How Texas escaped the crippling effects of the 2030-2032 drought

Austin (October 21, 2032)—Despite three years of record-breaking drought, and a number of areas throughout the United States being severely impacted, the state of Texas is poised to move forward relatively unscathed.

So, how did a state hard hit by drought and not known for its environmental activism do it? 

A number of reports attribute this to the realization of policies and actions that were enacted following the droughts of 2011-2016 and 2023-2025. 

Even with extended periods of high temperatures and scant rainfall during the past three years, including record-low precipitation in 2031, reservoir levels have not dropped as precipitously as during prior periods of drought. These additional water supplies have provided a cushion for the economy.

During previous droughts this century, commercial, industrial, and residential electricity users have had to dramatically scale back power demand to avoid rolling blackouts. Power generation can be problematic during dry cycles due to higher than normal temperatures and limited water used to cool power plants.  Estimates suggest that past droughts have cost the state of Texas billions of dollars in economic losses and hindered the governor’s economic development office’s efforts to convince businesses to relocate here.

In the past two decades, however, the availability of increasingly inexpensive wind and solar power has spurred a transition from coal power, which requires excessive amounts of water for mining, processing, burning, and waste storage.

As part of Texas’s strategy for adoption of the Clean Power Plan (CPP) goals of 2015, the state put in place an energy conservation policy that helped flatten electricity demand. As a result of these changes, power generation in Texas now requires 25 percent less water than 20 years ago, greatly increasing the sector’s resilience to drought and releasing water for other uses.

“One of the great benefits from our state’s progress on saving energy is the unexpected water savings dividend we’ve earned,” said Senator B.A. Ware, R-The Woodlands. “Texas is now more water-secure, economically robust, and energy efficient than ever before.”

Texas also joined the Regional Greenhouse Gas Initiative, enabling it to sell renewable energy credits (RECs) to northeastern states to meet their CPP targets. One report showed that because Texas is a low-cost provider of wind and solar power, the state is producing 35 percent more renewable power than it would otherwise, further cutting its water use and adding jobs.

Water demand outside the electricity sector has also decreased dramatically. The original impetus for this change was a state bond program established by the legislature in 2013, known as the SWIFT program (State Water Implementation Fund for Texas). Since 2015 the SWIFT program has provided more than $18 billion in loans to municipal water utilities with the goal of delivering sustainable and reliable water sources for Texas.

Most of the capital has been invested in the development of new reservoirs across the state. However, one major study showed that these reservoirs are underused due to other investments made with SWIFT funds.

The legislature required that 20 percent of SWIFT dollars (about $3.6 billion) be allocated to conservation. Utilities have invested these funds in finding and fixing leaks, systems to reuse water, including direct potable reuse, and a wide array of commercial water conservation and efficiency technologies.

When SWIFT began, average water use per person in Texas was 160 gallons per day (gpd). Even though the population of Texas has doubled since the law took effect, overall water demand has declined slightly as water use per person has dropped by 60 percent to 64 gpd. Much of this improvement is attributed to water efficient technologies and incentives to properly install them.

The SWIFT conservation campaign promoted the replacement of old water-inefficient household appliances such as dishwashers, washing machines, and showerheads. Smart technologies that track water use and alert homeowners when something is amiss (i.e., a leak develops) have also played a significant role in the decrease in per capita water use.

Now, it’s commonplace for household water use to be tracked and adjusted through online apps. According to the Texas Water Development Board, more than 20 million copies of its WaterTexas app have been downloaded on iOS devices such as Apple’s earPhone12.

Although there have been a variety of rules and regulations that the state has implemented to ensure that water supplies are sufficient to meet demand, most analysts attribute the biggest push to the law championed by former Governor Viva Verde in 2023 prior to the state’s last major drought. The law, Senate Bill 7, also known as the “decoupling” law, was intended to allow the Texas economy to grow unhindered by water constraints, which were increasingly restricting new business opportunities.

The law required new water users to find an offset within the watershed of the proposed commercial or residential development. Essentially, the law separated or “decoupled” economic growth from water consumption. This phenomenon had been observed for energy use as long as 60 years ago. It currently takes about 40 percent of the energy it did in 1980 to produce a dollar of GDP in the U.S.

Although industry leaders railed against the law, saying it would be cost-prohibitive and cripple the state’s economy, in practice, regulations have been inexpensive to implement and actually created economic opportunities by ensuring a stable water supply while the economy of other regions of the U.S., especially California, suffered.

Numerous “bundler” companies saw the law as an opportunity to install water efficient technologies in homes and commercial buildings and then sell the water conservation credits to developers. Many homeowners have taken advantage of offers from bundlers to install less labor-, chemical-, and water-intensive landscaping, at no cost to themselves.

Bundling companies have kept costs down while managing to rack up revenues in the tens of millions of dollars. Reports suggest that the cost of water conservation credits have added 5-15 percent to water costs for new users, although projections were as high as 50 percent.

An additional benefit of the law is that 10 percent of each credit is deposited into a mitigation bank designated for in-stream river flow preservation. This aspect of the law has protected the recreation and fishing industries during recent drought—industries that provide more than 100,000 jobs for the Texas economy.

When asked recently about the success of the law, former Governor Verde replied, “No one thought there was blood in that turnip. We proved critics wrong, showing that it was not only a sustainable, economically viable model but smart for our environment.” 

-Paul Faeth is senior editor, The Texas Herald News.

In reality, Paul is Director of Energy, Water & Climate at CNA and author of the report The Impacts of EPA’s Clean Power Plan on Electricity Generation and Water Use in Texas.


The views expressed by contributors to the Cynthia and George Mitchell Foundation's blogging initiative, "Achieving a Sustainable Texas," are those of the authors and do not necessarily represent the views of the foundation.  

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