The Energy-Water Nexus: Socioeconomic Considerations and Suggested Legal Reforms in the Southwest

Energy and water shortages amplify each other and require innovation. Increasingly, developers are proposing renewable energy projects to help meet future energy needs while reducing water demand. In the Southwest, such projects may be subject to state siting procedures as well as water transfer proceedings. Each type of proceeding provides a means to account for impacts to third parties and should ensure that socioeconomic impacts are given appropriate weight. Toward that end, new legislation should expressly provide for socioeconomic issues to be incorporated into the review process for a broader range of energy projects and should improve consistency among the states to reduce transaction costs and enable progress toward sustainability. In addition, energy and water proceedings should be better integrated and should be designed to promote collaboration at all levels of government. This article examines how economic modeling should be used as one tool in the decision-making process, demonstrating how information involving new projects should be carefully monitored, compiled, and made available. To the extent possible, third parties should be compensated for impacts from new energy projects.