. |
| format | Journal Article |
| id | CGSpace65950 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2015 |
| publishDateRange | 2015 |
| publishDateSort | 2015 |
| publisher | Elsevier |
| publisherStr | Elsevier |
| record_format | dspace |
| spelling | CGSpace659502025-03-13T09:44:22Z Industrialized watersheds have elevated water risk and limited opportunities to mitigate risk through water trading Reddy, Sheila MW McDonald, Robert I Maas, Alexander S Rogers, Anthony Girvetz, Evan Hartunian Molnar, Jennifer Finley, Tim Leathers, Gená DiMuro, Johnathan L. water availability climate change ecosystem services water resources markets watersheds disponibilidad del agua cambio climático servicios de los ecosistemas recursos hídricos mercados cuencas Businesses are increasingly concerned about water scarcity and its financial impacts, as well as competing needs of other stakeholders and ecosystems. Industrialized watersheds may be at more serious risk from water scarcity than previously understood because industrial and municipal users have inelastic demand and a high value for water. Previous water risk assessments have failed to sufficiently capture these economic aspects of water risk. We illustrate how hydro-economic modeling can be used to improve water risk assessments at a basin scale and we apply the methodology to the industrialized Brazos River Basin (85% municipal and industrial withdrawals) and consider implications for The Dow Chemical Company׳s Freeport Operations in Texas, US. Brazos water right holders pay only operating and maintenance costs for water during normal periods; however, when shortages occur, leasing stored water or reducing production may be the only mitigation option in the short-run. Modeling of water shortages and the theoretical cost of leasing water under nine combined scenarios of demand growth and climate change suggests that water lease prices to industry could increase by 9–13X. At best, a more developed water rights and storage lease market could result in lower lease prices (2–3X); however, given that transactions would be limited it is more likely that prices would still increase by 4–13X. These results suggest that markets are unlikely to be a robust solution for the Brazos because, in contrast to other watersheds in the Western US, there is little reliable water to trade from low value users (agricultural) to high value users (industry and municipalities). Looking at demand trends across the contiguous US as an indicator of water risk, 2% of watersheds have municipal and industrial demands that outstrip total surface and ground water supplies and in these watersheds industry has historically paid higher lease prices for water. This study provides new ways for businesses to characterize water risk and forecast water prices that uncovers hidden water risk and highlights the positive but diminished mitigating effects of water markets in a highly industrialized basin. 2015-09 2015-05-08T18:43:17Z 2015-05-08T18:43:17Z Journal Article https://hdl.handle.net/10568/65950 en Open Access Elsevier Reddy, Sheila M.W.; McDonald, Robert I.; Maas, Alexander S.; Rogers, Anthony; Girvetz, Evan H.; Molnar, Jennifer; Finley, Tim; Leathers, Gená; DiMuro, Johnathan L.. 2015. Industrialized watersheds have elevated water risk and limited opportunities to mitigate risk through water trading . Water Resources and Industry. 11: 27-45. |
| spellingShingle | water availability climate change ecosystem services water resources markets watersheds disponibilidad del agua cambio climático servicios de los ecosistemas recursos hídricos mercados cuencas Reddy, Sheila MW McDonald, Robert I Maas, Alexander S Rogers, Anthony Girvetz, Evan Hartunian Molnar, Jennifer Finley, Tim Leathers, Gená DiMuro, Johnathan L. Industrialized watersheds have elevated water risk and limited opportunities to mitigate risk through water trading |
| title | Industrialized watersheds have elevated water risk and limited opportunities to mitigate risk through water trading |
| title_full | Industrialized watersheds have elevated water risk and limited opportunities to mitigate risk through water trading |
| title_fullStr | Industrialized watersheds have elevated water risk and limited opportunities to mitigate risk through water trading |
| title_full_unstemmed | Industrialized watersheds have elevated water risk and limited opportunities to mitigate risk through water trading |
| title_short | Industrialized watersheds have elevated water risk and limited opportunities to mitigate risk through water trading |
| title_sort | industrialized watersheds have elevated water risk and limited opportunities to mitigate risk through water trading |
| topic | water availability climate change ecosystem services water resources markets watersheds disponibilidad del agua cambio climático servicios de los ecosistemas recursos hídricos mercados cuencas |
| url | https://hdl.handle.net/10568/65950 |
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