The electricity–water nexus: is a crisis imminent?

Several recent studies have warned that there will be widespread water shortages in many regions of the USA in the near future largely because of high demand for water in the production of electricity. This study reviews studies addressing electricity generation and water availability and concludes that electricity production is not likely to lead to water shortages in most regions for several reasons. First, the alarmist studies erroneously rely on water withdrawals rather than water consumption to measure gaps between water demand and supply. Second, these studies fail to account for market dynamics, which will lead to improvements in greater water recycling and reuse as well as new resources on the supply side, and conservation and improved efficiency via new technology on the demand side. Electricity is increasingly generated by low water use technologies such as solar and wind. In addition, fossil-fired power plant technologies exist that greatly reduce water withdrawals and consumption. As water prices rise in the face of tighter supplies these technologies will become more attractive. Third, policies designed to overcome market failures related to pricing regulation, water rights, and government boundaries can reduce, if not eliminate, widespread electricity and water shortages.