A proposal to terminate a landmark interstate water banking agreement demonstrates a nimble response to new economic and hydrologic realities.
In 2001, a landmark agreement between the Arizona Water Banking Authority and the Southern Nevada Water Authority established interstate water banking. At the time, water banking offered important benefits for both states. Arizona, with rights to 2.8 MAF/yr of Colorado River water, lacked the demand to take its full allotment. Nevada, on the other hand, faced unprecedented population growth in Las Vegas but held rights to a meager 300,000 AF/yr of Colorado River water; consequently, it was willing and able to pay for additional supplies to buffer future shortages on the river. The agreement was a win-win: It provided additional water supplies for Las Vegas while preserving Arizona’s future ability to use its Colorado River allocation.
The original agreement and subsequent amendments called for Arizona to “bank” 1.25 MAF of Colorado River water in underground storage facilities. In exchange, Nevada would pay the full cost of water delivery and storage, plus an additional $100M that Arizona could use to develop new in-state supplies. To date, Arizona has stored almost 50 percent of the contracted 1.25 MAF, receiving $123M from Nevada.
Twelve years later in 2013, however, water banking is no longer advantageous for either party. In recent years, as Arizona’s demand for CAP water has increased, less water has become available for Nevada (Arizona customers have first priority for these supplies); in fact, since 2010, Arizona has had no surplus CAP water at all for Nevada, as shown in Table 1.
Hydrologic and economic conditions have created additional challenges. In 2011, water levels in Lake Mead approached the 1,075-foot trigger level for declaring a shortage. In addition, the SNWA faced financial difficulties related to the economic downturn, which hit Las Vegas particularly hard, affecting its need to stockpile water supplies in Arizona. Las Vegas is now focusing on obtaining groundwater supplies from northern Nevada.
Based on these developments, the parties are now looking to terminate future water banking obligations. Lessons from the past are not forgotten, however; the new draft agreement provides the flexibility to adapt to changing conditions. In fact, the parties can agree to resume storage at any point in the future. This adaptive approach will be important to managing the Colorado River as both states grapple with the potential impacts of climate change and future population growth.
The AWBA Commission is expected to vote on the final agreement at its next meeting on March 20, 2013.
Table 1: AZ–NV Interstate Storage Account