Can the free market fix the Colorado River crisis?

Completely surrendering the Colorado River to the free market, as PERC and others suggest, could make water appropriately expensive to use. But it could also reward investors that have snapped up basin farms recently without solving the water crisis, as has been seen in Australia.



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California — with the largest allocation of water from the river — is the lone holdout. Officials said the state would release its own plan. The Colorado River and its tributaries pass through seven states and into Mexico, serving 40 million people and a $5 billion-a-year agricultural industry.

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Key Points. Lake Mead has dropped by 70% due to droughts in the West and it will take many years to refill again, naturally. The reservoir is vitally important to millions of people as a source of water, electricity, and recreation.

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Electricity would not just be the only thing lost. Without Lake Mead, Las Vegas would lose access to 90 percent of its water sources. If Lake Mead were to reach dead pool, it would technically still be able to supply drinking water to Las Vegas. But there will not be enough water for agricultural activities.

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What happens if Lake Mead dries up forever? If Lake Mead were to run out of water, the Hoover Dam would no longer be able to generate power or provide water to surrounding cities and farms. The Colorado River would essentially stop flowing, and the Southwest would be in a major water crisis.

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Since 1983, years of drought along with high water demand have caused the lake to drop by 132 feet. Today, the lake is at only 30% capacity, its lowest level since it was built in the 1930s. Fortunately, heavy rainfall early in 2023 has relieved the situation a little, but only temporarily.

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About 85–90 percent of the Colorado River's discharge originates in melting snowpack from the Rocky Mountains of Colorado and Wyoming. The three major upper tributaries of the Colorado – the snow-fed Gunnison, Green, and San Juan – alone deliver almost 9 million acre-feet (11 km3) per year to the main stem.

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The three “Lower Basin” states also receive 7.5 million acre-feet. Of that, California has the right to take up to 4.4 million acre-feet from the river each year; because they have the oldest legal rights to the river, Californians are also the last to see cuts during drought.

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It's worrying to see the lake's water level decline but the chances of it fully drying up are very slim. The Hoover Dam and Lake Mead still do so much important work for the southwest USA, in terms of both water supply and power generation.

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