US West prepares for possible 1st water shortage declaration

Sam Metz – April 19, 2021

CARSON CITY, Nev. (AP) — The man-made lakes that store water supplying millions of people in the U.S. West and Mexico are projected to shrink to historic lows in the coming months, dropping to levels that could trigger the federal government’s first-ever official shortage declaration and prompt cuts in Arizona and Nevada.

The U.S. Bureau of Reclamation released 24-month projections this week forecasting that less Colorado River water will cascade down from the Rocky Mountains through Lake Powell and Lake Mead and into the arid deserts of the U.S. Southwest and the Gulf of California. Water levels in the two lakes are expected to plummet low enough for the agency to declare an official shortage for the first time, threatening the supply of Colorado River water that growing cities and farms rely on.

It comes as climate change means less snowpack flows into the river and its tributaries, and hotter temperatures parch soil and cause more river water to evaporate as it streams through the drought-plagued American West.

The agency’s models project Lake Mead will fall below 1,075 feet (328 meters) for the first time in June 2021. That’s the level that prompts a shortage declaration under agreements negotiated by seven states that rely on Colorado River water: Arizona, California, Colorado, Nevada, New Mexico, Utah and Wyoming.

The April projections, however, will not have binding impact. Federal officials regularly issue long-term projections but use those released each August to make decisions about how to allocate river water. If projections don’t improve by then, the Bureau of Reclamation will declare a Level 1 shortage condition. The cuts would be implemented in January.

https://www.sfgate.com

Water Futures to Start Trading Amid Growing Fears of Scarcity

Newsmax – December 7, 2020

Water joined gold, oil and other commodities traded on Wall Street, highlighting worries that the life-sustaining natural resource may become scarce across more of the world.

Farmers, hedge funds and municipalities alike are now able to hedge against — or bet on — future water availability in California, the biggest U.S. agriculture market and world’s fifth-largest economy. CME Group Inc.’s January 2021 contract, linked to California’s $1.1 billion spot water market, last traded Monday at 496 index points, equal to $496 per acre-foot.

The contracts, a first of their kind in the U.S., were announced in September as heat and wildfires ravaged the U.S. West Coast and as California was emerging from an eight-year drought. They are meant to serve both as a hedge for big water consumers, such as almond farmers and electric utilities, against water prices fluctuations as well a scarcity gauge for investors worldwide.

“Climate change, droughts, population growth, and pollution are likely to make water scarcity issues and pricing a hot topic for years to come,” said RBC Capital Markets managing director and analyst Deane Dray. “We are definitely going to watch how this new water futures contract develops.”

The United Nations has long warned that human-driven climate change is leading to severe droughts and more flooding, making water availability increasingly less predictable. In California, the most recent acute dry spell stretched from December 2011 until March of last year, according to the U.S. Drought Monitor. The most dire effects took hold in July 2014, with 58% of the state’s land suffering “exceptional drought,” leading to crop and pasture losses and other water emergencies.

https://www.newsmax.com