Arizona’s surging growth cannot continue without finding more water

The 23-year drought that’s parching the Southwest is forcing Arizona to make a bitter choice. Unless developers can find new sources of water, the state’s largest master-planned housing development is going to remain a desert.

Across the American West, demand for housing is running into water shortages. Surface waters like the Colorado River are drying up, forcing cities and farmers to turn to groundwater. Unfortunately, most groundwater is finite. So unless developers can figure out a stable, long-term alternative, a future of fast growth in the American West is in serious doubt.

Near Phoenix, Howard Hughes Corp. recently broke ground on a 37,000-acre development planned to include 100,000 new homes. That should have been good news for the second-fastest growing state. But Arizona law requires new subdivisions to have an assured, centurylong water supply, and regulators recently determined there isn’t one.

Arizona’s 19th-century settlers drilled wells and relied upon what seemed like an endless supply of groundwater. Surface waters also beckoned, and over the decades government funding built dams, reservoirs and canals that fueled fast-growing central Arizona communities.

But groundwater remained irresistible, especially for industry. In 1977, Arizonans extracted more than 800 billion gallons than was replenished annually, putting many aquifers — which can take centuries to replenish — at risk of emptying.

In 1980 a bipartisan consensus forged Arizona’s Groundwater Management Act. Among other provisions, the law requires that developers who wish to build subdivisions within Arizona’s most populous areas must first prove that a development would have a 100-year “assured water supply.” For 40 years, that proof wasn’t hard to obtain. Aqueducts and canals transported Salt and Colorado River water to fast-growing parts of the state. To keep growth going, Arizona began banking excess Colorado River water in empty aquifers around the state in the mid-1990s.

But since 2000, a “megadrought,” intensified by the effects of climate change, has baked the Southwest. In 2021, the Interior Department declared its first-ever Colorado

River shortage and mandated cuts to water usage in Arizona and other states. For now, there’s enough water to last most Arizonans for years. But as the Southwest U.S. becomes hotter due to climate changes, surface waters that the region relied upon for decades won’t be as available to backup or recharge groundwater supplies.

That shift is taking a toll on Arizona’s housing. In January, new Gov. Katie Hobbs, released a report showing that projected developments west of Phoenix don’t have 100-year water supplies, putting those projects in limbo.

Impacts ripple well beyond the Phoenix suburbs. A 2022 study of rural Arizona real estate, which isn’t subject to the assured-supply rule, found that home values could decline by as much as 12% under severe drought conditions as buyers avoid areas that lack reliable water access.

For now, the most practical growth option for developers and government may lay in Arizona’s vast farm fields, which rely disproportionately on groundwater. In recent years, investors have made a business out of buying up Arizona farmland and piping the water entitlements to housing developments in more populated areas.

It’s an imperfect solution that will require society and its leaders to make hard choices about the value of Arizona’s small towns and agriculture. Are they worth preserving at the expense of urban development? Can other regions of the country replace Arizona’s food production? Regardless of the answers, shifting water to subdivisions from agriculture may be the only way to assure a water supply that will keep the Southwest growing.

Hobbs has promised to modernize Arizona’s groundwater policy to account for the impacts of climate change, drought and increasingly scarce surface water.

Her new water policy council mirrors the process that led to Arizona’s earlier groundwater law. It’s no short-term solution, though. Developers and local officials who want to see the state continue to grow its housing and population will have to focus for now on developing in more expensive areas where water supply is sufficient. Even that is likely to hamper growth while Arizona figures out its longterm groundwater policy.