REGION C REALITY CHECK WOULD REDUCE THE PRICE TAG OF THE STATE WATER PLAN

As we noted in our last post, a recent Texas Court of Appeals ruling has highlighted the issue of Region C’s desire to proceed with the proposed Marvin Nichols Reservoir in East Texas. This project, which is proposed to supply approximately 450,000 acre feet/year at a capital cost of $ 3.3 billion.  Marvin Nichols is one of eight Region C projects that are in the top 20 most costly projects in the 2012 State Water Plan.  In fact, the 2012 Plan recommended a total of $ 21 billion in water supply projects for Region C, or about 40% of the total projected state plan cost of $ 53 billion by 2060.  Many of these projects, especially the proposed large new reservoirs and pipelines, are not projected to be needed until near the end of the 50-year planning horizon. 

These proposed Region C projects are driven by municipal demand projections for the fast-growing Dallas-Fort Worth Metroplex.  These demand projections have two components: projected population and projected water use per capita, often expressed in gallons of water per capita per day (or GPCD).  Both population and projected water use figures are developed in the first instance by the Texas Water Development Board (TWDB).  The regions are then given leeway to request “adjustments” of both population and projected GPCD.

The demand projections supplied to Region C by TWDB for the current new round of planning are considerably lower than the projections used to develop the 2012 plan.  In fact, as discussed below, using the TWDB projections with the application of conservation strategies comparable to that used in the 2012 Region C plan, would result in almost 600,000 acre-feet less municipal demand in 2060 (2.2 million acre-feet (MAF) vs. the 2012 plan projection of 2.8 MAF), potentially completely eliminating the need for Marvin Nichols or other projects, or at least pushing them out to the very far end of the 50-year planning horizon.

These new, more realistic, demand projections are a vital step by TWDB in the direction of a more sustainable water plan for Texas.  Strong oversight and public engagement will be necessary to ensure these realistic projections are not undermined during the regional review process.  And, in fact, there is reason to believe, as explained below, that if all (not just some) water user groups in Region C were to engage in aggressive efficiency and drought management measures, could eliminate the need for an additional 400,000 acre-feet of new supply.  This, in turn, should result in a substantial reduction in the projected costs of the Region C plan, and thus in the cost of the state plan as a whole. 

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Discussion

Updated municipal demands are calculated based on population forecasts supplied by the state demographer and on GPCD estimates.  The population forecast tends to become less accurate toward the end of the planning horizon, but a review of previous water plans indicates that population projections compare well with actual growth.  For example, census results showed that the forecasts from 2006 overestimated 2010 population by only about 1 percent.  The population forecast for the new 2017 plan corrects for that difference and other region-specific factors. 

Developing accurate and agreed upon GPCD projections is substantially more complex and error-prone.  The first complication is the data.  Water use data in much of Texas is self-reported by retail or wholesale water suppliers, and reports differ among different entities. The amount that users report (buyers) may not always match the amount that wholesalers (sellers) report.  So, consultants who do the leg work of developing regional plans spend a good part of their effort resolving these discrepancies.

What is turning out to be a more controversial issue, however, has been the decision on what annual water use to select for the base year GPCD.  The base year GPCD is important because, after making some adjustments for the build-out of more efficient plumbing fixtures, the base year demand defines the demand that will be used for planning for future water needs through 2070. Because water use varies significantly from year to year, selecting the appropriate base year is critical. In some cities, particularly where no drought management measures are applied, municipal use per capita may be higher in dry years than in wet years.  By contrast, where drought management measures are employed in dry years, municipal use per capita will be lower, though potentially still higher than in normal years. 

Since the regional planning process is intended to meet water needs during drought – water supply estimates are based on availability during a repeat of the historical drought or record, which for most of the state occurred in the 50’s – water planners at the Texas Water Development Board selected a dry year, 2011, to represent base year demands.

The estimates of municipal demand used to develop the 2012 State Water Plan show that the baseline for Region C starts at 207 GPCD in 2010 and declines to 198 GPCD in 2060, as a result of reduction from federally mandated plumbing fixture efficiencies. The 2011 Region C planning group also recommended basic and advanced water conservation strategies for individual water user groups.  These water supply strategies further reduced the projected per capita use to 201 GPCD in 2010 and 178 in GPCD in 2060. With a Region C population estimated at about 6.6 million people and growing to 13.0 million in 2060, this resulted in total municipal demands of approximately 1.5 MAF in 2010 growing to 2.8 MAF in 2060.

However, the initial demand estimates provided to Region C by TWDB for development of the 2017 plan are substantially lower than those used for developing the 2012 plan.  The base GPCD for 2010 is 176 which, again, as the result of plumbing code upgrades, declines to 161 in 2060. 

Although it is too soon in the planning process to know what Region C or other regions will do with respect to water conservation strategies, if we assume that a comparable level of savings will be proposed in this round, the GPCD can be expected to be revised down to about 169 in 2010 and 141 in 2060.  Moreover, population projections for the 2017 Region C plan are about 3% lower at the beginning and end of the planning horizon (2020 and 2060) and about 6% lower in the middle decades as compared with the estimates developed in the last round.  These estimates, combined with the 169/141 GPCD values, would result in total municipal demands of approximately 1.2  to 2.2 MAF in 2060, or more than a 20 reduction in municipal water demand estimates for Region C.

The per capita water use reductions in Region C represent an important step in the right direction towards meeting long term water needs and one for which water suppliers and policy makers should be commended.  It is also reflective of well documented broader trends in decreased per capita water use across the county, suggesting that this decreasing per capita use trend, rather than the flat line forecasts (excluding adjustments plumbing fixture improvements), should be incorporated in long term projections. That said, it is worth asking whether even the use rates meet sufficiently ambitious goals for municipal water use.

Texas Water Conservation Implementation Task Force (WCITF) recommended a goal of 140 GPCD for potable water supplied to municipal retail customers. The discussion above suggests that Region C is on course towards that goal.  There are several nuances to the WCITF target that are worth considering. In support of Region C’s current forecasts, for example, it should be noted that the 140 GPCD goal explicitly includes reuse as part of the calculation. That is, before calculating the GPCD, demand should be reduced by the amount of supply that is projected to be met through reuse of existing supply. There is a significant amount of existing and planned reuse in Region C, and so, by this calculation, the projected GPCD would be even lower. 

On the other hand, given that conservation is the most cost effective, least environmentally destructive and overall most sustainable strategy for meeting long term water needs, it is important to consider that the WCITF 140 GPCD recommendation was the result of a long and difficult negotiation to reach a broad consensus amount water suppliers, state agency representatives and public and environmental advocacy groups.  It does not necessarily represent a particularly aggressive approach to conservation, nor is it reflective of the best we can do with technological innovation, funding and education. 

In fact, a minority report to the WCITF recommended a target of 125 GPDC.  Furthermore, even if the 140 estimate does represent a reasonable goal, it should be noted that this target was intended for individual water user groups.  As shown in Table 1, many of the Region C water user groups whose needs were projected to be met by some of the very costly and environmentally damaging projects proposed in the last state water plan still project a GPDC well above 200.

Table 1:  Large Water User Groups (Population > 30K) Supplied by Wholesalers Proposing Large Reservoir Projects With High GPCDs

 

If these water user groups  with high GPCDs were able to get their individual use down to the compromise 140 GPCD value, this could result in additional reduction of over 400,000 acre-feet/year in 2060 and a regional average GPCD of about 130.  This kind of aggressive goal could make Region C a leader in the state (and the nation) in showing how to meet future water demand in a cost-effective and sustainable fashion. 

Unfortunately, rather than an increased push towards more conservation, some Regional Planning groups, apparently including Region C, may try to push the pendulum back the other way.  The argument is that the new base GPCD projections supplied by TWDB are too low because base demands in 2011 may reflect implementation of drought contingency plans (reducing outdoor watering etc.) 

Some have put forward the view that drought contingency measures should be included in the water plan as “supply strategies” rather than being reflected in baseline demands. They contend that drought contingency plans will not be implemented unless they are budgeted and planned for, and thus they should be included as water supply strategies. 

Yet, Texas Law does require the development and implementation of drought contingency plans.  Thus, it can be argued that these reductions are similar to those that result from the mandatory plumbing code changes built into demand forecasts.

Moreover, if drought contingency plans are at least required to be in the demand forecast, the projected gap between supply and demand will be less, thus reducing the potential costs of meeting the gap.  Unfortunately, the last Region C plan states that drought contingency planning should not even be incorporated as a water supply strategy: :

Drought management and emergency response measures are important planning tools for all water suppliers. They provide protection in the event of water supply shortages, but they are not a reliable source of additional supplies to meet growing demands. They provide a backup plan in case a supplier experiences a drought worse than the drought of record or if a water management strategy is not fully implemented when it is needed. Therefore, drought management measures are not recommended as a water management strategy to provide additional supplies for Region C.

If that position were adopted by TWDB and drought contingency reductions were not included in the demands, the projected gap between supply and demand would be inflated statewide, leading to a much more expensive state plan.

Conclusion

The debate in Region C between TWDB and some who prefer to use higher demand projections poses an important statewide issue.  If the high demand approach is adopted b other planning groups, it could result in more proposals for unnecessary and controversial projects, bogging down the state plan in the type of conflicts that have arisen between Regions C and D. 

The benefits of drought contingency planning on lowering demands for the planning process are clear. .  The baseline demands used should reflect these measures.  Failure to include them would mean that some water users will take on responsible demand reduction efforts, and the political and economic costs associated with them, while others look to state funding to help them build costly projects that may ultimately not be needed.  That is not a sustainable, or equitable, approach to state water planning.

 

 

Court to Texas Water Planners: The Law Matters

A recent Texas Court of Appeals ruling could result in some major changes in how Texas develops its State Water Plan.  The suit was  brought by Ward Timber and a number of East Texas landowners who challenged the 2012 decision by the Texas Water Development Board (TWDB) to approve the Region C regional water plan. The Court reversed this approval after ruling that TWDB can be sued if it does not follow and enforce the law and rules applicable to Texas water planning.    

This result should lead to a more sustainable and realistic water planning process.

The dispute focused initially on the challenge to TWDB’s approval of the regional plan for the Dallas-Fort Worth area.   The Region D plan for Northeast Texas identified a Region C water strategy that conflicted with the Region D plan. 

The conflict centered on the proposed Marvin Nichols Reservoir, on the Sulphur River in Region D.   The Region C plan included the proposed reservoir as a long-term water supply strategy for the Metroplex area.  Region D’s plan, however, expressly stated that the proposed reservoir conflicted with its plan,  which included the finding that a reservoir at the proposed location would destroy  important agricultural and natural resources that Region D intended to protect. 

The identification by one region of a potential interregional conflict is authorized, if not required, by Texas law at Section 16.053(h) of the Texas Water Code.  If such a conflict exists between two regional plans, TWDB is required by that same portion of the Code to bring the regions together in an effort to find a resolution.  If that is not successful, the law then requires that TWDB itself resolve the conflict. 

At the outset, TWDB argued that it could not be sued for its decision to approve a regional plan because these were just “plans” with no immediate effect. TWDB  also argued that there was no interregional conflict.

The Court’s May 2013 opinion upheld a lower court ruling, reversing the TWDB’s approval of the Region C plan.   The Court held that:

·         TWDB can be sued for failure to comply with Texas law or its rules on water planning;

·         The TWDB decision to approve the 2011 Region C plan violated Texas law; and

·         TWDB’s definition of  interregional conflicts as limited to instances where two regions relied on the same water to meet proposed demands was inconsistent with Texas law.

TWDB’s deadline to appeal to the Texas Supreme Court has now passed, so the Court’s holding stands.  It will be an important precedent for future water planning efforts, as well as for the current dispute between Regions C and D over the proposed Marvin Nichols Reservoir.

The Ward Timber decision provides valuable guidance and benchmarks for on-going water planning efforts.  While the Texas water plan is reasonably viewed as a “bottom-up” effort, it has to also reflect the broader state interests.  It has become increasingly clear over the last few planning rounds that more state level engagement is needed.  As reflected in HB 4, passed this year by the legislature, state funds need to be spent on strategies that are priorities for both the regions and the state.  The state needs a water plan that reflects a realistic future and that can be implemented in a cost-effective and environmentally-sound manner.  

State level engagement can come in many forms, but one important avenue  is TWDB rules and guidance implementing the statutory requirements for planning. The Ward Timber case holds that the regions and TWDB need to take those rules seriously.  The Court upheld Region D's position that state water planning law allows it to protect its important agricultural and natural resources, even as the state seeks to meet municipal and other needs for water now and in the future.

TWDB rules can be used to set rational boundaries on the regional planning process, as envisioned by the statutory language in Section 16.053 of the Texas Water Code.  For example, TWDB’s current planning rules seek to establish consistent methods by which all regions project certain future water needs.  If a regional group does not comply with these or other elements of the rules, TWDB needs to enforce them by disapproving all or a part of the regional plan.  The Ward Timber case holds, in essence, that if TWDB does not do so, a court could invalidate the TWDB's decision to approve the regional plan.   

Thus, Ward Timber case has implications beyond the Region C and D conflict.  While resolution of that conflict will likely happen one way or another in the next six months to one year, the other aspects of the Court decision can affect all 16 regional planning processes for this next round and into the future.  Given the lack of attention in past rounds of planning to certain aspects of the legal requirements, such as protection of natural resources and environmental water needs, the Ward Timber case may also send a clear message that all aspects of the planning process established in the law and TWDB rules need to be addressed in the 2016 round of regional plans.