Cash flow: What's the economic value of a healthy, abundant river?

Project Flows
ASU/Project Flows report on the importance of the Colorado River to the Southwest economy.

The mighty Colorado River winds through watersheds of seven U.S. states and Mexico,  supplying not only water to this parched desert territory but also millions of jobs and more than a trillion dollars in economic benefits, according to a new study by Arizona State University.

But the river's water levels are slowly decreasing.

The ASU economic study, commissioned by the business coalition Protect the Flows, about the value of water posed a fascinating and important question.  What if the Colorado River was not available to the Southwest for one full year?  What would the economic impact be to companies in the river’s seven basin states?

As a corporation with over 30,000 employees in Nevada, one of the most arid states in the Southwest, Caesars Entertainment found this analysis, documenting in hard numbers the total value of the Colorado River to our economy, to be of incredible interest.  

The report demonstrates that the health of the Southwest’s economy is deeply intertwined with the health of the Colorado River.  Analysis by the report author, Tim James at ASU’s L. William Seidman Research Institute, shows that hanging in the balance of the health of the Colorado River system are the $1.4 trillion in economic benefits and 16 million jobs annually in the seven Colorado River Basin states. 

In Nevada alone, the study determined that 87 percent of Nevada’s Gross State Product, which is the sum of all value added by industries within the state, is dependent on Colorado River water.  More precisely, that equals $115 billion in economic activity and 1.4 million jobs in Nevada.  ASU’s study makes it starkly clear the business risk we face from diminishing our water and other natural resources.  

While the Colorado River is not likely to disappear completely anytime soon, the ominous signals for our upcoming challenges are already in plain sight. Lake Mead — a major reservoir for water supply in Nevada, California and Arizona — now sits at an all-time low capacity of 39 percent.

If the 15-year drought in the Colorado River Basin persists and climate change models are correct, forecasts are for this already difficult situation to worsen. In fact, some climate scientists predict a drop in the river’s flow of 10-30 percent in the coming decades and researchers at University of California San Diego’s Scripps Institution of Oceanography have calculated that without aggressive conservation efforts there’s a 50-50 chance that Lake Mead could reach “dead pool,” essentially an unusable state, by 2036.

Given the new data from the ASU report, how do we best proceed to protect this precious resource that sustains us in such large measure while driving business value?  

Like many companies in the region, Caesars uses water from the river for cleaning, cooling, cooking and other operational purposes while our guests rely on water for daily needs.To ensure that we use limited water resources as wisely as possible, since 2008 Caesars has voluntarily reduced its water consumption company-wide by 18 percent on a square footage basis through improved operational efficiencies and investment in water-smart technologies. We do this because we believe it is the right thing to do, it is our commitment to the environment, and it also happens to make good business sense. Water saving measures have saved $1.5 million in operating costs.

As part of Caesars’ ongoing CodeGreen sustainability efforts, we have implemented a series of portfolio-wide water efficiency initiatives that have solid economic returns and reduce overall water use.  A sampling of projects includes the following: 

  • Implementing a guest room towel and linen reuse program promoted through educational signs placed in guest rooms. Guests prove time and again that they want to make a difference and opt to reuse their sheets and towels so that they need to be laundered less often. Engaging and educating housekeeping staff about the program through CodeGreen is key to its success.

  • Replacing standard washers with tunnel washers at the Caesars’ Las Vegas, Nevada laundry facility saved 30 million gallons a year while expanding capacity by 40 percent, allowing the facility to process larger volumes of linens with reduced water use.

  • Installing high-efficiency, WaterSense labeled showerheads and faucet aerators. With corporate funding, Caesars replaced more than 10,000 showerheads throughout a selection of its U.S. properties, while some properties independently replaced an additional 6,000 showerheads. Showerheads went from using 2.5 gallons per minute (gpm) to 1.8 gpm, saving 50 million gallons of water and 18,000 million British thermal units (MMBtu) of natural gas annually in properties nationwide.

  • Bringing water savings outdoors by xeriscaping and replacing vegetation with desert landscaping. At Caesars’ Nevada golf courses, water savings goes a step further with reclaimed water used for irrigation purposes. 

  • Measuring water from one of its highest water end users—cooling towers—by installing submeters. These allow Caesars to evaluate water use trends and quickly identify leaks or other malfunctions.

  • Allowing individual properties to start their own water conservation initiatives, unique to their location’s needs. For example, the Caesars Palace Hotel and Casino Las Vegas installed dual-flush toilets in some of its larger public-use restrooms to capitalize on the savings that can be achieved from a large user throughput.

  • Aggressively tackling energy use through efficiency improvements and conservation measures that not only lower energy requirements, but also reduce the amount of water needed for HVAC systems in large properties. Measures include installing LED lights in tens of thousands of sockets, deploying over 12,000 digital thermostats with integrated occupancy sensors in guestrooms, and designing for efficiency in new LEED-certified projects.

 

Through these efforts and more, water use intensity has continued to decrease over the years while savings have been delivered to the bottom line. The water reductions alone have led to operating cost decreases of over $1.5 million per year. The progress is positive, but it’s clearly not enough, particularly in water-stressed regions such as southern Nevada.  We intend to go even further with our program and hope that other businesses will also see that environmental preservation is not only the right thing to do, but can have a positive financial impact on their operations. 

The ASU study highlights our region’s economic dependency on the Colorado River and underscores how we cannot afford to send this key source of economic growth and jobs down the drain by using water inefficiently. Our personal experience at Caesars further demonstrates that taking corporate citizenship seriously and using natural resources such as water more judiciously can also benefit our bottom line in the process. We encourage other companies to contact us and to connect to the many businesses in the Protect the Flows network who are more than willing to share and learn about water saving practices.  Working together is the only way we can make a more sustainable water future for our region a reality.