Nevada
Nevada exhibits niche specialization: Las Vegas's $85B+ gaming economy plus Tesla's Gigafactory and lithium mining, all constrained by Lake Mead's declining water.
Nevada exemplifies niche specialization taken to extremes. Las Vegas built an $85+ billion gaming and tourism economy by offering what puritanical neighbors wouldn't: legal gambling, quickie marriages, and 24-hour entertainment. This regulatory arbitrage created path dependence—the infrastructure, expertise, and brand recognition make Las Vegas the global gaming capital even as jurisdictions worldwide have legalized casinos.
The state is now undergoing a second specialization wave. Gigafactory Nevada—Tesla's massive battery production facility—anchors a lithium economy drawn by the state's reserves and permissive mining regulations. Data centers cluster in Reno, attracted by cheap land, favorable electricity rates, and a time zone convenient for serving California without California's costs. These industrial investments diversify an economy historically vulnerable to recession-driven tourism declines.
Yet Nevada's water constraints impose carrying capacity limits that increasingly bind. Lake Mead's declining levels threaten the Colorado River allocations that sustain Las Vegas's 2.8 million residents. Climate migration from California brings population growth while exacerbating resource competition. Nevada's future depends on whether its desert advantages—space, solar potential, regulatory flexibility—can outweigh the fundamental constraint of water scarcity in an increasingly hot and dry climate.