There’s an interesting article in the Times today on how rapid growth in Georgia suburbs has not only taxed water infrastructure but actual water reserves. Certainly, growth in the southeast has been hard on freshwater sources, but the challenge there is nothing compared to what’s coming for the boomtowns west of the Mississippi, and particularly in the desert southwest.

I’ve often wondered how water shortages and subsequent increases in prices for water might affect settlement patterns in places like Phoenix, Las Vegas, and Riverside California–places growing incredibly fast in areas where water is remarkably scarce. Harvard’s Ed Glaeser has found that growth in sunbelt boomtowns is fueled by low housing costs (which are themselves a result of the low level of community regulation on new housing construction). To what extent does the concept “housing costs” include things like the price of water, and to what extent would water prices need to rise before housing in places with limited water resources becomes less attractive relative to wetter cities? In the Times article, a family notes that their $30 per month water bill has increased to around $300 per month. That’s a tremendous increase, but while $3300 more per year adds up over time, I’m not sure that it will convince anyone to move from a place where the median home costs $180,000 to a place where the median home sells for $400,000 (although there is, of course, some margin, where that very well might make all the difference). Two things to keep an eye on: 1) will cities that used to allow new developments at the drop of a hat begin to curtail growth based on water problems (which would cause home prices to rise and presumably direct growth to other places), and 2) will any sort of super-regional or national effort to address this problem shield residents of dry areas from the true cost of water? If the national government subsidizes water programs in the desert southwest, then it will likewise subsidize population growth there, thus increasing the cost of the subsidy and making us all a little poorer.

Other things to think about: you know all those economically depressed and shrinking cities in the midwest and Ohio Valley? Not only do they have large reserves of freshwater, but they’re also home to underutilized water infrastructure. If resource costs grow and begin to figure into total housing costs, then places in the north and eastern parts of the United States will enjoy a growing cost advantage relative to the stars of the sunbelt.

Another thing: the shift in population from some old cities into new ones has resulted in the construction of billions of dollars or more of new infrastructure, while billions in old infrastructure has gone underused or unused in the old manufacturing towns. I wonder what the net effect on growth of that spending has been? Is it possible that output in the current population distribution is so great as to justify the expense of investing in so much duplicative infrastructure? Could we have grown more by investing in improvements to older cities? That’s one hell of a counterfactual to try and analyze quantitatively, but I’d love to see someone try.