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In some parts of the western United States, the most widely discussed potential impact of climate change is the impact on water supply and demand. The potential changes in water supplies would result directly from the changes in runoff and the levels of rivers, lakes, and aquifers. In the eastern half of the United States, consumptive withdrawals are usually only a fraction of total runoff; hence these withdrawals are unlikely to be threatened except during severe droughts or where non-consumptive uses such as navigation or environmental quality take precedence. In the west, by contrast, where many rivers are already fully allocated, a decline in runoff would translate directly to a reduced supply of water.
As an example of the potential magnitude of the likely impact, a recent study of the Colorado River found that if climate becomes hotter and drier, runoff could decline in the basin by 15-20%, with a 10% reduction in deliveries to water users. Such a reduction would cost water users in the Colorado Basin about $200-300 million per year.
 Fortunately, more efficient use of water could offset many of the adverse effects of reduced water availability. Because there is no free market for water in most areas, much of the water withdrawn is used inefficiently. A significant fraction of western water is used by farmers that pay only a few dollars per acre-foot for water delivered by federal projects — less than the cost of delivering the water and a tiny fraction of the few hundred dollars per acre-foot that some municipalities pay. Therefore, the economic cost of supply reductions could be very small if those farmers who put water to the least valuable uses respond by reducing their own consumption. If a free market for water can be created, either in anticipation of climate change or for other reasons, the economic cost of reductions in water availability could be much less than the projections of reduced water availability in the west might appear to imply.
In the eastern United States, salinity and increased delivery costs are more likely than insufficient supplies of water. Increased salinity is particularly likely in New York, Philadelphia, Miami, and California’s Central Valley. Eastern cities without salinity problems may still have to increase expenditures on water storage capacity if climate becomes drier. (Consider the Boston Area Water Supply, for example, in the Site's publications section.)
Throughout the nation, water availability problems could be further compounded by increased demand for water for agricultural irrigation, lawn-watering, and cooling water for power plants. Irrigation demand is likely to increase for three reasons: First, drier soils will force some farmers to irrigate land that currently can be cultivated relying solely on rainfall. Second, increased evaporation and transpiration by plants at higher temperatures will tend to increase the amount of irrigation water required in areas that are already irrigated. Finally, a number of studies suggest that the total area of land under cultivation will increase. There is one important mechanism that may help water availability: Higher CO2 concentrations enable plants to use water more efficiently, and therefore, to tolerate slightly drier soils (see Peart et al. 1989, Rosenzweig 1989, Ritchie 1989).
Municipalities are also likely to have a higher demands for water, primarily because more water will be needed for watering lawns and gardens. Cohen (1987) estimated that a one degree (C) warming increases summer municipal water consumption in the Great Lakes region by about 1.25 percent. Kirshen and Fennessey (1993) estimated that, with no change in water rates, a one degree warming increases annual water demand by about 1 percent increase in the metropolitan Boston area. Because the lawn watering season is longer in the south, and the climate is drier in the west, the impact on residential demand would probably be greater in most of the nation than in New England and the Great Lakes region.
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