Thu October 27, 2011
Drought's Economic Impact Spreading Across Texas
A year into the driest stretch in recorded state history, most Texans are still far from running out of water. But the devastating economic impact is beginning to extend beyond rural agriculture and into tourism, real estate and other staples of more urbanized economies.
The tiny town of Robert Lee, the self-described "Playground of West Texas,” is already reeling from these problems.
A few miles west of town, the E.V. Spence Reservoir, normally at least three times the size of downtown, is now 99.55 percent empty. The lake not only serves as the sole water supply for the town’s 1,049 residents but is also a highly valued component of its economy.
When the lake is at healthier levels, Robert Lee Mayor John Jacobs said, the average wait time at the boat ramps on holidays and weekends is half an hour. Now, he said, there’s no place to put a boat, and the steady stream of out-of-towners from Midland and other West Texas cities has dwindled considerably.
“There’s no doubt that it’s affected the economy,” Jacobs said, noting the town's sales tax revenue, which has been down for five months out of the year, has suffered because of a lag in tourism and, to a smaller extent, agricultural losses. “It’s been declining, as the level in Spence has come down. The weekenders and whatnot have pretty well quit coming.”
Elsewhere in Texas, the economic impact of the drought is also beginning to extend into more urban areas, especially lakeside communities.
Near Austin, Lake Travis is nearly 40 feet below its normal level, and lakeside tourism is suffering.
"From what I'm hearing from restaurant owners on lake, from boat owners, it's almost ground to a stop," said Karen Huber, a Travis County commissioner whose office initiated a report issued last month on the economic importance of Lake Travis and its vulnerability to drought, as rice farmers and cities compete for a decreasing amount of lake water.
For many Texas communities, drought "interjects this whole uncertainty," said John Jacob, director of the Coastal Watershed Program at the Texas A&M University System (not to be confused with the Robert Lee mayor with a similar name). No one knows if this drought will prove as bad, or worse, than that of the 1950s — considered the worst drought in state history — and how future droughts will shake out as the climate heats up and state's population continues to grow.
Businesses do not like uncertainty. "Chamber of commerce types likely do not want Houston to be seen as vulnerable to droughts — after all, we are expecting another 4 million folks in the next 30 years," said Jacob, who is based in Houston and argues that Texans need to start building communities "with not so much lawn."
Jacobs, the Robert Lee mayor, is similarly concerned.
“We’re certainly not going to attract any businesses without a stable supply of water,” he said, noting that for now, businesses are holding their own, but things could get worse if the drought persists. Area ranchers are selling off most or all of theirs herds. Revenue from water sales is down drastically, as the town has cut its water use in half.
“If it wasn’t for our oil and gas industry, we’d really be in dire straits,” Jacobs said, noting the area is experiencing a “mini boom.”
In San Angelo, 30 miles south of Robert Lee, residents are worried that Lake Nasworthy, a key draw for tourists and a location for upscale lake houses, could go the way of other Texas lakes, like Spence and Travis. The lake, part of the city’s dwindling 22-month water supply, is a source of last resort. But Angelo officials have said that, absent any rain or alternate source of water, they could start pulling water out of Nasworthy by the end of next year.
Depending on usage, it could then be completely drained sometime within 12 months.
Nasworthy was drained once before, in the early 1960s, when another drought left the city with about a month's worth of water. But that was when the lake was surrounded by fishing cabins — not high-dollar real estate.
Local realtor Mike Newlin, who has been selling lake houses since the 1980s, said that if Nasworthy were drained, it would slow down and eventually “kill” real estate sales — not to mention lake-based tourism.
“Somebody might buy a property if there wasn’t any water in the lake knowing that someday it’s going to rain again, but I bet the prices would go down quite a bit,” said Newlin, who owns two lake homes. “It’s such a scary situation. People really, I don’t think, have fully considered what would come about if that happened — if the lake was drained.”
It's a concern for realtors across Texas.
"Certainly the availability and affordability of clean water in the area is going to affect people's housing decisions," said Mike Barnett, an official with the Texas Association of Realtors, adding, "If there's no water, there aren't going to be any jobs coming into the area."
Trees are important draws for Texas homeowners, too, and right now, they're dying, not only in West Texas but also in much wetter places like Houston.
"Hard to put an economic value on that, but if places aren’t pretty, fewer people come," said Jacob of Texas A&M.
Andrew Sansom, executive director of the River Systems Institute at Texas State University, said that his group is doing research in the Wimberley area on the economic impacts of streams drying up. He said the research is still under way but that "it's clear so far that we are definitely finding out that property valuation takes a dramatic dip in communities that are streamside- or lakeside-based when those resources are not there." Sales and property taxes fall, too, he said.
Asked how you keep people and businesses in a place — or attract them — without a guaranteed water supply, Ron Griffin, a water resource and environmental economics professor at Texas A&M University, had a simple answer: “You don’t.”
“It causes changes in business activity, and general livability of a place and the employability of a place,” Griffin said.
“People move for all kinds of reasons, but certainly, if water becomes an issue in a particular region due to elevated scarcity, from a general social perspective they should be moving.”
In San Angelo, Chamber of Commerce President Phil Neighbors said the city’s economy hasn’t suffered during the current drought yet, but that could change as early as next year if dry conditions persist — something climatologists have said is likely because La Niña, a periodic weather pattern that causes unusually dry winters in Texas and was present last winter, has returned.
“Overall we haven’t seen the impact we might see in future months,” Neighbors said. “Would I expect it if La Nina continues another year? I would be amazed if our sales tax didn’t see an end to the continued growth we’ve seen over the last 12 months — if so.”