A techno-economic and policy analysis of integrated, cross-sectoral water management and conservation

Increasing demands on water resources from growing populations and industries coupled with periodic, yet severe, drought have revealed vulnerabilities in water supplies around the world. However, in some locations, partnerships between water rights holders (such as the agricultural sector) and those with water needs and available capital (such as the energy sector) could improve water efficiency. A market with cross-sectoral participation that creates incentives for reduction of fresh water consumption could improve water availability for many stakeholders. This work lays out the methodology of evaluating these hypotheses with an original water and cost model that is developed and demonstrated using three case studies in the Lower Rio Grande Basin, the Brazos River Basin, and the Permian Basin in Texas with the intent that the findings would be generally applicable to other regions. This work uses an integrated, geographically resolved allocation model to evaluate water market participants and management strategies that could be implemented to encourage water demand reductions to supply new water users. Best practices are evaluated for increasing water availability through market mechanisms based on costs, benefits, and technological viability. The work closes with a discussion of regional variations to this integrated approach. Results of this analysis show that, in the Rio Grande Basin, up to 900 million gallons per year could be made available through 15% water conservation in irrigation areas. The water would supply approximately 30% of the annual hydraulic fracturing demand for 2016 and 2017 in the area. Reductions would also improve reliability for irrigators. In the Brazos Basin, results show that low-cost conservation scenarios could lead to savings of up to 4.1 billion gallons of water per year with mixed effects on reliability and resilience in the basin. The price paid for water used in oil and gas operations would not offset conservation strategies in every scenario, but agriculture and some municipal strategies are available. In the Permian Basin in West Texas, results show that a market heavily reliant on centrally treated flowback and produced water would reduce water management costs and offset approximately 9 billion gallons of fresh water consumption annually. These transactions show that water could be provided without increasing total supplies through the combination of consumptive water conservation strategies and market mechanisms. Third party effects and transaction costs need to be fully evaluated, though. Moreover, spurring these saved water transactions might require incentives at the regional or state level.