Arizona Water Rights Review - Feb 2023 Newsletter

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Real Estate

If you live within the Tucson City limits like me, you likely received a notice from Tucson Water that our water rates are going up significantly. This got me thinking about water scarcity and I thought it would be interesting to briefly go over how Arizonans have access to water and the issues we're facing.

CAP Water.

Most Arizonans and other Southwesterners get their water from the Colorado River. Back in 1922, Colorado, Wyoming, New Mexico, Utah (the Upper Basin States), Arizona, Nevada and California (the Lower Basin States) signed the Colorado River Compact, which is the governing document dividing up CAP water among the seven States. This was later updated to include parts of Mexico and Native American tribes which had initially been cut out of the deal entirely.

Over 100 years later, 40 million people depend on the river flow, and the deficiencies of the agreement have become pretty glaring.  First, the States assumed the flow would be fixed and higher than it ever was, even at the time. Over the years, the flow has decreased and has become more variable due to warmer temperatures and drought conditions. The original compact was based on average river flows of 17.5 million acre-feet when it was closer to 15 million acre-feet. Since 2000, that has fallen to about 12 million acre-feet. Secondly, no one contemplated in the early 20th century that the population of the seven States would grow so much and so fast. In short, the water supply has decreased and become less predictable but the demand has continued to steadily increase.

As a consequence, Lake Mead and Lake Powell, the River’s two biggest reservoirs, have fallen to one-third of their capacity, and how to reapportion that water has reached a crisis level. The fear is that they could hit what's known as "dead pool," the level at which the water is too low to flow out of the dams. This could happen within two years!

In response to the crisis, the Interior Department imposed cuts on Arizona’s and Nevada’s water use for 2023.  In addition, it requested that the Compact come up with a plan by August 2022 to reduce their use of the River's flow by one-third. The Bureau extended the deadline a couple of times, then warned the States that if they didn't put together a satisfactory plan by Jan. 31, it would come up with one on its own.

I won’t go into details about what each State proposed, but they were unable to reach an agreement by the latest deadline. This is a to-be-continued story, but for an interesting listen, I recommend The Daily’s Jan 31 podcast, which goes in details about where we’re at.


Some Arizonans do not have access to Colorado River at all and rely entirely on groundwater sources. Groundwater constitutes 40% of the state’s water supply and contributes 43% to its GDP. Groundwater is not considered a renewable resource as it takes years to replenish.

The only Arizona state law regulating groundwater, the 1980 AZ Groundwater Management Act, is limited to 5 "Active Management Areas" (AMAs), in essence its urban areas (about 20% of the State).  The Act requires among other things that new development within the State’s 5 AMAs prove an assured water supply for at least 100 years, and that the AMAs reach groundwater usage that would keep the aquifers balanced by 2025. While this law has been tremendously helpful, the remaining 80% of the State’s territory is not regulated, so the groundwater can be pumped to the last drop without restriction.

This lack of regulation has allowed out-of-state companies and foreign companies to access our aquifer cheaply and without any kind of limits. Take the case of Almarai, a Saudi Company and one of the largest dairy suppliers in the Middle East. Growing alfalfa has been illegal in Saudi Arabia since 2018, because it is so water intensive that it was a threat to Saudi’s limited water supply. Fondomonte (an Almarai subsidiary) has been leasing about 10,000 acres from the Arizona State Land Department near Vicksburg for years, where it is growing its alfalfa. It then ships it back to Saudi Arabia to feed its dairy cows. Not only is the lease for half the market rate, the company is also allowed to pump all the water it wants free of charge. Since then residents and local water companies have seen their own wells go dry or have had to seriously limit their usage. Our newly elected Attorney General Kris Mayes has vowed to repeal the agreement as an illegal gift, and for the Saudi company to pay for the water it has used up, which is estimated to be worth about $38,000,000.  Fondomonte pays $86,000 per year on its lease. It is to be noted that revenues from the land owned by the Arizona State Land Department are meant to be held in trust for the benefit of Arizona public schools. 

U.S.-owned companies also take advantage of Arizona’s lax system. Residents in Sunizona have seen their wells dry up due to Minnesota’s Riverview Dairy company’s activities, for example. Some California-based farms are also contemplating relocating to Arizona as groundwater regulations are tougher in their state. A significant issue is that these companies can afford to drill very deep wells and keep pumping as the table recedes, unlike residents.  

Clearly, Arizona needs to do better protecting its most precious resource, starting with creating a legal framework that limits what megafarms can do at residents’ expense.