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August 10, 2011
Brattle Principal David Sunding Assesses Economic Impact of Reductions in Water Availability Due to Minimum Stream Flow Requirements

Brattle principal David Sunding recently filed an expert report in a lawsuit brought by The Aransas Project (TAP) against members of the Texas Commission on Environmental Quality (TCEQ). The lawsuit alleged that the defendants' failure to adequately manage the flow of freshwater into the San Antonio Bay ecosystem during the 2008-2009 winter resulted in the death of 23 whooping cranes, an endangered species, in violation of Section 9 of the Endangered Species Act. The Guadalupe-Blanco River Authority (GBRA) filed a motion to intervene as a defendant on April 21, 2010 and submitted reports from experts around the country this week, including from Dr. Sunding. In addition to the allegations made by TAP in the lawsuit, the organization proposed remedies that included federal intervention in the way Texas currently manages its water resources. As part of his expert report, Dr. Sunding assessed the economic impacts of reductions in water availability resulting from the minimum stream flow requirements detailed in the Freshwater Inflow Requirement Scenario (FIRS) for the Guadalupe and San Antonio (GSA) River Basins. The decrease in water supply reliability also has the potential to cause losses to consumers, workers, businesses, and government entities. Dr. Sunding projected economic losses for each year over the period 2010 to 2060 based on forecasted demand and supply conditions and historical annual water availability. He concluded that the FIRS instream flow requirements would have significant negative economic consequences for the GSA basins. The loss of water supply reliability resulting from the instream flow requirements would cause more frequent water shortages and result in the construction of expensive water supply projects that would not be needed in the baseline. The end use shortages and extra water supply costs resulting from the FIRS instream flow requirements would cost water users in the GSA Basins an expected total of $6.7 billion over the period 2010 to 2060. This loss amounts to approximately $2,700 for every person residing in the basin, or $7,700 per household. He also found that the economic sector most directly impacted is steam-electric generation. Economic losses related to lost electricity generation exceed $80 million under 2010 demand conditions and over $100 million annually by 2030. These costs are borne by ratepayers in San Antonio and other areas of South Central Texas.