Wynn Exterior Image

How much do the rivers and fountains at Las Vegas casinos really contribute to the city's water problems? Image source: Wynn Resorts.

Las Vegas is a city known for excess and greed. Parties, gambling, and hair-raising adventures are just the tip of the iceberg of what goes on everyday in Sin City. But the city, and the casinos it's known for, may not be as wasteful as you might think when it comes to natural resources.

In fact, Sin City has become a model for sustainability in water, and it's becoming a hub for renewable energy as well. It may not have set out to be a leader in those areas, but when you're providing visitors with excess in the middle of the desert, it's a necessity to do more with less.

Sustainability on the Las Vegas Strip
It's almost by accident that Las Vegas became a beacon of sustainability. As Daniel Person highlighted in a recent article in Outside Magazine, the 1922 Colorado River Compact that allocated just 2% of the Colorado River's lower basin flow to Las Vegas and the surrounding area was a central piece of the city's water sustainability efforts in the last decade. To put that water allocation into perspective, California is allocated 27% of the flow, and Arizona gets 18%. That put limits on how much water Las Vegas could use, which wasn't a big deal when it was a town of a few thousand people, but by 2000, it was running out of water from its source in Lake Mead.  

It just so happens that the 1990s and 2000s were also a boom time for the Las Vegas economy. New resorts from Wynn Resorts (NASDAQ:WYNN), MGM Resorts (NYSE:MGM), and Caesars Entertainment (NASDAQ:CZR) were popping up like crazy, and the people who worked in those resorts had to live somewhere -- preferably somewhere with some green grass to look at. Crazy water shows at Bellagio, Treasure Island, and Las Vegas Sands' (NYSE:LVS) The Venetian also used millions of gallons of water. But the casinos might not be the primary cause of the boom in water consumption and the water shortage we're seeing in Lake Mead today.

Las Vegas Strip Image

A booming population has put stress on the water and electric infrastructure in Las Vegas.

Casinos use a measly 7.6% of the water consumed in southern Nevada each day. It's actually homeowners, who water lawns in the middle of a desert, who use 60% of the region's water. In fact, most of the water used in casinos is pumped to a treatment facility and goes back into Lake Mead. It's not a perfect closed-loop system, but the city is able to return much of the water that goes down the drain back into the reservoir, potentially saving the Vegas from water shortages.

Getting homeowners to cut back is harder. The city had to limit lawn sizes in new neighborhoods, and it paid people to pull up sod, monitored leaks, and enforced time limits on watering. For its efforts, there has been almost no growth in Las Vegas' water use over the past 15 years despite a boom in population and growth on the Las Vegas Strip.

These restrictions and recycling efforts weren't put in place because Las Vegas wanted to be a model of sustainability, but because it has a limited resource in the middle of the desert. Las Vegas could literally dry up if it didn't get its act together, so there was an imperative to create a sustainable ecosystem. And that's not the only place Nevada is showing other states how to be sustainable.

Making Las Vegas green
It's not only water where Las Vegas is taking a lead in sustainability; it's increasingly becoming a hotbed for solar activity.

According to GTM Research, Nevada installed the third most solar in the U.S. last year with 339 MW, and the state's biggest utility, NV Energy, recently signed power purchase agreements with First Solar and SunPower on separate 100 MW solar power plants.

MGM Resorts' Mandalay Bay has also used its abundant rooftop space to go solar when it can. A 6.4 MW system on the convention center will provide as much as 20% of the resort's power need and gives MGM the ability to generate power on-site.  

Again, these moves aren't necessarily driven by a desire to go green, but rather the need to do more with what it has and an economic incentive to do so. And the economic advantages of solar are clear in Las Vegas. NV Energy is paying just 3.87 cents per kWh for its latest project from First Solar, or less than a third of what electricity costs the state's residents. That's a competitive price driven by the abundant sunshine and available land solar systems have in the state.  

The accidental leader in sustainability
You wouldn't think of a city known for sin as being a haven for sustainability efforts, but that's exactly what Las Vegas has become. Conserving water and generating renewable energy become necessities when you want to build excess in the desert.

If Las Vegas is going to continue to grow, these sustainability efforts may need to get even stronger. Water levels in Lake Mead are still falling, and the region could save millions by generating more solar energy. Las Vegas is already a leader on both fronts, but even more might be necessary to sustain the party, and it's a task the city seems to be up to.

Travis Hoium owns shares of First Solar, SunPower, and Wynn Resorts, Limited. The Motley Fool is short Caesars Entertainment. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.