The irony of scarcity: When risk and opportunity reside between agencies

Conventional wisdom assumes scarcity discourages development. In reality, scarcity often does the opposite. As water, land, transmission capacity and other critical resources become more constrained, the rights associated with those resources often become more valuable. The same conditions creating concern in government offices may be creating opportunity in investment offices.

This is the irony of scarcity.

For planners, water managers and local governments, scarcity is usually understood as a constraint. For investors, scarcity can be the asset itself. One actor's constraint is another's opportunity. As the saying goes, don't invest in the gold miners. Invest in the picks and shovels.

What originally caught my attention was not artificial intelligence itself. It was the investment logic behind it. Spend enough time reading about hyperscale data centers and AI infrastructure and you eventually encounter a remarkably consistent thesis: don't bet on the technology, control the resources the technology needs. 

Investors do not need to understand every possible future. They need to identify which resources are likely to retain value across multiple futures. Farmland with power, fiber and transmission access remains valuable regardless of which technology wins. Water rights remain water rights. Mineral rights have survived multiple energy booms. Pore space may become an important asset in the carbon management era.

AI expansion is accelerating demand for electricity, transmission capacity, water, and supporting infrastructure. Carbon capture is creating demand for pore space, pipeline networks, and other forms of resource infrastructure. Different technologies are competing for many of the same scarce resources.

Local governments do not have the same optionality as investors. A water allocation, zoning approval, transmission corridor, or subsurface storage permit represents a commitment made in one place at one moment in time. If a project underperforms, relocates, or evolves in unexpected ways, the investor's asset often retains value. The community's commitment remains.

Yet the challenge is not simply scarcity. The challenge is how scarcity is governed. Colorado governs water, land, energy and emerging technology through separate agencies, permits and definitions. Each institution manages its piece competently, yet many of the most important risks emerge between them. Water, land use, energy and economic development are deeply interconnected, yet the institutions responsible for them are organized around increasingly specialized responsibilities. Specialization produces expertise, but it can also make it harder to see how decisions in one domain affect another. The result is fragmentation.

Every generation introduces new technologies, but those technologies still depend on the same underlying resources: water, land, energy, and infrastructure. This dynamic is what originally drew me into researching carbon capture, utilization, and storage. Ask five different Colorado agencies what CCUS means and you may receive five different answers, some of them contradictory. 

That observation became the basis of research I recently published in Risk Analysis, applying a novel adaptation of the bow-tie framework to CCUS development in Colorado. The framework itself is derived from the oil and gas industry's Shell HEMP risk-management model, underscoring how lessons from one resource era often reappear in the next.

One of the central findings of that research was that many of the most important risks associated with CCUS did not reside within a single agency or resource system. They emerged between them. The term CCUS often groups together technologies with very different implications for water, land use, energy demand and long-term stewardship. 

When those distinctions blur, so do the impacts being measured and discussed. Colorado tracks water through a consumptive and non-consumptive framework largely developed around irrigation, municipal supply, and traditional industrial uses. Water injected underground for carbon dioxide storage does not fit neatly into either category, and current governance lacks a consistent way to define, measure, and account for it.

The larger lesson is what happens when new technologies interact with governance systems built around older assumptions. Emerging technologies often create new forms of resource use that do not fit neatly within existing categories. Governments are then forced to evaluate novel demands using frameworks originally designed for very different circumstances.

Data centers reveal a similar pattern. Data centers increasingly compete for water, power, transmission capacity, and land, yet the governance systems responsible for those resources are often separate from one another. Similar projects may face very different standards across neighboring jurisdictions. Competent local decisions are being made, but there is often no mechanism connecting them across jurisdictions.

A community that declines a project may simply watch the investment move elsewhere because the underlying resource remains valuable. Scarcity does not disappear when one jurisdiction says no. In many cases it makes the opportunity more attractive to the next jurisdiction in line, creating competition not only for the resource itself but also for suitable sites. Responsible stewardship does not eliminate competition. In many cases, it intensifies it.

Communities may compete for development while depending on many of the same underlying resource systems. A county that says no may simply watch a neighboring jurisdiction say yes. The project may move, but the competition does not. The water system often does not move. Neither does the electric grid, the labor market, or much of the infrastructure supporting growth. The investment opportunity may be local, but the consequences of scarcity often are not.

Communities can conserve water, invest in efficiency, and carefully manage growth, yet still find themselves constrained by decisions made elsewhere. Similar tensions appear throughout the American West, where scarcity is increasingly managed across interconnected systems rather than individual jurisdictions. The Colorado River illustrates this challenge well. States, municipalities, utilities, agricultural interests, and water users operate under different authorities yet remain connected through the same physical system.

Understanding those interactions begins with seeing the system as a whole. Counties, municipalities, regulators, utilities, and resource managers each see a different part of the system. No single institution naturally sees the whole picture. The challenge is not necessarily a lack of information. It is that information is often organized across agencies, disciplines, and governance systems designed to manage individual resources rather than interconnected ones.

Climate change is often discussed as a failure of political will or rationality. I tend to see it as a visibility problem. People and institutions generally make decisions based on the information available to them. The challenge is that climate and resource risks often emerge across agencies, disciplines, jurisdictions, and time horizons. No single actor naturally sees the entire system.

Improving governance often means making those interactions visible. The challenge facing governments is not simply managing scarcity, but seeing the system clearly enough to understand how scarcity, opportunity, and risk interact.

Climate change is a systems problem. Universities are organized around disciplines. Governments are organized around agencies. Climate change ignores both.

Ultimately, the challenge is governing interactions that no single institution is designed to see in full.

Matt Weisner is an independent researcher at Colorado State University.