The Risk of Curtailment under the Colorado River Compact

Abstract

Water supply in the Colorado River could drop so far in the next decade that the ability of the Upper Colorado River Basin states – Colorado, Utah, Wyoming, and New Mexico – to meet their legal obligations to downstream users in Nevada, Arizona, California, and Mexico would be in grave jeopardy.

Legal institutions designed nearly a century ago are inadequate to address the significant risk of shortfall combined with uncertainty about whose water supplies would be cut, and by how much.

This report indicates that declines in the Colorado River’s flow could force water curtailments in coming decades, posing a credible risk to Colorado communities and requiring serious consideration of insurance protection like demand management.

Keywords: Colorado River, Colorado River Compact, demand management, curtailment, Upper Basin obligations, water conservation

JEL Classification: Q01, Q25, Q28, Z18