Despite last week’s news that the state is pausing the approval of future Phoenix-area single-family development that over-relies on groundwater, don’t expect residential construction to dry up in your lifetime.
By Kent Lang and Mike Thal
On June 1, Governor Katie Hobbs released the Arizona Department of Water Resources’ (DWR) updated study of the Phoenix area’s groundwater conditions. The study projects that, 100 years from now, the demand for groundwater in the region will have fallen short of supply by about 4% (or 4.86 million acre-feet).
That is a significant projection, because Arizona’s groundwater laws bar the DWR from approving new residential real estate development if the agency cannot certify that the new homes will have a safe 100-year water supply.
Consistent with the DWR report, the Governor announced that the agency will stop approving new development that relies too heavily on groundwater for its water supply.
Predictably, headline writers for national media outlets had a field day: “Groundwater dwindles,” said CNBC. The Guardian warned of Arizona’s “lack of groundwater.” And Reuters noted the area’s “water shortage” as though your lantana is already dying. Phoenix Mayor Kate Gallego correctly noted that “some national coverage really confuses the issue … in a way that implies Phoenix does not have the water supply that we do.”
Local reporting was a little more business-like (see the Republic’s June 1 article and June 2 opinion piece, “Metro Phoenix has shut down growth, right? Well, not exactly”), as was the Governor’s announcement itself.
Nonetheless, hearing the news that some future single-family developments in rapidly growing, groundwater-dependent areas such as Buckeye and Queen Creek might not be built was not the way most residential contractors and construction suppliers wanted to start their day.
Perspective. Because the moratorium’s impact will generally affect only the outskirts of the Phoenix area, on developments that have not yet been planned, contractors and suppliers would be wise to look beyond the headlines and weigh the following:
Most Valley cities have already reduced their reliance on groundwater. (The City of Phoenix reports that groundwater accounts for only about 2% of its annual use.)
Cities have ample, diverse water supplies (including renewable supplies from the Salt, Verde and Colorado rivers) and will continue to grow. As the above-referenced Republic article notes, “Most cities have secured assured water supply designations from the state, which means they can show a 100-year water supply. That applies to 12 Phoenix-area cities and to areas supplied by three other water utilities.”
Arizona will continue to be among the nation’s fastest-growing states, and continuing demand for housing will trigger new supply.
Developers are in the business of profitable development, and they will find new ways to profit from the housing demand.
Infill development will become more prevalent in areas that are not as reliant on groundwater.
According to the Governor, about 80,000 unbuilt lots have been approved and can go forward.
The state will use $40 million from its unused federal Covid-19 recovery allocation for the Arizona Water Resiliency Fund, which will promote groundwater conservation and sustainable water supplies.
The ban on groundwater-reliant development is not permanent and is subject to future DWR studies of groundwater conditions.
Good Management, Good News? It is worth noting that news sources outside of Arizona have long predicted, since the state’s post-World War II population boom began, that someday Arizona would run out of water.
It hasn’t, and, if the state is playing this correctly, it won’t.
One might even argue that the restraint announced by the Governor this month will send assurances, to potential residents and relocating corporations, that our water supply is being effectively managed and that a future in Arizona is as bright as ever.
That would be good for Arizona’s business community – including the residential construction industry and the companies that supply it.