WaterWired

CRS Insight Report: 'The National Flood Insurance Program (NFIP), Reinsurance, and Catastrophe Bonds' Updated 11 April 2019

Just off the press (updated 11 April 2019) this brief (2+ pages) CRS Insight report by Diane P. Horn and Baird Webel is another timely one: The National Flood Insurance Program (NFIP), Reinsurance, and Catastrophe Bonds.

Download CRS_Insight_NFIP_11April2019

Introduction
Insurance generally serves to transfer risk from one entity who does not want to bear that risk to another entity that does. An initial insurance purchase, such as homeowners buying a policy to cover damage to their home, however, is often only the first transfer of that risk. The initial (or primary) insurer may then transfer (or cede) some or all of this risk to another company or investor, such as a reinsurer. Reinsurers may also further transfer (or retrocede) risks to other reinsurers. Such risk transfers are, on the whole, a net cost for primary insurers, just as purchasing insurance is a net cost for homeowners.

The Homeowner Flood Insurance Affordability Act of 2014 (P.L. 113-89) revised the authority of the National Flood Insurance Program (NFIP) to secure reinsurance from “private reinsurance and capital markets.” Risk transfer to the private market could reduce the likelihood of the Federal Emergency Management Agency (FEMA) borrowing from the Treasury to pay claims. In addition, it could allow the NFIP to recognize some of its flood risk up front through premiums it pays for risk transfers rather than after-the-fact borrowing, and could help the NFIP to reduce the volatility of its losses over time. However, because reinsurers charge premiums to compensate for the assumed risk as well as the reinsurers’ costs and profit margins, the primary benefit of reinsurance is to manage risk, not to reduce the NFIP’s long- term fiscal exposure.

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"You are piling up a heritage of conflict and litigation over water rights for there is not sufficient water to supply the land" - John Wesley Powell, 1893

Paper: 'Crisis on the High Plains - The Loss of America’s Largest Aquifer – the Ogallala'

It's appropriate to post an article about the Ogallala (aka High Plains) aquifer today. I am in Omaha about to start an AWRA conference (Setting Conditions for the Success of Integrated Water Resources Management) in Nebraska, where the Ogallala is sacred ground to many. It underlies more of Nebraska than any other state and pumps a huge amount of groundwater.

This paper is by Jeremy Frankel from the University of Denver Law School Water Law Review in May 2018: Crisis on the High Plains: The Loss of America’s Largest Aquifer–The Ogallala. You can also find the paper in this issue (Volume 33, Issue 3) of the Renewable Resources Journal.

Introduction
The grain-growing region in the High Plains of America—known as America’s breadbasket—relies entirely on the Ogallala Aquifer. But long term unsustainable use of the aquifer is forcing states in the region to face the prospect of a regional economic disaster. As the High Plains states reach the verge of a major crisis, the states have taken different approaches to conservation with varying results.

The Ogallala Aquifer supports an astounding one-sixth of the world’s grain produce, and it has long been an essential component of American agriculture. The High Plains region—where the aquifer lies—relies on the aquifer for residential and industrial uses, but the aquifer’s water is used primarily for agricultural irrigation. The agricultural demands for Ogallala water in the region are immense, with the aquifer ultimately being responsible for thirty percent of all irrigation in the United States. The Ogallala Aquifer has long been unable to keep up with these agricultural demands, as the aquifer recharges far slower than water is withdrawn.

Aside from the obvious agricultural ramifications from the Ogallala’s depletion, recent studies have shown that groundwater depletion also has a severe effect on freshwater ecosystems in the region. Each state has had to confront the issue in their own way, but the depletion of the aquifer has become severe enough to warrant the attention of the federal government as well. At the state level, the focus has been on maintaining an orderly depletion of the aquifer rather than developing a plan for sustainable use. However, some states have achieved some level of success in slowing down the aquifer’s depletion. Kansas, for example, has recently achieved mild success by adopting a program that put conservation in the hands of the State’s farmers. On the other hand, Nebraska has seen more success than Kansas by being tougher on farmers and exercising its enforcement powers. The federal government has also set up financial and technical assistance for farmers who commit to conservation and is funding large-scale pipeline projects to bring in water to the more desperate areas of the High Plains.

Cutting to the chase...

Conclusion
The Governor of Kansas, after seeing the success of the one and only LEMA group in the state, has recently declared that Kansas has been producing real results towards water conservation and that Kansas’s status as a breadbasket for the nation has been secured. However, it is important to remember to contextualize this success; it is only one group in an area less than one hundred square miles, meaning that the Ogallala is far from saved. And while there is value in allowing farmers to voluntarily take the reins in conserving the Ogallala, it is clear that they are not jumping at the opportunity to do so. The farmers themselves have commented that it is going to take a whole change of culture in the region to see the results that the Kansas legislature envisioned from the LEMA program—an uphill battle that certainly will not happen overnight. Nebraska is at least seeing some more substantial results from their hardline policies, which may be the direction the High Plains states need to take to avoid a major crisis. While the Ogallala may not be able to be completely saved at this point, it is certainly worth preserving for as long as possible, and states should not hold back in using their enforcement powers to do so.

Thanks to Tim Smith for briging this article to my attention. I'll be hearing about this over the next few days.

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"IT indicates they've backed up all our emails into a group of slaved and networked old Commodore 64s. Attached are your instructions for using ELM." - @ass_deans

CRS Report: 'Management of the Colorado River: Water Allocations, Drought, and the Federal Role' (Updated 21 March 2019)

Another timely (21 March 2019) CRS report from Charles V. Stern and Pervaze A. Sheikh: Management of the Colorado River: Water Allocation, Drought, and the Federal Role. 

Download CRS_Mgmt_CR_Allocation_Drought_21March2019

The first few sections follow. Don't forget the last section 'Issues for Congress'.

Click on the graphics to enlarge them.

Introduction

The Colorado River Basin covers more than 246,000 square miles in seven U.S. states (Wyoming, Colorado, Utah, New Mexico, Arizona, Nevada, and California) and Mexico. Pursuant to federal law, the Bureau of Reclamation (part of the Department of the Interior) manages much of the basin’s water supplies. Colorado River water is used primarily for agricultural irrigation and municipal and industrial (M&I) uses, but it also is important for power production, fish and wildlife, and recreational uses. 

 

In recent years, consumptive uses of Colorado River water have exceeded natural flows. This causes an imbalance in the basin’s available supplies and competing demands. A drought in the basin dating to 2000 has raised the prospect of water delivery curtailments and decreased hydropower production, among other things. In the future, observers expect that increasing demand for supplies, coupled with the effects of climate change, will further increase the strain on the basin’s limited water supplies. 

River Management

The Law of the River is the commonly used shorthand for the multiple laws, court decisions, and other documents governing Colorado River operations. The foundational document of the Law of the River is the Colorado River Compact of 1922. Pursuant to the compact, the basin states established a framework to apportion the water supplies between the Upper and Lower Basins of the Colorado River, with the dividing line between the two basins at Lees Ferry, AZ (near the Utah border). The Upper and Lower Basins each were allocated 7.5 million acre-feet (maf) annually under the Colorado River Compact; an additional 1.5 maf in annual flows was made available to Mexico under a 1944 treaty. Future agreements and court decisions addressed numerous other issues (including intrastate allocations of flows), and subsequent federal legislation provided authority and funding for federal facilities that allowed users to develop their allocations. A Supreme Court ruling also confirmed that Congress designated the Secretary of the Interior as the water master for the Lower Basin, a role in which the federal government manages the delivery of all water below Hoover Dam.

Reclamation and basin stakeholders closely track the status of two large reservoirs—Lake Powell in the Upper Basin and Lake Mead in the Lower Basin—as an indicator of basin storage conditions. Under recent guidelines, dam releases from these facilities are tied to specific water storage levels. For Lake Mead, the first tier of “shortage,” under which Arizona’s and Nevada’s allocations would be decreased, would be triggered if Lake Mead’s January 1 elevation is expected to fall below 1,075 feet above mean sea level. As of early 2019, Reclamation projected that there is an almost 70% chance of a shortage condition at Lake Mead beginning in 2020; there is also a lesser chance of Lake Powell reaching critically low levels in the next five years.

 

Drought Contingency Plans

Despite previous efforts to alleviate shortages in the basin, the possibility of water delivery curtailments for basin users has increased. After several years of negotiations, Reclamation and the basin states in 2018 announced draft drought contingency plans (DCPs) for the Upper and Lower Basins. These plans would commit states to water supply cutbacks tied to reservoir storage levels (i.e., cutbacks in excess of previous cutback commitments), among other things. For the DCPs to be finalized, states and stakeholders must approve intrastate commitments (the agreements that make it possible for the states to realize their responsibilities in the DCPs). Federal implementation of the agreements also requires congressional authorization. DOI has stated that if the relevant entities do not approve the DCPs in a timely manner, then it may implement additional curtailments. 

Congressional Role

Congress plays a multifaceted role in federal management of the Colorado River basin. Congress funds and oversees management of basin facilities, including operations and programs to protect and restore endangered species. It also has enacted and continues to consider Indian water rights settlements involving Colorado River waters and development of new water storage facilities in the basin. In addition, Congress has authorized and approved funding to mitigate water shortages and conserve basin water supplies and has considered enacting new authorities to combat drought and its effects on basin water users.

Great material for my US Water Management class!

Enjoy!

“Water problems in the western United States, when viewed from afar, can seem tantalizingly easy to solve: all we need to do is turn off the fountains at the Bellagio, stop selling hay to China, ban golf, cut down the almond trees, and kill all the lawyers.” - David Owen, Where the Water Goes: Life and Death Along the Colorado River

Report: 'How the Aral Sea Will Look Like in Foreseeable Future?'

This publication was sent to me by someone who must know that I am a sucker for anything having to do with the water resources of the South Caucasus, Central Asia ('the Stans'), and Iran. I am by no means an expert but have visited all three (only Kazakhstan in Central Asia) and would love to return.

As I said - I'm no expert but this report looks interesting.

How the Aral Sea Will Look Like in Foreseeable Future? was published on 23 February 2019 by Dursun Yildiz in World Water Diplomacy and Science News.

Download How_the_Aral_Sea_will_look_like_in_Fores

Some information about the author (from the report):

Dursun Yıldız is a hydropolitics expert and Director of the Hydropolitics Academy Associationlocated in Ankara-Turkey. He is a civil engineer and used to be Deputy Director at the State Hydraulic Works in Turkey; he completed a hydroinformatics post graduate course at the IHE in Delft,t echnical training programme in USBR-USA and a master's degree in Hydropolitics at the Hacettepe University-Turkey. He has over 5 years of teaching experiences in some Turkish Universities and now works as head of his own Hydro Energy & Strategy consulting company located in Ankara. He has published severel international articles and 13 Books. He recieved Most Succesful Reseracher Award on International Water Issues from Turkish Agricultural Association in 2008 and from Central Union of Irrigatıon Cooperatives in 2016.

Summary
In 2011, Together with Ambassador (R) and Hydropolitical Academy founding Member M. Nuri Yildirim we made a technical trip to Central Asia .In this trip 2 hours after we left Kızılorda city to reach Aral Sea , we began to witness the great damage caused to the environment by drying a lake along the dirt road. As the water was drawn from the sea, it also took away the ecological balance. Because of the strong winds in the region, salt and drugs in the vicinity of the lake spread very alarmingly, this problem was felt in the capital of Uzbekistan, Tashkent, which is 500 km away.In this article I'm looking for an answer to the question of whether the Aral Sea will go back or not.

 

1) Introduction
Since the 1960s, the Aral Sea has been severely shrunk due to the excessive use of water resources that feed the lake in the period of USSR for agricultural irrigation. This decrease in the amount of water in the Aral Lake brought many ecological problems for the lake and its surroundings. The area of 33.000 km2 in Aral Lake is completely dried and the mineral content in its water is increased. The lake ecosystem is almost completely destroyed.

In the period between 1911 and 1960, an annual average of 56 billion m3 of water was spilled on the Aral Sea. Since the mid - 1980s, the decline in the Aral Sea water volume has accelerated. It was divided into two part in December 1987. The depth of the small Aral to the north dropped to 12 m. The depth of the Great Aral in the south dropped to 23 m. The Aral Lake, on this date, shrank by 74% in area and 84% in volume .

The area of Aral Lake, which was 67 500 km2 in 1960, decreased to 17 200 km2 in 2003. The most populous countries in the region are also the most industrialized countries. For this reason, these countries need important water to feed their populations as well as to provide water to their industries.

Related with Aral Sea environmental disaster, the protection of the environment in Central Asia encountered two obstacles. The first of these is addressing human needs in front of environmental protection which remain from the period of USSR and the economic obstacle.

The amount of water flowing into the Aral Lake declined rapidly and in 2000 and 2001 The measured average annual flow at observation station located 102 km. far away from the sea showed that discharge was too low to feed the lake.

Cutting to the chase...

6) Results and Evaluations 

What will all these efforts bring for the future of the Aral Sea ? It will bring a potential positive environmental impacts in and around the Northern Aral Sea and the Syrdarya delta would include: 

1. (i) the creation of a freshwater reservoir; 
2. (ii) the filling of lagoons and delta lakes; 
3. (iii) an increase in wetlands; 
4. (iv) a reduction in salt and dust storms; 
5. (v) the restoration if biological diversity; and 
6. (vi) an improved ecological system. 

The actual impact would depend on the design water level in the Northern Aral Sea .The progress in the Northern Aral has increased hopes for the return of the Aral Sea. However, the complete return of the Sea will not be as easy as the Northern Aral Part. It is clear that engineering structures and facilities provided by the geography have helped to solve the problem in this part. However, the solution for South Aral is more dependent on water management and hydro-political relations among the riparian state. 

The alternative of carrying water from the other basin to the Aral Sea may not be a sustainable solution. Therefore, instead of bringing water out of the basin, the solution should be searched primarily within the basin. This makes it possible to link the return of the Aral Sea with the more efficient use of water in the basin countries. The water resources in the Aral Basin are threatened by the inefficient use of water as well as the climate change effects. 

If one ask that will the Aral Sea come back? In fact ,it is difficult to give a favorable response this question for a near future. Therefore, we assume that the lake, which was lost in half a century as a whole, will be able to come back in a longer period and it will occur part by part. 

The annual average water of the Ceyhun River pouring into the Southern Aral Sea is approximately twice that of Seyhun, which is still pouring into the Northern Aral . However, this water is used in a very inefficient way to reach the lake. It seems to be difficult to fill a lake volume about 10 times larger than the North Aral. 

As a result, there are many problems to the return of South Aral Sea, ranging from the inefficient use of water in the basin, the negative consequences of global climate change and the geopolitical obstacles to the softening of hydro-political relations among riparian state. 

I regret to say that the Aral Sea will also be given by next generation as a live example of an environmental disaster created by the water mismanagement. 

 

Hard to enjoy this report. Your comments are welcomed.

Here is a 2010 paper by noted expert Philip Micklin: The Past, Present, and Future Aral Sea. And another one (2016): The Future Aral Sea: Hope and Despair. 

"Sooner or later, wittingly or unwittingly, we must pay for every intrusion on the natural environment." - Barry Commoner


CRS Insight Reports: National Flood Insurance Program - 1) Selected Issues - Reauthorization and Reform; 2) Brief Introduction

Diane P. Horn has been busy on the National Flood Insurance Program front lately. She has authored two brief (two pages) CRS Insight reports on 19 February 2019: Selected Issues for National Flood Insurance Program (NFIP) Reauthorization and Reform: Homeland Security Issues in the 116th Congress and A Brief Introduction to the National Flood Insurance Program: Homeland Security Issues in the 116th Congress,

Below I have pasted the first section of each report. Click on the title to access the version including any hot links in the text. 

1) Selected Issues for National Flood Insurance Program (NFIP) Reauthorization and Reform: Homeland Security Issues in the 116th Congress

Download CRS_Insight_NFIP_19February2019

NFIP Reauthorization
The National Flood Insurance Program (NFIP) is the primary source of flood insurance for residential properties in the United States, with more than 5.1 million policies providing over $1.3 trillion in coverage in over 22,000 communities. Since the end of FY2017, 10 short-term NFIP reauthorizations have been enacted, and the NFIP is currently authorized until May 31, 2019. Unless reauthorized or amended by Congress, on May 31, 2019, (1) the authority to provide new flood insurance contracts will expire and (2) the authority for the NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion.

A number of bills were introduced in the 115 th Congress to provide longer-term reauthorization of the NFIP and numerous other changes to the program. The House passed H.R. 2874 on November 14, 2017. Three reauthorization bills were introduced in the Senate, S. 1313, S. 1368, and S. 1571; however, none of these were considered by the Senate in the 115 th Congress.

2) A Brief Introduction to the National Flood Insurance Program: Homeland Security Issues in the 116th Congress

Download CRS_Insight_NFIP_Intro_19February2019

Introduction
The National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. §§4001 et seq.) and is the primary source of flood insurance coverage forresidential properties in the United States. The NFIP has two main policy goals: (1) to provide access to primary flood insurance, thereby allowing for the transfer of some of the financial risk from property owners to the federal government, and (2) to mitigate and reduce the nation's comprehensive flood risk through the development and implementation of floodplain management standards. A longer-term objective of the NFIP is to reduce federal expenditure on disaster assistance after floods. The NFIP engages in many "noninsurance" activities in the public interest: it identifies and maps flood hazards, disseminates flood-risk information through flood maps, requires community land-use and building-code standards, contributes to community resilience by providing a mechanism to fund rebuilding after a flood, and offers grants and incentive programs for household- and community-level investments in flood-risk reduction.

Over 22,000 communities participate in the NFIP, with more than 5.1 million policies providing over $1.3 trillion in coverage. The program collects more than $4.7 billion in annual revenue from policyholders' premiums, fees, and surcharges. Floods are the most common natural disaster in the United States, and all 50 states have experienced floods in recent years.

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"We are the state’s flagship institution in a fleet of dinghies. That is something to be proud, even if the state’s higher education system is in the gutter nationally." - @ass_deans .