Is Drought Risk In The American West An Economic Threat?
James Picerno | Mar 27, 2015 07:54AM ET
The historic and ongoing drought in California is getting harder to ignore in terms of its potential impact on the US economy down the road. The Golden State, after all, boasts the country’s largest GDP among the 50 states, representing a bit more than 13% of US output, based on report from scientists writing for the online journal ScienceAdvances warns of an “unprecedented 21st century drought risk in the American Southwest and Central Plains.”
Scientific hyperbole? Maybe, but the longer the drought persists, the higher the risk of macro blowback in some degree. The immediate challenge is the dwindling resources for generating power from water. “For the areas of the state that have been able to rely on inexpensive hydro, and then they have to purchase more expensive energy off the grid — those costs are an impact that will be passed along over time,” new study from the Pacific Institute. The bottom line: the fading water supply has cost California $1.4 billion so far, the group estimates.
By some accounts, California’s reservoirs have been reduced to roughly a one-year supply. That doesn’t mean that the water will literally run out in a year, but it’s a stark reminder that the clock is ticking. The solution, of course, is precipitation… lots of it. But that’s nowhere on the horizon, at least in quantities that will make a difference any time soon. Or so current projections advise. In the meantime, there’s a guessing game about what it all means in economic terms and how long the dry spell will last.
As for where we stand at the moment, here’s a short list of resources for getting up to speed on drought risk in the American West:
● How Bad Is California’s Drought? Hint: it’s pretty bad | Pacific Institute
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