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Development Adapts: Water Scarcity and Urban Growth

February 8, 2013

Clean and reliable water supplies are fundamental to urban growth and prosperity. In the last decade, growth regions worldwide faced a growing strain as water supplies dwindled and demand for urban, energy, agricultural and environmental uses soared. Many American cities now face conditions of water scarcity — which will become more widespread with the onset of global climate change. 

While the international community debates a long-term approach to climate change, real estate developers in water-scarce communities are finding it necessary to adapt to its impacts on urban water supplies today.

The U.S. General Accounting Office projected two years ago that at least 36 states would experience water shortages by 2013. Many are arid western states, but water scarcity is also triggering growing concern in the eastern half of the nation. Even water-rich Florida, where vast swamps were drained in the last century to facilitate development and food control, is projected to run short of drinking water in its major metropolitan areas by 2030 without a change in course.

The severity of the recent western drought, the worst 10-year episode in recorded history, stunned even some seasoned water managers despite pervasive aridity in the region. 

Jeffrey Kightlinger, the Metropolitan Water District of Southern California’s general manager, supplies water to 19 million people in the Los Angeles and San Diego regions. Kightlinger reported, “We plan for droughts but nonetheless expect to get a reliable baseline supply from the Colorado River and California Aqueduct. These assumptions really started to change in 2003, when we lost half of our supply because of a tremendous drought on both systems.”

Today, water levels at Lake Mead, for example, are dropping rapidly and could fall below the intake valve that supplies 90 percent of Las Vegas’ needs by 2012. Within a half-century, the influence of climate change means that Mead has a 50-50 chance of becoming a “dead pool” behind the Hoover Dam, depriving Arizona, Nevada and Southern California of a vital water source for 30 million people and, on average, enough clean hydro-power for 374,000 homes.

Even after these droughts subside, “normal” as defined by 20th century terms is a thing of the past. Brad Udall, director of the Western Water Assessment, and a leading water scientist, warned that, “most of the really important impacts of climate change are not going to come directly from temperature increases but because of changes to the water cycle.”

An abundance of scientific research now shows that climate change introduces volatility to water supplies by altering the averages and extremes of precipitation, evaporation and river volumes. This upends the idea that natural water systems fluctuate within an unchanging envelope of variability, which is a fundamental assumption to most water-resource management practices.

Even without climate change, mismanagement of water supplies, in the long-term, can pit neighboring states and regions against each other in a high stakes battle for growth. Most of the metropolitan Atlanta water supply, serving up to 5 million people, is at stake in a 20-year-old water war pitting Florida and Alabama against Georgia. Siding with Florida and Alabama, a federal judge ruled last year that the U.S. Army Corps of Engineers had illegally drawn water from Lake Lanier, a sprawling manmade reservoir northeast of Atlanta, to meet much of metro Atlanta’s water needs. The judge gave the three states three years to resolve the dispute. If they can’t, Atlanta will lose its access to that water source.

Georgia and suburban Gwinnett County appealed, with the county’s lawyers asserting that the ruling imposed “what can only be termed the death penalty for subsistence by existing households and business, as well as future economic growth within Gwinnett.”

Florida Environmental Protection Secretary Michael Sole said the drought that lowered Lake Lanier to record levels has eased “but even now the amount of water in the system is limited. Particularly during dry periods, there is not enough water to meet everyone’s unconstrained needs.”

In the West, water resources are governed by a 19th century legal structure and the region’s major water infrastructure was built assuming that climate conditions in the 20th century, the wettest in a millennium, would remain constant.

The Federal government’s efforts to lead a rational water policy response are stymied by a lack of reliable data. Deanna Archuleta, Deputy Assistant Secretary at the U.S. Department of Interior, said, “The United States has not conducted a comprehensive water study since the Carter Administration. We don’t know how much water is available, where it is located, or if it is of acceptable quality.”

In lieu of a national strategy, state and local authorities have applied a jumble of incremental policies to cope with threats to their water supplies. Due to their precarious position at the bottom of the western water “food chain,” municipal users, and the real estate development industry, in particular, face the greatest risks. 

Western surface waters are, in general, apportioned based on a legal doctrine of “last in time, last in right.” This means that long-term water rights vested to agricultural owners will remain secure during a drought while municipal users with newer rights stand to lose their supplies — even if these rights were acquired and transferred from agricultural lands.

Local governments could relieve some pressure on their water supplies by raising water rates to a level that would promote conservation or by mandating it outright —though either approach can be politically unpalatable in communities that are accustomed to cheap and plentiful water. Instead, these burdens are often shifted to new development and, in turn, future residents.

Clay Landry, managing director of WestWater, a leading water marketing firm, commented that “Municipalities are simply running out of water supplies in their portfolios … so they are now requiring that developers acquire and transfer new water rights before granting land use entitlements.”

Merritt Brown, owner at SF Brown, a New Mexico-based developer of mixed-use projects, explained, “transferring a water right in New Mexico is, at minimum, a two-year process. You have to go to a farmer, buy his water right, then sit two years, hope it’s going to get approved and then go back into the city, and ask them for [permission to build] a project.”

Meanwhile, the price of water is skyrocketing in some markets, like in Santa Fe where an acre-foot of water now costs roughly $30,000 ($7,500 per new household)up from $4,200 per acre-foot ($1,100 per new household) in 2002.

Even if water scarcity, in parts of the West and Sunbelt, has important ramifications for the national economy, it is not fundamentally an issue of inadequate water supplies, at least from a national perspective. The problem is that water supplies are misallocated, by environmental and legal processes, in terms of where it can be put to “highest and best use.” Yet, it can be expensive and energy intensive to transport water because it is heavy and cannot be compressed.

Nonetheless, water shortages in the West and elsewhere have occasionally prompted discussions of shipping water from distant locations where it is more abundant. Just as water managers in the West focus on finding new  water, water managers and environmentalists in the Great Lakes Basin, which contains 20 percent of the world’s surface fresh water supply, are concerned with protecting this crown jewel of fresh water supplies.

Motivated by the public outcry over a proposal by a Canadian firm to ship water to Asia by tanker, eight states bordering the Great Lakes have formed the Great Lakes Compact to prevent large-scale diversions of water from the Great Lakes outside of the basin.

In the first test of the compact, the city of Waukesha, Wis., has applied for a permit to draw water from Lake Michigan because its local water supply is contaminated by radium pollution. Waukesha is five miles west of the Great Lakes Basin boundary, meaning it needs the approval of all eight governors to get its water from Lake Michigan. There is serious opposition to the plan.

“If we say yes to Waukesha County, it’s hypocritical to say ‘no’ to the West, or Asia,” said Cameron David, executive director of the Lake Michigan Federation. 

A business group’s 2003 plan to transport water south from North Florida’s Suwannee River to relieve scarcities in the state’s major cities set off a storm of protest, even in South Florida, and died a swift death. Now four of the state’s five water management districts are warning that groundwater supplies are running low and the state will need to find alternatives such as desalinization plants turning salt water from the Atlantic Ocean and the Gulf of Mexico into drinking water.

Three water management districts have adopted an action plan capping groundwater withdrawals in the Orlando metropolitan area at 2013 levels. “Beyond the 2013 level of demand, [alternative water supply] sources must be developed to meet future demands,” the plan said, informing Central Florida water utilities that they “must be prepared to move to alternative water supplies as a critical component of meeting future demands.”

Pinellas County, Florida, (St. Petersburg) ran out of ground water years ago and drilled wells in two neighboring counties to meet its needs. Groundwater supplies dwindled in those counties, however, touching off a bitter, prolonged water battle between Pinellas and its neighbors. They ended the fight by creating a regional water authority. One of its key solutions was to build a $148 million desalinization plant in 2003, but it has been plagued by operating problems for much of its history

Florida water managers have responded to drought conditions over the past decade by imposing restrictions on watering lawns and other uses. At the same time, however, officials continued to approve water permits for new developments.

In her book “Mirage: Florida and the Vanishing Water of the Eastern U.S.” journalist Cynthia Barnett wrote that developers ruled the day. “The state’s powerful home builders were insisting that Florida’s leaders find them more water,” she said. “And, despite water shortages, they were insisting the leaders work to lure more people down to Florida, too. Only with increasing populations and new water supplies could Florida grow its most important crop: rooftops.”

However, in South Florida, the Corps of Engineers has, in some cases, reversed course, tearing up the development-enhancing dikes and canals it built for food control in the last century, to restore the natural flow of water as part of the $10.5 billion Comprehensive Everglades Restoration Plan. More than 1.7 billion gallons of water a day that currently flows out channelized rivers to the Atlantic and Gulf will be stored in the Everglades and provide new water resources for South Florida’s large urban population.

It is a monumental undertaking that has generated lots of political and public interest. Yet, most communities dealing with water scarcity are finding there are few “silver bullet” projects to solve their problems. Instead, the trend is moving away from engineering new supply projects, to finding better ways to manage existing supplies that can sustain continued population growth. Some water managers, particularly in the Southwest, have started looking at a comprehensive strategy that requires water utilities, municipal governments and the development industry to embrace new land use and development practices as part of the solution. Kightlinger noted, “The Metropolitan Water District is now working with the development community and urban planners to figure out how to manage smart growth over the next decade even though we can’t say for sure how the future is going to pan out.”

New thinking is already taking hold in communities facing the most pressing scarcity issues — where every piece of land and each building play a role in augmenting and stretching finite water supplies further.

Michael Ogden, founding principal of Natural Systems International, Santa Fe, argued that a new model is needed, “The regulations handle potable water, wastewater and rainwater discretely. It’s all water, and we’ve got to start using more integrative thinking when de-signing our projects and communities.”

Trevor Hill, president of Global Water, a private water utility based in Tempe, Ariz., described the conservation potential of new development, “There is a tremendous opportunity on the demand management side — we can integrate water, wastewater, recycled water systems into communities at the outset with a material reduction in water use and rates.”

In some cases, developers are pushing the envelope by applying these novel conservation strategies, and time tested methods like low-water landscaping, to prevent water shortages from becoming building moratoria, but they must first win-over local and state regulators.

Bob Taunton, reflecting on his tenure as former president of Suncor New Mexico in Santa Fe, commented, “We needed to increase the number of units we could get out of an acre-foot of water at Rancho Viejo [Santa Fe], or we were out-of-business. The county eventually approved us to build five units per acre-foot of water after we proposed the use of cisterns, which kept the project going with enough time to acquire additional water rights for 1,300 more units.”

District and building water retrofits can offer similar gains as well. Grant McInnes, associate principal at ARUP in San Francisco, offered an example, “Stanford University understood the benefit of an overall campus water strategy. Instead of putting 60,000 gallons per day of water discharge from building cooling equipment into the sanitary sewer, they’ve decided to bring it across the campus for toilet flushing among other uses. This reduced the need to treat and transport potable water.”

Ultimately, adapting to water scarcity will come, in part, by creating projects that forge more resilient connections between people, place and water.

Harold Smethills, developer of Sterling Ranch, a 3,100-acre master planned community in Douglas County, Colo., remarked, “There is absolutely no question that making a future for real estate development means that we’ll have to deal with water now.”

 

The preceding article was adapted with permission from an original version by David Stocker. Stocker is a Research Director with the ULI Center for Balanced Development in the West which is headquartered in Los Angeles, Calif. Stocker’s article includes material originally presented at a Center for the West symposium, “Adapting to a Drier West”, held in December 2009. His original version can be found in its entirety at www.uli.org/centerwest.