Increasing Drought Conditions Threaten Texas’ Future Prosperity

New research by the Center for Public Finance at Rice University’s Baker Institute for Public Policy Shows Risks and Potential Economic Impacts of Severe Drought

As temperatures rise and drought intensification appears inevitable for much of Texas this summer, a new report released by the Center for Public Finance at Rice University’s Baker Institute for Public Policy, in partnership with Texas 2036, calculates the price Texas might soon pay for worsening droughts.

The third release in a series of studies focused on key investment opportunities for the state, “Investing in Texas: Economic Impact of Severe Drought” reveals Texas’ potential negative economic impacts based on the State Water Plan’s projection of failing to develop additional water supplies as demands will increase by 9% and available supplies will diminish by 18% over the next 50 years.

The State Water Plan produced by the Texas Water Development Board finds that Texas could face a potential gross domestic product loss of $98 billion–$117 billion and job loss of 600,000–988,000 if the recommended new water supply projects and strategies are not implemented and if Texas were to experience a dry spell that matches or surpasses the drought of record—the current benchmark for future water planning.

According to Dr. Joyce Beebe, fellow at the Center for Public Finance and author of the new report, major sectors of the state’s economy will endure severe economic losses if new water supplies are not developed in time for the next severe drought. Specifically, the paper estimates the water development board’s top 5 regions where key Texas industries would be at most risk. With losses increasing annually, in 2036, each stand to potentially lose:

  • Energy industry: $46 billion and 220,000 jobs
  • Manufacturing: $15 billion and 100,000 jobs
  • Agriculture interests: $3.5 billion and 62,000 jobs
  • Semiconductor manufacturing: $4.7 billion (statewide)

“Failing to develop new water supplies needed for a future severe drought places our state’s prosperity at risk, with many of our core economic pillars, including manufacturing, energy and agriculture, being directly impacted,” Dr. Beebe said. “We have an opportunity to use this economic analysis to weigh the costs of inaction today in order to take the steps we need for tomorrow.”

Last fall, Texas 2036 partnered with Dr. John Nielsen-Gammon, a regents professor at Texas A&M and the State Climatologist, to examine the future of extreme weather trends in Texas. His research confirms that the state should expect worsening droughts.

“Texas is experiencing increasingly drier and warmer days and months,” Dr. Nielsen-Gammon said. The number of 100-degree days has more than doubled over the past 40 years and could nearly double again by 2036, he reports, stressing that these conclusions are largely consistent with climate modeling data.

“Our weather is changing, and it’s doing so in ways that will make it harder to live here and more expensive to recover from increasingly disruptive events such as a severe drought. That means preparation and resilience are more important than ever,” Dr. Nielsen-Gammon said. “Texas’ long-term prosperity will depend on how well we prepare for these increasingly potent natural disasters.”

In 2011, the last worst one-year drought in recorded history, the State Comptroller estimated that Texas’ agriculture industry alone lost $7.6 billion.

Jeremy Mazur, senior policy advisor at Texas 2036, emphasizes the need for investing in water infrastructure as preparation for future severe droughts. This includes taking advantage of federal funds like in the U.S. Infrastructure Investment and Jobs Act, which provides Texas with more than half a billion dollars for the clean and drinking water state revolving funds.

“By making data-informed decisions, the state can safeguard public health and maintain sustainable economic growth,” Mazur said. “The more state policymakers continue to consult with the State Climatologist and consider planning for future and worsening droughts, the better Texas will be prepared.”

In two recent statewide Texas Voter Polls, Texans showed their support for the state’s efforts to address key challenges and vulnerabilities that more extreme weather will bring by leveraging federal funds as they become available, including:

  • 88% of Texas voters supported projects to improve both the cleanliness of drinking water and access to water during droughts (Aug. 2021)
  • 72% of Texas voters recognized that Texas’ climate has changed over the past 10 years (Aug. 2021)
  • 65% of Texas voters are “extremely concerned” or “very concerned” that, given current trends, Texas will not be able to meet a significant amount of its future water needs, meaning some communities may lose access to water in an extreme drought (Jan. 22)
  • 53% of Texas voters are “extremely concerned” or “very concerned” about the extreme weather trends Texas will experience, including more 100-degree days, more extreme rainfall, more urban flooding, greater hurricane intensity, and increased drought severity by 2036 (Jan. 2022)

To view the Baker Institute’s report and its summary, visit

To view Dr. Nielsen-Gammon’s extreme weather report, visit

To view Texas 2036’s Texas Voter Poll, visit