U.S. Bureau of Reclamation

Persistent drought and climate change affect water and energy costs, and hence choices made by farms, cities and industrial water and energy users, as well as energy and water providers’ operations. This project examines potential climate change and variability adaptation strategies related to water and energy in the Colorado River and Rio Grande Basins, including northwestern Mexico. Researchers are investigating how climate influences the market price of water and developing a menu of water and energy supply reliability tools with guidelines for using these tools.

Through engagement with a variety of agencies and stakeholders, we are developing methods, resources, and tools for incorporating climate change and non-stationarity into planning efforts. Through this project and leveraged activities, we are: a) developing and applying scenario planning to address uncertainty of climate change and other stressors; b) evaluating needs and approaches for system-wide climate literacy training of National Park staff; c) identifying the needs and capacities of the water resources sector related to climate change and non-stationarity; d) evaluating methods for combining paleoclimatological information with historical observations and climate change projections; e) communicating uncertainty of projections of Colorado River flows; f) supporting the National Climate Assessment.

To date, we have demonstrated a practical process for using scenario planning to consider climate change in the context of multiple stressors. the approach is now being used within the National Park Service. We have also developed a comprehensive curriculum for improving climate change literacy in the National Park Service.

Several recent studies estimate that the future streamflow of the Colorado River will decline due to drought and climate change. However, estimates from these projections range from less than 10% to a 45% decline by 2050. This cross-RISA research team explored why this large range exists and suggested ways that scientists and other stakeholders could apply these projections for future research and adaptation efforts.

Although the projections show drastically different amounts of streamflow reduction, it is still evident across all studies that Colorado River streamflow will be reduced due to climate change. Additionally, current reconstructions of the worst possible drought for the Colorado River are underestimates of the severity and duration of drought that has occurred, and that could occur, in the Colorado River Basin.

This project examines the potential for market mechanisms to facilitate voluntary reallocation of scarce water across different uses, specifically from agricultural to environmental purposes. It considers the scope for using reverse water auctions to obtain water for riparian restoration. This includes study of the economic theory behind reversed auctions as well as lessons from applications. It also examines the scope of the USDA Conservation Reserve Enhancement Program (CREP) to complement state and local programs for environmental water acquisitions.

Researchers at the University of California, Riverside have access to proprietary data on prices and quantities of water market trades. A hypothesis of the CLIMAS research is that USDA data on crop rental rates can be used to assess what likely water transfer prices will be. We plan to collaborate in the coming year, combining data to test this hypothesis.

In spite of harsh conditions created by persistent drought, populations in southwestern states are growing, placing greater burdens on the water supply. Resource managers and policy-makers face the daunting task of ensuring an adequate water supply for the states’ thirsty residents. There are different water supply options when faced with drought. One method of augmenting the water supply involves voluntary water transfers, negotiated between those who possess secure dry-year supplies and those who want to improve the dry-year reliability of their water. Policy-makers can opt to expand water supply through the use of water banks, spot markets, and dry-year options contracts.

To shed light on the economic behavior of water markets during droughts, CLIMAS researchers sought to identify the effects of drought on water prices in three major western water markets: the Colorado-Big Thompson (CBT) project market, the Arizona Type II water market, and the Central Arizona Project (CAP) market. The CBT project is one of the largest and most complex of the U.S. Bureau of Reclamation water projects, diverting water from the western to the eastern slope of the Rocky Mountains. The Arizona Type II market refers to groundwater rights in central and southern Arizona that can be used for non-irrigation purposes only and can only be transferred within a specified, geographically defined management area (referred to as an Adative Management Area). The Central Arizona Project (CAP) refers to the well-known project that distributes allocations of Colorado River water to Arizona tribes, municipalities, and industrial users. The uses of this water are varied, but unlike the CBT and Arizona Type II markets, prices are not freely negotiated.