Securing Texas’ future: Water is the key to power our economy
Water doesn’t just quench our thirst; it powers our economy and keeps the lights on. Water supply security, electric grid integrity and, ultimately, our physical and economic well-being are deeply interconnected.
At the same time, Texas’ rapid growth and urbanization in recent decades mean we have fewer shock absorbers for coping with prolonged drought. The situation deserves close attention because the historical record shows that droughts worse than that of 2011 or even the 1950s are very possible.
For Houston, the stakes are high. As the energy capital of the world, Houston’s industries depend on reliable water supplies. From cooling power plants to supporting petrochemical production, water underpins the city’s economic engine. A prolonged drought could jeopardize this infrastructure, threatening jobs and Houston’s leadership in energy and innovation.
A recent report by Texas 2036 and Rice University’s Baker Institute for Public Policy reveals the risks of failing to invest in water infrastructure. Without action, prolonged droughts could disrupt Texas’ power supply, agriculture and manufacturing, putting millions of Texans — and Houstonians — at risk.
The drought of 2023 offered a stark preview. Had it continued for another 18 months, roughly a quarter of ERCOT’s dispatchable power generation capacity could have faced disruptions. These power plants rely on water for cooling and, without it, they may shut down when Texans need electricity most, during the sweltering summer months.
Water scarcity doesn’t just threaten power production; it imperils the entire economy. Houston’s industries, from energy and manufacturing to small businesses, rely on stable water supplies. Without them, investment could dry up, and jobs could move elsewhere.
The hefty price of inaction
The costs of inaction already accrue. We estimate Texas loses approximately $2 billion annually to water system leaks. A severe drought could cause $40 billion in annual economic losses to cities reliant on surface water and $15 billion in agricultural losses.
Texas has never been a state that waits for problems to solve themselves. From the oil boom to the rise of the tech sector, Texans have consistently invested in infrastructure to fuel growth. Houston exemplifies this spirit with its innovative energy solutions, rapidly growing entrepreneurial startup environment and economic leadership.
Water should be no different. Securing a reliable water supply is critical to keeping the lights on, fields green, businesses thriving and people healthy. Texas can take several key steps, including repairing aging water infrastructure to reduce waste, expanding conservation practices, and investing in recycling efforts. In some regions, desalination may also play a role.
For Houston, proactive water planning is essential to maintaining its status as a global energy leader and economic powerhouse and, more broadly, as a destination for enterprises and people.
Water: Key to safeguarding the Texas Miracle
The time is right for Texas to make strategic investments in our water infrastructure to safeguard our future. A secure and resilient water supply is essential to maintaining Texas’ position as an economic powerhouse and ensuring that our cities, industries and families thrive in the face of growing challenges and opportunities.
By taking bold steps now, we can ensure that Texas — and Houston — remain the best places to live, work and do business for generations to come.
Gabriel Collins is the Baker Botts fellow in energy and environmental regulatory affairs at Rice University’s Baker Institute for Public Policy. David Leebron is the president and CEO of Texas 2036 and the former president of Rice University. The views expressed here do not necessarily represent the views or positions of the Baker Institute for Public Policy.