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Environmental Economics Seminar: The effect of water supply shocks on the electricity generation mix: Implications for climate change
August 11, 2015, 1 - 2:30 PM
Room 4128, William Jefferson Clinton West Building, 1301 Constitution Ave., NW, Washington, DC
Jonathan Eyer (Department of Economics, North Carolina State Univ.) and Casey J. Wichman (Resources for the Future)
Presenting: Casey J. Wichman
EPA Contact: Carl Pasurka, 202-566-2275
Abstract: This paper considers the role of water scarcity on electricity generation from different fuel sources in geographically differentiated markets in the US. We find that hydroelectric generation decreases substantially in response to drought, though this baseline generation is offset by coal, natural gas, and other renewables depending on the geographic region. Results at both the state- and plant-level provide evidence that increases in water scarcity between 2001 and 2012 shifted the generation portfolio towards fossil fuels in many energy markets. We provide empirical evidence that droughts increased emissions of carbon as well as local pollutants. We estimate the social costs of water scarcity to be $10 million per month for a drought-ridden state attributable to carbon emissions alone.