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Panel models with random effects are used to estimate how climate influences in-stream surface water supply, municipal water demand, crop yields and irrigation water use. The results are added into TEXRIVERSIM, a state wide economic, hydrological, environmental and inter-basin water transfer (IBTs) investment model, through the objective function and hydrological constraints. A climate change related scenario analysis from the Global Circulation Models (GCMs)--Hadley, Canadian, BCCR and NCAR with SRES scenarios A1B, B1, and A2 indicates that inter-basin water transfers not only greatly relax water scarcity problems for major cities and industrial counties, but also create growth opportunity for Houston. However, while destination basins receive the benefits, source basins will experience dramatic reduction in in-stream flow and water flows to bays and estuaries. Climate change requires accelerated water development with more IBTs proving economically feasible depending on the GCMs and SRES scenarios.


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