Last week, President Biden had a pretty relatable moment. He had to briefly interrupt his summer vacation to deal with a work thing. Presidents, they're just like us, right? However, in this case, Biden probably didn't mind the quick detour back to the White House.

Now I'm going to take action that I've been looking forward to doing for 18 months...

That's because after more than a year of negotiations, Biden finally had the chance to sign his party's landmark health care, tax and climate bill into law. You might remember this used to be called Build Back Better. It's now called the Inflation Reduction Act. It's paired way down from the original version. But this is still a big, big deal. Among other things, it'll bring major changes to prescription drug pricing policy, corporate taxes and IRS enforcement. But experts say above all else, we can't lose sight of what a big deal this law is when it comes to our fight against climate change. My guest today is CNN climate reporter Ella Nilsen. We're going to dig into what's actually in this law, what it means for your wallet and how it could help address a drought. Emergency playing out right now on the Colorado River. It's August 21st and this is the Sunday edition of CNN 5 Things. I'm David Rind. Ella, this law is called the Inflation Reduction Act. I guess it remains to be seen if it'll actually reduce inflation. But I know your team has been saying just how much of this is climate related. So can you walk me through it?

Yeah. So there is over 370 billion in there for climate and clean energy. And this is the biggest US congressional investment in climate change ever, and it's arguably the biggest deal for climate and the environment as far as a new law since, you know, probably like the Clean Air Act, which was passed back in the seventies. So, yeah, this is a really big deal. So as far as how much the bill will actually go towards reducing greenhouse gas emissions like carbon dioxide and methane, both estimates from lawmakers and also independent estimates show that the investments in the bill alone will reduce US greenhouse gas emissions by 40% by the end of the decade in 2030. Now, President Biden, when he rejoined the Paris Climate Agreement, he said that he wants to cut U.S. greenhouse gas emissions by 50 to 52% by the end of the decade. So the idea is that this climate bill will get most of the way there. But then Biden's administration is going to have to fill in the gaps with things like, you know, strong EPA regulations regulating greenhouse gases. And then also there is, you know, money for four other bigger programs. There is money for a program that will basically get oil and gas companies to cap their methane leaks, which methane is a super polluting greenhouse gas that is actually more polluting than than carbon dioxide. It stays in the atmosphere, not quite as long, but it's really dangerous. So that's something to to try to curb that. And then there's money to keep nuclear plants online, which is important, you know, to to generate more clean electricity, essentially.

All right. That does sound important. But I'm sure many people are asking, you know, what about me? What does the text say about how it'll impact the average American?

There's a lot in the bill. There's billions in there for consumer tax credits, which is probably going to be the thing that, you know, most American consumers kind of how they benefit and sort of interact with the bill is like basically if you want to go out and buy a new appliance like a heat pump, replace your gas burning furnace with a heat pump, which it runs on electricity or if you want to get solar panels on your home. Been thinking about that for a while, but it's kind of too expensive. This has tax credits and consumer rebates that will make those things cheaper for you and more easy to do.

Right? If you're ever thinking about making your home a little greener, I guess now is the time. What about cars? How do they factor in?

Well, one thing that is going to be really big for Americans that might be looking to purchase an electric vehicle, which is, you know, one of sort of the biggest incentives in the bill. It's one of the ones that could potentially impact Americans the most. It is $7,500 for a new electric vehicle and $4000 if you are trying to get a used electric vehicle. And there are some limits on how much people can make if they want to take advantage of these tax credits. But one thing that sort of in the fine print of this is that it was written in a way to basically incentivize moving the electric vehicle supply chain out of China. But basically the big picture is that it's going to take a few years, at the very least, to satisfy the requirements of this EV tax credit of moving the supply chain. So it's going to be something that consumers are not going to be able to immediately take advantage of...

So I won't be able to go to my local car dealer, say, hey, I want an electric car and they'll give me some rebate, you know, in a few months for it that kind of thing.

Exactly. Not immediately. So as the Senate was trying to hammer out a last minute deal, Kyrsten Sinema and other Western lawmakers kind of threw in this last minute demand, which was that they wanted money to deal with drought relief and wanted a few billion dollars. They finally came to 4 billion and it made it in the final text. And it happened at a time when we have really seen why this money has has been so needed, because the Colorado River is is in danger of drying up.

Ella, so what happened with the Colorado River last week?

Well, the western U.S. has been mired in a megadrought for about 20 years now. And this definitely has to do with climate change and the U.S. and the world just getting hotter. But it's a little bit more complicated than that. It also has to do with the fact that there is booming population growth in the western United States. And people have just basically been using more river water than the Colorado River is is able to support.

The severe drought out west is drying up the Colorado River and the nation's largest manmade reservoir, Lake Mead, is down to 27% of its full capacity.

So readers have probably seen our CNN headlines about Lake Powell and Lake Mead. There are massive reservoirs that are fed by the Colorado River, and they provide water to millions of people in the West.

More skeletal remains have been found at the bottom of Lake Mead. Now, this is because the water has dropped so low.

These reservoirs are so critically low.

There's probably two V8 engines under the mud.

And they're so low that they're people are actually finding bodies and boats in Lake Mead as the water recedes.

And now states that rely on the Colorado River's resources are being told to prepare for mandatory water cuts and come up with a plan to save the water basin.

So last year, the federal government told states they declared a Tier one water shortage on the Colorado River for the very first time.

63 days ago, I briefed Congress on the science of the Colorado River, the risks we see to the system.

And on Tuesday, they declared a first ever Tier two Colorado shortage, which basically means more cuts are coming.

The conditions and risks have not changed.

And they told the states that rely on Colorado River water that they need to drastically cut back on their water usage for things like farming, for water usage for tribes, water usage for businesses, etc., etc..

The system is approaching a tipping point and without action we cannot protect the system and the millions of Americans who rely on this critical resource.

So right now, these states are basically still in the middle of a negotiation to try to figure out where those cuts are coming from and who is going to bear the brunt. Earlier this year, the official who oversees the federal government body that basically kind of has purview over the Colorado River and over these reservoirs, told states that they need to come up with 2 to 4 million additional, that's on top of what was announced, additional acre feet of cuts of the Colorado River. So that's a massive, massive amount of water. And it just speaks to just how dire things are on the Colorado River basin and for these states right now.

So what's the plan then between these states? Is there a plan to figure out how to stop using all that extra water?

That is a great question. It is really unclear right now if there is actually a plan or especially a plan that everybody can agree on. I think that is sort of the main tension here.

I want to allow for one more question. Ella Nilsen, if you'd like to ask...

Some states have put forward plans that they say will cut that 2 million acre feet of water next year. But that has been rejected by other states, including California and also officials from the federal government.

I wanted to just ask you, as far as the position of the Bureau of Reclamation in some of these negotiations...

Arizona state water officials are really uncertain about how this is going to go. And there are a lot of people that are kind of looking to the federal government to bring the hammer down on states.

I mean, do you guys think that there needs to be more of a stick approach from the bureau at this point?

Well, I will I will say the short answer is yes.

Even if they don't unilaterally step in, there are even state officials that kind of want them to threaten that, to basically get people serious about doing this, because it...

They're like, "hey, this is an emergency." Like, we don't have time for all this back and forth. Federal government come in and tell us what to do.

Exactly. They're saying, like your own reports are showing, that this is not getting any better and instead is getting severely worse and the time has come for a solution.

And we would encourage and do encourage the United States to move forward as expeditiously as they can to get to that point where they can define what what they will do and when they will be able to do it, the sooner the better.

So in the meantime, the drought funding that got added to the climate bill last minute is basically a way to pay people that are going to cut their water usage. So it is at least a little bit of a financial cushion to sort of say, okay, you know, you farmer in Arizona or you farmer in California are going to cut your water for your crops by this amount. But instead, we are going to, you know, basically make up for your lost income from farming by giving you money that is coming from the federal government.

Okay. So, you know, as the states figure out how to divvy up this water from the Colorado River and wait for the federal government to step in or not. How is the drought that's just been going on for years and years? How is it affecting people out in the West right now?

Yeah, I mean, it's it's affecting people in a bunch of ways. And I think it's ways that, you know, people like I live in D.C., it's things that we just don't really have to deal with or think about at all. But like in states like Nevada, they have had a program, I think, dating back to the early 2000s where they basically pay people to rip out their lawn. So things like, you know, just your average lawn, it's very water intensive. Grass sucks up a lot of water. And so the idea is that the state will pay you money or your city will pay you money to rip out your lawn and, you know, maybe put in some native plants that aren't as water intensive. Then there's also more serious concerns because those reservoirs that we've been talking about that have been dropping too precipitously, low levels, the water in those reservoirs makes electricity at places like Hoover Dam. And so there are concerns that that could impact the West's electricity supply. And then there are farmers and ranchers who rely on the water to grow things. You know, how are they going to cope with less water?

We had pecan trees. We had orange trees. You know...

My colleague Rachel Ramirez spoke to the Biggs family in Goshen, California.

And they all, they all died.

And they're living this right now. I mean, their farmland is dried up. Their well is bone dry. They have to wash clothes in town. And he told my colleague that no one's really taking this issue seriously and that their town is dying.

But my family's here. My grandkids are here. And I had an excellent job. I just couldn't leave. Now, I wish I had've before my kids got married, you know, move somewhere where there's water. At some point, water is going to become more valuable than petrol, than oil.

So this is a huge problem and we're basically at the beginning of what is going to need to happen to address it. And there's going to be a lot more that has to be done in order to address the magnitude of the problem that we're facing.

Well, Ella Nilsen, thanks very much. I appreciate it.

Thanks for having me.

The Sunday edition of CNN's 5 Things is produced by Paola Ortiz and me David Rind. Our production manager is Matt Dempsey. Our senior producer is Muhammad Darwish. Our supervising producer is Greg Peppers and the executive producer of CNN Audio is Megan Marcus. Have a nice week. I'll talk to you next time.