Costs of Underinvesting in Texas Water Infrastructure

A new report by Gabriel Collins at Rice University's Baker Institute for Public Policy Center for Energy Studies, in partnership with Texas 2036 , warns that prolonged droughts could cause billions in economic losses across Texas. The report calls for urgent investment in water infrastructure to safeguard the state’s $2.5 trillion economy and its communities.

By the Numbers:

• $40 billion/year: Potential economic damage to large cities during a severe drought.
• $15 billion/year: Agricultural and livestock losses statewide from drought impacts.
• $2 billion/year: Revenue lost from utility system leaks alone.
• 0.2% of GDP: The effective annual investment needed ($5 billion) to secure Texas’ water future.

What’s Driving the Problem:?

• Aging water infrastructure unable to meet the demands of a growing population.
• Increased severity and frequency of droughts due to climate variability.
• Interdependencies between water supply, energy production, and economic activities, creating cascading risks.

Proposed Solutions:

• Infrastructure Investments: Allocate $5 billion annually to reduce leaks and modernize systems.
• Water Recycling and Desalination: Expand alternative water sources to diversify supply.
• Strengthened Water Markets: Enable efficient resource allocation between industries, municipalities, and agriculture.
• Integrated Planning: Address water-energy vulnerabilities, particularly in power generation and manufacturing.

Why It Matters: Water is essential for Texas’ economy, which consumes nearly 300 million barrels of water per day. Prolonged droughts don’t just disrupt water supply; they threaten industries, jobs, and communities. Without proactive action:

• Businesses may leave Texas due to unreliable water supplies.?
• Critical industries like agriculture, manufacturing, and energy production could face large financial losses.
• The state’s reputation as an economic powerhouse could be impacted.

What The Experts are Saying: “Texas’ history shows that resilience requires foresight. This report underscores the high stakes behind the decision to invest in water infrastructure, with potential costs reaching billions annually if we delay,” says Collins. “Yet, it also highlights a tremendous opportunity— by making smart, targeted investments today, Texas can secure its water future, safeguard its economy, and set a global standard for water resilience in the 21st century.”

What’s Next: The report urges policymakers, businesses, and communities to act now by prioritizing infrastructure investments in water and collaborative solutions to build a more resilient Texas.

For more information, visit Texas2036.