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Water and Energy at Issue in Fifth State of the West Symposium

Nov 13 2015

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Photos: Steve Castillo

Two fundamental resources of the American West, water and energy, were the focus of the fifth annual State of the West Symposium held on November 12. Collaboratively organized by the Bill Lane Center for the American West and the Stanford Institute for Economic Policy Research (SIEPR), the half-day event took place at SIEPR's headquarters on the Stanford campus.

Assessing The Economic State of the West

The SIEPR fellow and Stanford public policy lecturer David Crane opened the symposium with a keynote talk (video) assessing the economic state of the American West. Crane noted that while energy dependent economies in North Dakota and Alaska have suffered from declining oil and gas prices, other western states like California, Nevada, Washington, and Oregon saw robust employment growth over the past year. Crane added that a number of western states are seeing tax revenues approach levels not seen since before the Great Recession; at the same time, he pointed out how spending priorities have changed since the economic crisis. For example, California now devotes a much smaller share of its budget to long-term investments like transportation, parks, and education, in favor of meeting the increasing demands of Medicaid, pension obligations, and prison costs.

Video: Economic State of the West

Water Markets a Solution to Scarcity?

Water Markets Panel

The afternoon sessions convened distinguished panels on two issues of critical importance. First, a panel led by SIEPR director Mark G. Duggan explored the feasibility of water transfers and markets as a possible approach for addressing the western drought (video). Felicia Marcus, chair of California's State Water Resources Control Board and a veteran water regulator, lamented the difficulty of achieving productive dialogue on water when most players only see one part of the larger picture. Warning that climate change will be a "game-changer" for California water – in that rising temperatures will reduce the state's ability to use winter snowpack for water storage – Marcus urged an "all of the above" strategy employing conservation, increased efficiency, groundwater recharge, water recycling and desalination and, perhaps most controversially, new water storage projects. Marcus predicted that while "water is complicated, it's not impossible, and we are making progress," pointing to a legislature that has passed more water legislation in the past six years than "in the previous three decades."

Stanford economist Frank Wolak has been working on water pricing formulas to help public utilities replace revenue they are losing to water conservation. He spoke about the promise of water markets as a way of allocating water more efficiently – pointing to the example of electrical markets as a model, using an "independent system operator" to manage pricing and exchange of resources. In electricity, said Wolak, the transmission network takes bids and uses them to run a market that balances supply and demand in real time. The challenge, though, is getting back exactly what you put in, he said, and dealing with possible effects on ecosystems. But the gain would be worth it, Wolak continued, saying that the money that goes to pay for armies of water lawyers could instead go to a tariff that would fund local water transfers.

Both Marcus and Wolak saw the Australian millennium drought – which lasted from 1995 to 2007 and led to major policy changes – as a valuable lesson for western water policy. Wolak pointed out how Australian ecosystems were given their own water right and a seat at the negotiating table, while Marcus admired the communal spirit that negotiators have shown – "even though they fight, there's much more talk of 'we'” in Australia.

Video: Panel on Water Markets

Debating the Costs and Benefits of a "Fossil Highway" to Asia

The second panel of the afternoon featured a spirited debate between opponents and supporters of fossil-fuel export facilities on the West coast (video). Moderated by Bruce E. Cain, the Spence and Cleone Eccles Family Director of the Bill Lane Center for the American West, the panel was led off by Sally Benson,  co-director of Stanford’s Precourt Institute for Energy. Benson pointed out the growing share that renewable energy sources are taking in western states like California.

The conservation lawyer Jay Manning touted the successes of the Pacific coast states from California to British Columbia in promoting renewable energy policies, from cap and trade in California to carbon taxes in B.C. "These states, which together comprise the fifth largest economy in the world," Manning said, "will be the first to embrace the clean energy economy." At the same time that states like Oregon and Washington appear headed toward economy-wide limits on carbon, Manning warned of the possible effects of several fossil energy export projects proposed for ports in Washington and British Columbia. Focusing on the Millennium coal terminal proposed in Longview, Wash., Manning argued that sending U.S. coal abroad to be burned in Asia would add a billion tons of CO2 to the atmosphere every year.

Arguing the "pro" case for the terminals fell to Bill Chapman, CEO of the Longview-based Millennium Bulk Terminals company. Chapman countered that "having a dialogue about symbolic gestures in a mostly hydro-powered region is not going to affect China" – adding that China already has 155 coal-burning plants under development and that the policy priorities should be for Asian markets to burn cleaner coal – like the US's. He added that a priority is for Chinese plants to start using pollution control devices, which they have already installed but are reluctant to use because of the corresponding reduction in energy output.

Video: Panel on Energy Infrastructure

Evening Keynote with Wyoming Political Royalty

The Western Governor's Association chairman and Wyoming Governor Matt Mead gave the evening keynote address(video). Echoing the discussion of fossil fuel exports, Mead pointed out that his coal-rich state is the third largest energy exporter in the world, and that "it is unrealistic to think that the source of 40% of electricity is not going to be around," but added "it is the responsibility of coal-producing states to make it better."

Turning an eye to renewables, Gov. Mead said "we intend to build the world's best onshore wind platform, though delivering to California is problematic."

Gov. Mead also stressed the importance of ensuring that the West can meet the food needs of the future, despite the shrinking number of young people going into agriculture. He added that food is an important national security concern: "imagine the leverage of other countries if we needed them not just for fuel, but for food?"

From left to right: David M. Kennedy, Former Sen. Alan Simpson, Bruce E. Cain, Jody Foster, Nancy Pfund

Gov. Mead, the grandson of Wyoming Governor and Senator Clifford Hansen, was given a folksy introduction by his fellow Equality State political scion, the voluble former Senator Alan Simpson, the son of Wyoming Senator and Governor Milward Simpson. The address was followed by a conversation among Gov. Mead, Sen. Simpson, and Bill Lane Center founding former co-director David M. Kennedy.

In reaching back to his family roots, Gov. Mead emphasized the need for maintaining collegiality in working with the other western governors. "In Wyoming, civility matters. If you look at myself, Governor Brown and Governor Inslee [of Washington], we have fundamental disagreements on coal, but we have to work together on forest health and issues that don't recognize state boundaries. The Western Governors' Association and the ability to recognize differences and common interests, that's a model to me," he added.

Video: Gov. Matt Mead and Former Senator Alan Simpson

State of the West Symposium Returns in 2016

The sixth annual State of the West Symposium will be held in December 1, 2016. Complete video of this year's sessions is available at siepr.stanford.edu. Read about previous symposia on our State of the West page.

Watch complete video of the 2015 State of the West Symposium »