As the Colorado River Dries Up, Phoenix Will Have to Survive on Less Water

(Bloomberg) -- The state of Arizona has been in drought since 1994. In that time, its population has almost doubled to 7.2 million people as of 2020, according to the U.S. Census Bureau. The majority of that growth has been in Maricopa, Pima, and Pinal counties, which cover the area around and between Arizona’s two largest cities Phoenix and Tucson.

Both cities — along with native tribes, farmers, and municipal and industrial users — draw a substantial portion of their water from the Central Arizona Project, a system of canals and aqueducts that carries water from the Colorado River, more than 300 miles to the northwest. The canal cuts through areas like suburban Scottsdale and winds through Arizonan countryside. In all, roughly 40 million people from California to Wyoming to Mexico depend on the water for their lives and livelihoods.

And it’s starting to run dry.

Last week, the U.S. Bureau of Reclamation made official the crisis at Lake Mead, a reservoir formed by the Hoover Dam and one of the most visible signs of the Colorado River’s decline. The water level in the lake now sits about 1,068 feet above sea level, close to 200 feet below its typical level. With the announcement came cuts to CAP’s water supply. Early next year, supply will drop 30%.

“The announcement today is a recognition that the hydrology that was planned for years ago, but we hoped we would never see, is here,” said Camille Calimlim Touton, the Bureau of Reclamation’s deputy commissioner, referring to the changes in the river’s flow.

Arizona is one of seven U.S. states in the Colorado River Compact, a water-sharing agreement that goes back nearly 100 years. Given the drought conditions, in 2007 the members adopted interim guidelines to clarify how they would share the shrinking amount of water. By 2019, those guidelines were no longer adequate, and the states adopted the Drought Contingency Plan, which established a series of triggers for water reductions based on levels in Lake Mead.

Members of the Colorado River Compact are granted different levels priority access to water in the event of a shortage much the way loan- and bondholders get priority access to capital in the event of a bankruptcy. Not only is Arizona among the first group to see reductions, it will also see far greater reductions than other areas, at least initially. A fall below 1,050 feet would trigger more cuts that would hit a number of tribes and communities, including Phoenix and Scottsdale.

Worse may be ahead. A two-year study projects that Lake Mead will fall below 1,030 feet by July 2023. When that happens, Arizona, California and Nevada will have to take additional conservation measures to prevent it from dropping below 1,020 feet.

There’s a hierarchy of users within CAP, as well. Farmers—who represent just 1% of the state’s economy but use 74% of its water—will bear the brunt of the first cuts. “I have a feeling residents in cities won’t feel this in the tap for a very long time,” said John Fleck, director of water resources at the University of New Mexico.

They won’t be spared higher costs due to the limited supply, however. The Central Arizona Water Conservation District will increase rates 20% next year to make up for lost agriculture revenue, according to Fitch Ratings, one of the big three credit ratings agency. Recreational facilities—particularly golf courses—may also have to adjust their water usage.

By 2040, the Phoenix metro area will be home to an estimated 6.5 million people, according to projections from the Arizona Office of Economic Opportunity. That continued growth will come at the expense of farming, Fleck said.

“That's the choice Arizona has,” he said. “It can't be a growing metropolis and have hundreds of thousands of acres of irrigated agriculture in the central state.”

Negotiators in the 1920s over-estimated the amount of water available in the river, Fleck said, by basing their supply calculations on data from just the few years prior, which had been wetter than average. While there were some contemporaneous studies showing that available water was likely to be less than policymakers’ estimates, that research was largely ignored. “People were just looking to get a deal done,” he said.

In 2026, the 2007 guidelines will formally expire, necessitating a new water-sharing agreement. “What’s different when developing the new rules is: How do we address the economic, environmental and in many ways human health needs of 40 million people who share the Colorado River in the face of a hotter, dryer future?” said Chuck Collum, CAP’s program manager for the river. 

This time, negotiators will be entering with accurate data and clear eyes. “Almost 30 years is a very long time to be at the levels we’ve had,” said Terry Goddard, CAP’s board president and a former mayor of Phoenix.

“Realism is critical here,” he said of the upcoming talks. Arizonans “need to use the first rule of holes: when you’re in a hole, stop digging. Any future expansion of water use is off the table.”

©2021 Bloomberg L.P.