AUSTIN, Texas Texas leaders’ dreams of unlimited development and a rush of AI data centers are on a collision course with a new reality of extreme weather, as this month’s flash floods hammer a landscape plagued by long-term drought.

Heading into the summer, the region faced perhaps its worst drought on record, until the dregs of Tropical Storm Barry poured torrential rain over Central Texas.

With Texans now facing both the aftermath of floods and a referendum that could release billions into new state water supplies and flood control projects, experts told The Hill, the state faces a critical question: Can it make the necessary investments in time to keep the economic miracle growing and can it do so without either getting washed away or sucking the environment dry?

When it rains, it pours

The July 4 deluge funneled through limestone canyons, swelling rivers that tore through the Hill Country west of Austin and San Antonio and killing at least 132, with more than 100 others still missing a death toll that makes the floods among Texas’s deadliest weather disasters of the last century.

Nor was that the end. Last Sunday, parts of the Hill Country that flooded Independence Day weekend were hit again by rainfalls that topped 10 inches, leading local leaders to call for mandatory evacuations.

But all this, experts say, was not enough to definitively break the grip of drought. Instead, they point to a new reality of chronic scarcity of water punctuated, but not broken, by its sudden, terrifying abundance.

“It’s not a matter of ‘if’ there is another drought, but ‘when,’” said Robert Mace, director of the Meadows Center at Texas State University, a regional mecca for the study of water. “And the question is: Is that ‘when’ tomorrow? As soon as the rains stop, does the next drought start?” 

For Austin, at least, the prognosis for its water supply has become less “scary,” Mace noted. The equivalent of more than 17,000 Olympic-sized pools worth of water thundering into the reservoir on Lake Travis took it from 41 percent full in April to 74 percent full by mid-July — inflows which have been matched or exceeded on the city’s other reservoirs.

But the rains, Mace noted, may have been less an end to the drought than a freak parentheses within it: a perfect storm of “three firehoses of moisture colliding over the Hill County” amid a broader reality in which Texas is getting drier.

Even after the floods, reservoirs on the San Antonio and Nueces rivers, critical for cities including San Antonio and Corpus Christi, remain near historic lows.

Water fights

On the eve of the floods, local attempts to stop the drawdown of Hill Country aquifers were stymied at the highest levels of the state. 

In late June, Gov. Greg Abbott (R) vetoed a bipartisan law that would have allowed a Central Texas water district above the rapidly depleting Hays-Trinity Aquifer to begin charging fees for groundwater withdrawals.

That veto came amid an array of water fights playing out across Texas, with a wave of more than two-dozen new data centers planned for water-stressed parts of the state and hundreds of thousands of new residents — on balance the most in the country moving to the state each year.

On the one hand, the state is “looking into the abyss,” said Rice University environmental law professor Gabriel Collins. “But what you see next to us is a partially assembled jetpack where with a bit of tinkering we can fly out of here,” Collins said.

In the Hill Country region west of Austin, rivers are at their lowest levels “since record keeping began over 100 years ago,” Charlie Hickman, executive manager of engineering with the Guadalupe Blanco River Authority, told local station KXAN last month. In May, the Edwards Aquifer, a key source of water for San Antonio, dropped to its lowest level since the 1950s driving local regulators to cut permitted pumping by nearly half.

Driving this dynamic is, above all, a planet heated up by the uncontrolled burning of fossil fuels, which has created a hotter, thirstier atmosphere that sucks moisture from the land, and increasingly replaces soaking rains which replenish soil and aquifers with torrential storms that run right off them.

Climate change has plunged the state into a new reality, said Mace. In the past when a drought ended, he said, “You could say, ‘Woohoo, it’s over. We’re not gonna have to do that again.’”

But now, less than a decade after the worst drought in the region’s history, “here we are back in it.” Mace said that “this is probably the new normal going forward: that we keep experiencing droughts worse than the previous drought.”

The downstream effects are playing out in legal battles across Texas, including lawsuits in Bryan-College Station and East Texas over aquifer pumping rights.

In the near term at least, that reality means shortage and conflict at least regionally. In April, a private water supplier announced it was cutting off supplies to nine planned developments in Central Texas; in June, a municipality west of Austin considered banning bulk sales of water, a key lifeline to exurban residents whose wells have gone dry. In Montgomery County in East Texas one of the 10 fastest-growing regions in the country the cities of Magnolia and Conroe have halted the permitting of new commercial or residential wells. 

‘So anxious for my cities’

The downstream effects of shortages are playing out between cities as well. Last week, the city of Bryan-College Station home of Texas A&M University settled a lawsuit over a permit its groundwater authority had given to a landowner selling water from the aquifer to a rapidly growing suburb of Austin. Similar legal fights are playing out in Houston County and the city of Jacksonville, in East Texas.

Making the picture more difficult for cities is a 2023 state law that makes it easier for residents or developers of subdivisions or data centers to remove themselves from a city’s jurisdiction and tax base.

That law could allow developers of data centers or real estate to effectively secede from city authority, allowing them to drill their own wells into the city water supply, without the city being able to charge them taxes or impact fees.

While cities have the potential to get ahead of that problem by signing preemptive development agreements with new entrants effectively getting them to help fund the new civic water infrastructure they need the prospect of the new rush “makes me so anxious for my cities,” environmental lawyer Toni Rask said. 

Most of the cities and water districts she represents, Rask said, “are just tiny, and it’s easy for them to get pushed around by big, fancy tech companies.”

Floods mark the other extreme of development risk, as worsening rains meet a largely uninsured populace raising the risk of financial death spirals, as totaled mortgages cut into the financial health of municipalities, which largely rely on property taxes for their financial lifeblood. The Independence Day floods brought at least $22 billion in property damage losses that were largely uninsured, leading to risk of foreclosure and stark drops in the revenues of towns such as Kerrville. 

After the floods, “it’s hard to imagine how fundamentally altered these communities are going to be,” said Jayson O’Neill, who studies climate at the Focal Point Strategy Group. For small Central Texas towns where most residents are on the hook for damages, “you just lost your entire property tax base. There’s no value there anymore.”

Only 1 to 2 percent of inland Texans have flood coverage with permissive building codes that have allowed 5 million state residents to build their homes in floodplains. The state even allows citizens to build their homes in floodways land immediately adjacent to a watercourse leaving it up to municipalities to set stricter limits. 

Many may not be aware they are at flood risk Federal Emergency Management Agency (FEMA) flood maps are both outdated and incomplete, with large swaths of Texas, including many flood prone areas, with no flood data at all.

Property owners can also challenge FEMA to have their properties removed from maps, which relieves them from the responsibility of buying federally subsidized flood insurance as did the owners of Camp Mystic, the girl’s camp where 27 died when the Guadalupe River spilled its banks. 

Voters get a say this November

When it comes to water scarcity, rather than flood, Texas has taken some action. Like most experts interviewed by The Hill, Rice University’s Collins argued that while Texas towns and cities have to wake up to a new reality of drought, the state is far from running out of water and notes that it may be about to get a huge infusion of new resources.

In November, voters will get a chance to approve a referendum advocates have billed as a generational investment in water infrastructure that would unlock a $20 billion public investment in new water supplies, conservation and recycling.

Once federal, local and corporate investments are added in, that’s a “meaningful bite” of the approximately $154 billion the state needs to safeguard its water supplies, said Jeremy Mazur of Texas 2036, a nonpartisan think tank focused on the state’s long-term future.

This year, Mazur said, “the legislature recognized that the water supply issue access is one of the more substantive policy issues informing the continuation of the Texas economic miracle.”

The bill enabling the referendum wasn’t unanimously popular in the legislature conservative advocacy group Texans for Fiscal Responsibility urged members to vote “no,” warning that it represented a new, permanent expense that risks “growing government bureaucracy without guaranteeing outcomes.”

A handful of members voted against it, including state Rep. Brian Harrison (R), who argued that Texas’s budget surplus should instead be spent on property tax cuts.

But it passed the state Senate unanimously and the House by a factor of more than 10 to 1.

If voters approve the referendum in November, a new funding will head to water projects across the state, ranging from desalination of seawater and briny water to the reuse of wastewater and the repair of leaky pipes as well as flood control projects, which have taken on new public importance in the wake of the July 4 disaster.

The state’s towns and cities, Collins said, should think about water not in terms of something to be mined and ultimately depleted like copper or oil but in terms of a shifting, balanced portfolio of supplies. 

The gold standard for this approach, he argued, is the city of San Antonio, which combines aquifer pumping, underground storage, desalination and the state’s largest recycling program.

But the state’s municipalities face significant risk if they get the calculus wrong, Collins said.

“People and companies move to Texas,” he said, because it’s “attractive” and they want to, “not because they have to.”

“And if we ever do something, have a set of circumstances emerge that changes that analysis, we will suffer for decades and generations as a result.”