Arizona’s Colorado River Water Challenge

Arizona is facing a critical water supply challenge. The over-appropriation of the Colorado River requires new water conservation to meet the water demands of economic development in Arizona. With groundwater use reaching its limit in Central Arizona, Arizona’s future economic development faces unprecedented challenges in securing adequate surface water supplies. A case example of these challenges are playing in Buckeye, where, as explained in a recent article in Axios, limited water supplies and resulting challenges have halted development and left some houses stranded (approved but unbuilt).

Meeting surface water supply challenges require institutional reform today.

Alternatives

There two alternatives for addressing the situation:

• Placing the private sector’s future in the hands of public agencies to devise and implement innovative water transactions on a timely basis, versus
• Facilitating private initiatives for water conservation and water transactions based on mutually agreeable prices between buyers and sellers

Components of a Successful Federal Water Policy

Continued recognition that water rights are constitutionally protected private property rights.  A federal policy relying on voluntary transfers will have cities focus on securing new water supplies at mutually agreeable prices with senior water right owners rather than holding economic development hostage to regulatory/legal scheming for taking water from agricultural interests.

Maintain federal deference to state water law.  Unfortunately, some municipal interests invest in lobbyists and lawyers to federalize state water law to overturn senior agricultural water rights.  Repelling these initiatives will require municipalities to return to the bargaining table.

Require landowner consent to water transfers involving agricultural water rights administered/held by irrigation districts.  Irrigation districts must not siphon off significant monies paid by municipalities for water made available by farmers.  Landowner consent under long-term contracts assures that municipal payments for conserved water are used to provide economic incentives for water conservation.

Develop predictable “rules of the road” for voluntary transfers.  Development of water transfers faces significant delays, transaction costs, and risk of regulatory non-approval or (for approved transactions) a follow-on litigation lottery.  Federal policy should provide guidance on assessment of the environmental consequences and the impact on reliability of Colorado River water for other water right holders from moving diversions of Colorado River water “upstream” or “downstream”.   Rules of the road will reduce regulatory risk and incentives for litigation lotteries.