Growing Texas’ water markets will be essential to minimizing the impacts of water scarcity facing the state in the near future, according to a new environmental analysis by The Nature Conservancy of Texas — and legislators should look to the robust management of the Edwards Aquifer for inspiration.
“Water markets” are just what they sound like — a largely free market for buying and selling water to competing interests, such as cities, agriculture operations and, more recently, to protect the environment. For example, the Edwards Aquifer Authority sells pumping permits to those who utilize the aquifer’s water and can enact pumping restrictions on those permit holders to protect endangered species within the aquifer.
While water markets have been used in Texas for the past 100 years to reallocate regional water supplies, the nonprofit Nature Conservancy of Texas argues in its report released Tuesday that expanding and bolstering those markets with key legislation could have a significant impact in securing Texas’ water future.
By 2070, Texas is expected to face a statewide water shortage equivalent to an estimated $153 billion in annual economic losses, according to the Texas Water Development Board. It also continues to face unmet water demands to keep enough water in a natural body for wildlife, despite past legislative efforts to establish flow protections. Environmental flows are the amount, timing and quality of streamflows required to sustain ecosystems and the people who depend on them.
Growing and strengthening water markets could help lessen the effects of both of these issues, said the report’s co-author, Kyle Garmany, a hydrologist at The Nature Conservancy.
“The Legislature has already made significant investments in Texas water markets … [such as] the Texas Water Trust and Texas Water Bank,” Garmany told the San Antonio Report. “With this report, what we’re doing is calling on Texas lawmakers to further strengthen and scale water markets to protect our state’s natural heritage and economy.”
The Texas Water Bank, which includes the Texas Water Trust, is managed by the Texas Water Development Board. The bank facilitates the marketing and transfer of water and water rights, and the trust was created as a program within the Texas Water Bank. The trust can hold water rights dedicated to environmental needs such as the Edwards Aquifer’s spring flow requirements.
As water use shifts in Texas — municipal demand is projected to surpass irrigation demand by 2060 — expanded water markets could help cities meet some of their additional needs, the report says, by allowing farmers to sell or lease water their crops don’t need to cities for a dependable source of income.
Expanded markets could also allow for more “environmental” water transactions — agreements that pay a farmer or irrigator to not use their irrigation system for a set period of time, which would allow that water to remain in its natural body, helping that environment.
The report identifies the Edwards Aquifer and the Rio Grande water markets as thriving examples that state lawmakers can look to, Garmany said.
The San Antonio Water System, the City of San Antonio and the Edwards Aquifer Authority already utilize these types of transactions (often in partnerships with nonprofits such as The Nature Conservancy) to help protect the Edwards Aquifer and support the area’s growth.
The Edwards Aquifer Authority, whose jurisdiction spans the eight counties that encompass the aquifer, requires permit holders — such as the San Antonio Water System — to pay a water rights fee that goes toward the authority, which is utilized to maintain the aquifer’s health and to study the aquifer.
Another example of a water market that is not mentioned in the report is the Vista Ridge project, noted SAWS President and CEO Robert Puente.
SAWS pays the Post Oak Savannah Groundwater Conservation District a permit fee to allow it to pump roughly 56,000 acre-feet of water per year through a 142-mile pipeline to San Antonio from the Carrizo and Simsboro aquifer formations. The project was built and is managed by Canada-based EPCOR but eventually will be handed off to the City of San Antonio.
“Vista Ridge is another classic example of bringing in the private sector to pay for the infrastructure and financing,” said SAWS President and CEO Robert Puente, “and having the public sector essentially be the buyer.”
The report says that despite the strength of the Rio Grande and Edwards Aquifer water markets, others in Texas lag behind. That’s due in part to the state’s lack of a centralized water grid, which would allow water to be transferred more easily; the regional nature of water scarcity; spotty water rights enforcement; and the monopolization of power and water by river authorities, which the report says decreases market activity.
To mitigate these challenges and further develop the state’s water markets, legislative changes are needed.
The report makes several recommendations. These include allotting more state funding to the Texas Water Trust and Texas Water Bank, and transferring the Texas Water Trust to the Texas Parks and Wildlife Department. This would help these programs to hire additional staff who could promote and manage the bank and trust, the report said.
The report also recommends expanding the state’s watermaster program, which helps allocate water between users to ensure water rights compliance; funding additional studies on groundwater-surface water interaction; and expediting the approval process for permit amendments to short-term leases, among other findings.
For this legislative session The Nature Conservancy has primarily been focused on legislative efforts to expand the state’s water infrastructure. However, the report’s proposed actions will be a priority for future sessions, Garmany said.
State lawmakers are on track to approve billions of dollars that will finance new water supply projects and upgrades to water infrastructure, specifically benefiting rural communities.