The South: In Hot Water About Water

A drought has underscored how unbridled growth is taxing the region's dwindling supplies

The Southeast is thirsty. Because of a record drought, Atlanta now has 87 days of drinking water left if rain doesn't fall soon. Raleigh, N.C., has 97 days. Some restaurants in Atlanta aren't offering drinking water unless asked. Farmers in North Carolina are so low on hay that they've begun selling cattle. And dams along the Savannah River have gotten to such low levels this summer they've fallen short of generating the hydropower promised to help keep the region's air conditioners blasting.

Most of the blame at the moment is falling squarely on historically low rainfall. But an equally important culprit has been the unbridled growth of the Southeast in the past 50 years. The region's abundance of cheap water has long fueled development. Now economists fear that the parched earth could become the most important constraint on the region's growth. "Even if the current drought ended tomorrow, we'd still be facing a crisis 12 to 15 years from now," says Sam A. Williams, president of the Metro Atlanta Chamber of Commerce. Williams is in the midst of a battle for more water from the Army Corps of Engineers and is pushing for a statewide water management plan.

Booming Demand

The Southeast's problems could well be a warning for other parts of the nation. "Across the country this is going to become more of an issue," says Mark M. Zandi, chief economist at Moody's (MCO) "Water increasingly will be a binding constraint on growth. More energy and resources will be devoted to thinking about moving water from where we have a lot of it to where we don't have enough of it."

The diminishing water supply in the Southeast has come at a time of soaring demand. Population growth and water use in the region have both outstripped the national average in recent years. According to data from the U.S. Geological Survey, water consumption in the Southeast grew 15% from 1990 to 2000, compared with 2% nationwide. The population rose by 20%, vs. 13% for the country as a whole, and the South has added 4.4 million people since 2000. Demand from traditionally large water customers, including ranches, mines, and factories, actually declined during that period. But that drop was overshadowed by increasing demand for tap and lawn water.

One area facing acute shortages in spots is the I-85 corridor in South Carolina. The road, along with a low cost of doing business in the state, has helped lure employers such as BMW, Hitachi (HIT), and BASF, but it crosses the driest area of the state. Now these companies' plants—and the suburban communities with irrigated lawns that sprouted nearby—are facing a tightening water supply. Walhalla, S.C,, for example, relies on rapidly dwindling stream water and has imposed usage restrictions. "The drought is a serious short-term issue, but it has opened our eyes to the water problems we have and to the fact they won't be going away," says Jeffrey S. Allen, director of the South Carolina Water Resources Center at Clemson University.

Difficult Solutions

If the causes of the water shortage are clear, the solutions are far less obvious. Unlike the Southwest, which has been planning water use for the past 200 years, the Southeast is less equipped to deal with drought. Its outdated laws make dealing with shortages challenging. Some communities have tried to adopt techniques used in drier climates. Sixteen counties in Georgia, for example, have put in place two-tiered pricing, with those who use less paying a lower rate.

Still. water remains a consumer's cheapest utility, with bills averaging $25 per month across the country, and sewage $20, compared with $60 to $100 per month for cell-phone service, notes Francesca McCann, water industry analyst for Houston-based Stanford Group Co. That has created a false sense of the resource as being low in value, she says, and will make it hard to come up with the half-trillion dollars the Environmental Protection Agency estimates will be needed in drinking water and sewage upgrades nationwide over the next 20 years.

Water tensions are high enough that Southeastern states are suing one another. Alabama, Florida, and Georgia continue a series of lawsuits over water that have been in the courts for years. Another suit, currently being considered for review by the U.S. Supreme Court, pits South Carolina against North Carolina. At issue: the northern state's plans to divert 10 million gallons from a shared river to bolster water supply to fast-growing towns outside booming Charlotte. South Carolina objects to the plan being created without its participation. It also claims the move violates the U.S. Constitution's doctrine of Equitable Apportionment by ignoring Sourth Carolina's needs, which should have equal status in matters of interstate rivers. "The place is a dead desert without water except for the lizards and the cactuses," says South Carolina Attorney General Henry McMaster, who filed the suit. "This will be a good time to lay out the water rules. A lot of problems can be averted down the line by dealing with this correctly now."

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