CGW - Western states strike deal to cut water use from the Colorado River
2023-05-23 05:42:05 ET
Under pressure of more severe cuts by the federal government, Arizona, California and Nevada have reached a deal to cut water usage from the drought-stricken Colorado River. In return, the Biden administration will compensate cities, irrigation districts, agricultural landowners and farm operators, with funding to the tune of $1.2B that will come from the Inflation Reduction Act.
The Colorado River, one of America's most important natural resources, runs from the Rocky Mountains to the U.S.-Mexico border and supplies water to 40M people.
While the current agreement will trim water usage by about 13% across the Southwest, or 3M acre-feet of water by 2026 (a family of four typically uses one acre-foot per year), longer-term solutions will be needed in the future, especially if dry conditions intensify. The deal must also undergo an environmental review, with plans to finalize the cuts in the months to come.
SA analyst Vlad Deshkovich discusses what the Colorado River water shortages will mean for investors in the long-term , while AllianceBernstein explains that water scarcity is no longer just a problem for developing countries in desert climates.
Related stocks: American Water Works ( NYSE: AWK ), Consolidated Water ( NASDAQ: CWCO ), Energy Recovery ( NASDAQ: ERII ), Xylem ( NYSE: XYL ), Invesco S&P Global Water Index ETF ( CGW ), Invesco Water Resource ETF ( PHO ), Northwest Pipe Company ( NWPX ). Comment on other ideas below.
For further details see:
Western states strike deal to cut water use from the Colorado River