Texas water and the economic miracle are at risk of evaporating

Texas has experienced a “miracle” in the last decade: the economy of the southern U.S. state grew 63% over that period. Fossil fuels have been driving much of the growth, since Texas produces 42% of America’s crude oil and 27% of its natural gas. But water is crucial to this industry, as much of the production comes from fracking. However, in the midst of a mega-drought that has lasted several decades, driven largely by global warming, water has become a source of major concern.

While money continues to pour in, the blows dealt by the drought are not immediately obvious. But in the Rio Grande Valley, the border area with Mexico in the southeastern part of the state, the last sugar mill closed in February due to a lack of water. Citrus crops — Texas is the third largest citrus-producing state — are in jeopardy. And Texas reservoirs are at near historic lows. This summer, the Falcon and Amistad International Reservoirs on the Rio Grande, which provide water to millions of people, were at 13% and 25% capacity, respectively.

Although periods of heavy rainfall may refill the reservoirs, the heat quickly dries them out again. Climate change is expected to further increase temperatures and alter rainfall patterns throughout the Southeast, exacerbating the drought and its effects. Comparable droughts, such as one during the 1950s, were caused primarily by a lack of rain. With climate change, however, the key factor is high temperatures, not an actual lack of rain, and this exacerbates the risks of such prolonged droughts. The effects of a severe drought can have enormous consequences on agricultural ecosystems and water supplies, including reduced productivity and depletion of groundwater reserves and reservoirs that supply freshwater to cities and towns.

This is why the update to the U.S.-Mexico bilateral agreement on water sharing in this area is so important. First signed in 1944, this treaty obliged Mexico to deliver a certain amount of water to Texas from six Rio Grande tributaries every five years. Announced mid-November, the new version allows it to also use water from alternative sources or from shared reservoirs. In the current cycle, which ends in October 2025, Mexico has so far delivered on less than one-third of this agreement, exacerbating water shortages for Texas farmers. The amendment aims to alleviate farmers’ concerns and support water availability for the upcoming planting season.

The agreement also addresses a recent offer by Mexico to supply water from another source, which had raised concerns among Texas farmers wary of possible countervailing measures that could affect their own water supplies. Mexico had offered the water in October, but the irrigation district authorities that supply water to farmers and ranchers were hesitant to accept the offer. They worried that receiving water now would reduce their critical supply, needed for the next agricultural season. The Texas Commission on Environmental Quality, the state agency that decides how to allocate the water, has not yet given the green light for it to be used.

But Texas has no choice but to accept the amendment, negotiated by the federal government, which states that the U.S. will recognize water provided by Mexico from the San Juan River despite the fact it is not one of the six tributaries included in the original agreement. This is a position that Texas Governor Greg Abbott sharply criticized when he ordered the state to accept the water: “Texas stands firm in its position that Mexico’s commitment can only be satisfied by water from one of the six tributaries named in the 1944 treaty,” he declared.

The Rio Grande Valley situation is mirrored in different parts of the state and has the potential for profound economic repercussions in the short, medium and long term. A recent report by Rice University’s Baker Institute Center for Energy Studies, commissioned by the non-governmental public policy organization Texas 2036, has flagged up Texas’ vulnerability.

According to the study’s estimates, if a precipitation drought similar to that of the 1950s were to occur now, Texas would suffer annual losses of $160 billion in GDP by 2030, with more than 800,000 lost jobs, and an exodus of hundreds of thousands of people. According to the report, the drought would also affect the state’s ability to generate power, with a daily cost in economic damages of millions — perhaps billions — of dollars from very possible rolling blackouts.

The report warns that Texas’ water problems could also be exacerbated by infrastructure issues. Without significant infrastructure investments, the study says, deteriorating water and wastewater systems will contribute to losses of nearly $320 billion in GDP, “an amount equal to the size of the state’s current two-year budget.” It further estimates that, over the next 50 years, the state will have to invest $59 billion in new water supplies, $74 billion in repairing deteriorated water systems and $21 billion in repairing broken wastewater systems.

Weeks away from the beginning of a new presidency in Washington, the economic miracle of Texas has clearly inspired the economic-energy model advocated by President-elect Donald Trump — his famous “drill, baby, drill” slogan, which refers to boosting fossil fuel production. But the situation regarding the future of Texas’ water supply may serve as a warning.

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