John Robinson, an economist at the Agricultural Research and Extension Center in Weslaco, Texas estimates the war for water is costing the local Rio Grande economy roughly $1 billion over a 10-year period.

At the heart of the matter, is a dispute between parties on both sides of the border over a 1944 water treaty. The treaty mandates that Mexico annually supply the United States with an average of 350,000-acre feet of water over defined five-year cycles. In turn, the United States agreed to supply water to Mexico from the Colorado River in California and Arizona.

What has happened, however, is Mexico has failed to hold up its end of the bargain, and Texas farmers are growing increasingly impatient with diplomatic efforts to resolve the problem with our neighbors to the south. Meanwhile, the United States has continued to supply its required supply of water to Mexico.

The water shortages reportedly began in 1992 when Mexico began under-supplying the average minimum annual amount of 350,000-acre feet of water into the Rio Grande Valley. “The deficit for the five-year cycle between 1992 and 1997 was approximately one million-acre feet, and without substantive repayment, the cumulative deficit is projected to grow to 1.7 million-acre feet by October 2002, which is the end of the current five-year cycle.”

“The impacts of these deficits were not immediately felt as the remaining U.S. irrigation water supplies in the Amistad and Falcon reservoirs were consumed,” he says. “Irrigation supply shortages occurred when irrigation water demands exceeded the available supplies, which had been drawn down during the deficit years since 1992.”

Making matters worse, the Rio Grande Valley entered a drought period in 1995 and 1996, increasing water demands. The U.S. agricultural accounts went dry, making the Mexican induced water shortage more apparent.

Since 1992, the average decrease in irrigation water usage in the Rio Grande Valley is 563,826 acre-feet per year. The Texas Governor’s office used these figures and Robinson’s values to estimate losses of $367 million in lost business and job losses of 11,277 each year since 1996. In comparison, if Mexico supplied Texas with the minimum 350,000 acre-feet of water each year as it agreed to, Robinson estimates it would mean an additional $134 million in business activity and 4,130 in jobs for the region.

Accurately estimating economic damages, he says, is hampered somewhat by the period of time over which the damages incurred. “We don’t really know, on an annual basis, what the water supply would have been had Mexico complied with the treaty, or what the annual water use would have been for the Texas crops affected.”

Robinson calculated the direct impact of irrigation water on the regional economy by estimating the total value of production per acre foot of water, assuming that acreage is allocated among crops as if producers made cropping decisions anticipating no shortages of irrigation water.

“We may even be understating the impact of a water shortage on businesses in the Rio Grande Valley because we are assuming farmers would have used the water they didn’t receive in the same pattern as the water they actually used in each year of the shortage,” he says. “More than likely, however, farmers assured of adequate water supplies would have expanded irrigated acreage of the higher valued crops, like sugarcane and vegetables, and not the lower valued crops of cotton and grain sorghum. Also, our economic analysis does not take into account any forward linkages generated by the local processing of local farm products.”

A recent USDA study estimates an average annual decrease in the gross value of major row crops at $34 million per year for the 1996-1999 period, as compared to the five years between 1990-1995. However, the USDA figures reflect only “farm gate” losses for selected crops and do not capture the broader, regional economic impacts included in Robinson’s analysis.

Adding to the confusion, Robinson says, “Producers notified of a reduction in anticipated water availability after planting decisions have been made would likely first reduce or eliminate irrigation of crops returning a lower value and would eliminate irrigation of higher valued crops only in the event of larger water restrictions.”

Because of this, he says, the estimate of the average value of water may be higher, particularly in the instance of a relatively small water shortage.

On the other hand, if an anticipated water shortage was announced in advance of planting decisions, producers would be more likely to first reduce acreage of crops requiring more intensive irrigation and producing higher values. In that case, the average value of the water could be less,” he says.

Since the water shortage became apparent in the early 1990s, vegetable production in the Rio Grande Valley has declined, sugarcane and citrus acreage have remained steady, but irrigated cotton production has “taken it on the chin,” according to Robinson. “Irrigated row crops have seen the biggest acreage decreases from this water shortage.”

Despite increased political pressure, the battle for water between the two countries isn’t likely to change anytime soon. “When the problem moves to urban areas and begins to affect millions of voters, the pressure on the Mexican government to comply with the treaty may finally increase.”

e-mail: dmuzzi@primediabusiness.com