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The Arizona governor is calling for new limits on construction in the Phoenix suburbs due to a dwindling supply of groundwater. Governor Katie Hobbs announced a pause on new subdivisions that don't have a proven source of water. The policy comes after an analysis that says the supply of groundwater will fall short of demand over the next 100 years. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please remember to subscribe to this podcast and leave us a review. Growth Putting Pressure on Water Supply Phoenix is the 5th largest city in the U.S. with more than 1.6-million people, but the entire metro area has closer to 5-million people. Those suburbs and outlying areas are also growing rapidly, and putting more and more pressure on groundwater supplies that do not replenish rapidly, especially during times of drought. The city's groundwater analysis involved tests on more than 40,000 wells, along with the testing of aquifers and streamflows. Those tests show that water levels will fall about 185 feet across the entire basin over the next century. Outlying areas that are closer to the mountains will see a bigger decline in those levels. As reported by the Washington Post, the outflow of water is expected to exceed the inflow by a factor of 1.4 or 140%. The unmet demand would be about 4% or close to 5-million acre-feet of water over 100 years. One acre foot is about 326,000 gallons. A typical home might use half- to one-acre foot per year. At one acre-foot per home, about 50,000 homes would run dry in the Phoenix area over that 100 year period. At a half-acre foot, it would be more like 100,000 homes. Those are very rough figures. New Policy Requires Water Assurances To address the issue, Governor Hobbs announced that any new development projects will have to have proven water supplies. And many Phoenix area cities already have them, such as Scottsdale, Mesa, Gilbert, and Goodyear. But more rural communities that rely on groundwater don't have those assurances. Former Phoenix mayor Terry Goddard says: "You can't build unless you know exactly where the water is coming from." Developments that have already been approved can still move forward, but those cities are also scrambling to be sure they have adequate water for the decades ahead. Places like the town of Queen Creek, east of Phoenix, is working on a way to import water and meet demands for mushrooming growth. According to the Post, the town is spending $27 million to buy Colorado River water from a farm elsewhere in Arizona. It also made a deal for groundwater in another part of the state. The town's water resource director, Paul Gardner, says the town has about 10,000 lots ready to build, and water has been secured for those homes. But the city is working on ways to import water for other parts of the project, and while water importation will help solve the problem, Gardener also says the water price tag is rising. One of several landowners involved with development projects expects the cost of water to add as much as $15,000 to $25,000 to each home. Dan Reeb told the Post: "Arizona has gotten very good at stamping out four-bed, two-and-a-half bath, three-car garage homes, and a great job to go with it." But he says: "It's not going to be as inexpensive and simple as it has been for the last 50 years of phenomenal growth." Massive Development Project on Hold One massive development plan in Buckeye called Teravalis is now on hold. Plans call for some 100,000 homes on 37,000 acres for what would be the largest planned community in Arizona. But most of the property currently lacks the necessary water supply approvals. Buckeye officials are working on a solution, and they insist that their water future is secure. A big part of their plan is an $80-million deal to purchase groundwater from another rural part of the state. Each town, city and/or region is dealing with its own water supply problem, so there's a difference in how well they are each solving this problem. While some cities have already invested a lot of money in their water supplies, newer communities that rely on groundwater are having to rethink their options. In addition to informing residents about the water situation, Governor Hobbs is also offering assurances that the city won't be running out of water anytime soon. She says: "We are not running out of water and we will not be running out of water. We have to close this gap and find efficiencies in our water use." Sharon Megdal of the Water Resources Research Center at the University of Arizona says it's a matter of responsible growth. She says: "What these models are suggesting is that the patterns of growth may change." She says: "It's part of our reality check, an appropriate one, that we make sure the people buying these homes can be confident that the water is there." Groundwater as Key to the Future An Arizona State University professor doesn't feel that the issue is being addressed as a major priority. He told the Post: "I'm incredibly concerned. I don't think that people, and this is everyone, the general public, but right up to our water managers and elected officials, really understand now that groundwater is the key to our future." (2) It's a reality check for states and cities across the west, including those who draw water from the drought-stricken Colorado River. The Colorado River supplies drinking water to 40-million people along with hydroelectric power to millions. As the two states using the most water from the Colorado River, California and Arizona are part of a preliminary deal to conserve and reallocate water from the river. Nevada is also part of that preliminary deal, but the seven states drawing from the river also include Utah, Colorado, Wyoming and New Mexico along with 30 Tribal Nations. (3) Under that agreement, California, Arizona, and Nevada would conserve 3-million acre-feet of water over three years. That's expected to be enough water savings to protect reservoirs through 2026 when the states and the federal government hope to come up with a more comprehensive plan on how the river water will be shared. You can read more about this by following links in the show notes at newsforinvestors.com. And please subscribe to the podcast to keep up to date on stories that impact you, your family, and your future. You can also join RealWealth for free to learn how to create a future that will support you with real estate income. Thanks for listening! Kathy Fettke Links: 1 - https://www.washingtonpost.com/climate-environment/2023/06/01/phoenix-water-shortage-population-growth/ 2 - https://www.washingtonpost.com/climate-environment/2023/05/22/colorado-river-water-conservation-deal-states/?itid=ap_joshuapartlow 3 - https://www.washingtonpost.com/climate-environment/2023/05/22/colorado-river-water-conservation-deal-states/?itid=ap_joshuapartlow
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