Colorado River Water and Our Economy
We knew the water of the Colorado River Basin was critical to our economy and lifestyle, but now we know by how much.
Practitioners of the dismal science at ASU’s W.P. Carey School of Business, L. William Seidman Institute, led by economist sleuth, Dr. Timothy James have completed a 
study on what water from the Colorado River means to the economies of the seven states, which access its waters. As you might imagine, “the lifeblood of the region” according to Dr. James and his colleagues is mightily important for each state’s economic well-being. In ASU’s theoretical economic experiment, if Colorado river water was to suddenly become unavailable for a single year, the loss in economic activity for the region and for each of the seven states would be devastating.
study on what water from the Colorado River means to the economies of the seven states, which access its waters. As you might imagine, “the lifeblood of the region” according to Dr. James and his colleagues is mightily important for each state’s economic well-being. In ASU’s theoretical economic experiment, if Colorado river water was to suddenly become unavailable for a single year, the loss in economic activity for the region and for each of the seven states would be devastating.
The study, reported in today’s Wall Street Journal estimates that loss of the water would reduce the region’s gross state product by $1.4 trillion. Not surprising, California with the biggest straw would see its GSP lowered by $657.5 billion. Arizona’s GSP would be lower by $185 billion – a 60 percent drop-off. The seven state region would lose 16 million jobs, of which 2 million would be lost in Arizona.
It’s unlikely the spigot would be shut completely (at least probably not in our lifetime). But, if we lost a portion of the Colorado River – say by 25 percent, which under our persistent drought conditions could well be likely, Arizona’s GSP would fall by $46 billion and employment would fall by a half million. To put this in perspective, during the great recession of 2008-2009, Arizona lost about 300 thousand jobs. It’s been a slow recovery from the economic recession. Imagine how difficult economic recovery will be if we lose our most precious resource.
Is it time to move?
Not yet. We’ll still have water to drink and to supply most economic endeavors. But, the ASU study provides us with a cautionary tale, if only hypothetical, of why we should elevate water -- its value, and its smart use -- to the top of our policy agenda.