The Southwest Texas Water Project proposed by Southwest Texas Water Resources, L.P. (“STWR”)  involves the creation of a water company based in Uvalde County to develop, finance and operate a well field in Uvalde County and a regional water pipeline from Uvalde County to Bexar County.  The Southwest Texas Water Project represents an important economic boost to the local economy of Uvalde County by the direct capital investment and jobs that will result from the Southwest Texas Water Project’s water company located in Uvalde County, the economic benefits to water rights owners, and the hundreds of jobs created during the construction phase.

Current Status of the Uvalde County Economy

Economic growth in Uvalde County has been driven more by the growth in transfer payments from government than growth in economic activity.  Since 1980,transfer payments have grown at an annual rate of 4.4%.  In contrast, earnings (net of contribution to social insurance) grew at an annual rate of 1.6%, while capital income (dividends, interest, rents) grew at an annual rate of only 1.1%.  The composition of the Uvalde County economy is also changing.  In the 1970s,the government and service sectors, respectively, accounted for 18.6% and 15.3% of earnings.  Since the turn of the century, government and service sectors now account, respectively, for 31.1%  and 24.6% of earnings.  Over the same period, there has been a general decline in the importance of agriculture and the related agriculture services sector.  In the 1990s, agriculture and agricultural services accounted for 11.9% of county earnings.  Since the turn of the century,agriculture and agricultural services now only account for 7.4% of county earnings.

Like elsewhere in the western United States, the decline in the importance of agriculture in Uvalde County reflects a deteriorating economic situation on the farm.   In the 1990s, proprietor farming income averaged $17.1 million per year.  Since the turn of the century,proprietor farming income has fallen by two-thirds, averaging $5.7 million in the 2000s.  Moreover, these averages mask the fact that in recent years, such as 2006, farmers lost about $5 million.  With the demise of agricultural proprietor income in the past few years, the agriculture sector going forward may not be a robust sector of the Uvalde County economy. 

Economic Stimulus to the Uvalde County Economy

The Southwest Texas Water Project will provide a significant economic stimulus for Uvalde County.  There are three sources of the stimulus:

1. Operation of a new water company in Uvalde County (annual spending of approximately $7 million, with $2 million per year in wages and benefits paid by the company for the new jobs located in Uvalde County and $5 million spent on local services purchased by the new water company).
2. Water right owners participating in STWR’s project will receive a new, long-term income source (estimated at $7 million per year, or 20% greater than the annual average of proprietor income in agriculture since the turn of the century).
3. Construction of the water company’s well field in Uvalde County and regional pipeline (estimated local spending during the construction phase of $32.6 million). 

The Southwest Texas Water Project will create a long-term and significant economic stimulus for Uvalde County (see table “Local Economic Stimulus from the Southwest Texas Water Project”).  The recurring stimulus from the water company’s operations and payments received by water right owners will generate between 77 to 121 jobs annually, depending on how water right owners spend their new source of income created by the Southwest Texas Water Project.  The Southwest Texas Water Project’s job creation will increase wages in Uvalde County by almost $4 million per year.  The Southwest Texas Water Project also increases Uvalde County’s output by about $15 million per year.

Local Economic Stimulus from the Southwest Texas Water Project

* Stimulus created by payments received by water right owners depends on how they spend the money.  To bracket the range of outcomes,the analysis considered two assumptions: water right owners spend their additional income generally (“Spending”) or they invest their income in their agricultural operations (“Investment”).
** Stimulus occurs only for duration of the construction period.
*** County output is the value of all goods and services produced in Uvalde County.

The construction of the new company’s infrastructure also provides a short-term economic stimulus to the Uvalde local economy.  The Southwest Texas Water Project’s spending on local goods and services during the construction period will create 173 jobs, generate $6.7 million in wages, and increase the Uvalde County’s output by $43.76 million.

The Southwest Texas Water Project can generate this economic stimulus without reducing the agricultural base of Uvalde County.  With sprinkler irrigation, farmers can irrigate their crop mix with less than 1 acre foot per acre.  Therefore, participation in the Southwest Texas Water Project does not require any reduction in agricultural activity.  The majority of irrigated acreage in Uvalde County uses sprinkler irrigation.  If a participant in the Southwest Texas Water Project has not yet installed sprinklers, they can invest in sprinklers and continue their farming activity.   With the increased crop yields from sprinklers, this investment could pay for itself within two years without any consideration of the cost-sharing and incentive compensation offered by the U.S. Department of Agriculture Environmental Quality Incentive Program (see “About the Project:Groundwater Use, Agriculture and the Local Economy in Uvalde County for more discussion of sprinklers”).