A Puzzle in Arizona’s Boom Towns: How to Keep Growing With Less Water

As the mayor of an old farming town bursting with new homes, factories and warehouses, Eric Orsborn spends his days thinking about water. The lifeblood for this growth is billions of gallons of water pumped from the ground, and his city, Buckeye, Ariz., is thirsty for more as builders push deeper into the desert fringes of Phoenix.

But last week, Arizona announced it would limit some future home construction in Buckeye and other places because of a shortfall in groundwater. The worried calls started pouring in to Mr. Orsborn.

“I have neighbors who come up to me and say, ‘What are you doing? Are we running out of water?’” Mr. Orsborn said. “It put our community on edge, thinking, ‘What is going on here and do I need to move?’”

No, he tells them. Breathe.

The upheaval was caused by a new state study that found groundwater supplies in the Phoenix area were about 4 percent short of what is needed for planned growth over the next 100 years. That may feel like a far-off horizon, but it is enough of a change to force the state to rethink its future in the near and long terms.

Now, there are urgent questions about how Arizona should be using its increasingly precious water — for water-guzzling alfalfa and lettuce farms or thirsty new computer chip and battery factories and coffee-creamer manufacturing? For new sprawl or more development inside cities? Could the Phoenix suburbs keep up their frenzied pace of growth? Should they?

“No, we’re not out of business,” said Grady Gammage, a former president of the Central Arizona Project, an aqueduct system that carries Colorado River water to Phoenix and Tucson. “This may slow growth somewhat. I don’t think that’s necessarily a bad thing.”

Arizona has some of the strictest groundwater laws in the country in more regulated areas like Phoenix. For decades, the state has required new developments to show they have a 100-year supply of water before they can sell lots or break ground.

The projected shortfall means that developers in Phoenix’s fast-growing outskirts can no longer get state approval to build new subdivisions that rely on groundwater wells, meaning they have to get water from somewhere else.

But there are limited sources of new water at a moment when cities and developers across Arizona and other fast-growing Western states are competing for every spare drop. Experts said that could drive up housing costs that have already increased by 51 percent over the past four years, according to Zillow, and sap Arizona’s appeal as an affordable destination for businesses and new residents.

“It’ll change the way development looks,” Mr. Gammage said. “Higher density, less turf, fewer swimming pools.”

Ever since news of the groundwater shortage sent shock waves across the Phoenix area, mayors, developers and business groups have been trying to reassure jittery investors, homeowners and potential new businesses that Arizona still has water, even as the threats of climate change and the shriveling Colorado River begin to reorder its future.

Gov. Katie Hobbs, who has made Arizona’s water supply a focus of her first months in office, said the groundwater decision would not derail any projects that have already been approved and would have little effect on development in most big cities around the Phoenix area. Even on the edge of the suburbs, the state said there was also a supply of 80,000 lots with permission to build that can keep moving forward.

But to some residents around Buckeye, regularly ranked as one of the 10 fastest-growing cities in the country, it felt like an overdrawn account finally coming due — the start of a thirstier new era where the rapidly expanding Phoenix area cannot keep growing by spilling endlessly into the Sonoran desert.

“I worry all the time,” said Trudy Hann, 71, who moved to Buckeye in 1980, when the population was just 3,400. Today, it has more than 110,000 residents, and city officials say they envision 1.5 million people living there — enough to rival the current size of Phoenix.

On Saturday afternoon, Ms. Hann and her family huddled under an umbrella in a subdivision of Spanish-tiled homes bordering an unbroken expanse of desert, watching her grandson play flag football on a grassy field fed by treated wastewater.

Inocente Cayetano moved from Goodyear, Ariz., to Buckeye, just 15 miles west, shortly before the pandemic because it was cheap, without a concern about water. He said a starter home cost $100,000 less in Buckeye than it did just one town closer to Phoenix, allowing him to invest his savings in a mobile coffee trailer. The business took off, and he just broke ground on building a storefront location in one of Buckeye’s fancier master-planned communities.

“It’s a little gold mine,” he said.

He trusts the city will have enough water to brew his coffee and fill his faucets.

Buckeye’s affordability has attracted growing numbers of Black and Latino families from California, the Midwest and other corners of Arizona over the past 20 years. Today, the city has a higher percentage of Latino residents than Arizona as a whole.

On the far western reaches of the city, the realities of limited groundwater will soon start coming into focus. There, just west of the jagged White Tank Mountains, earth movers had cleared away creosote bushes to make way for the first homes of a new development called Teravalis, which aspires to build 100,000 homes and 55 million square feet of commercial space.

The development, which is owned by the Howard Hughes Corporation, has gotten approval from state water authorities to build 7,000 homes. But now, the developers of Teravalis and several other projects in the deserts of western Buckeye will have to find other sources of water to get permits to build the rest of the project.

The limits mean that cities on the outer edges of Maricopa County, home to 4.5 million people, must redouble their hunt for new sources of water. They are seeking it through conservation, recycling wastewater, expanding reservoirs or even pumping in treated seawater from Mexico.

Mr. Orsborn, Buckeye’s mayor, said the city was in the final stages of buying $80 million worth of water from landowners in a rugged mountain basin about 40 miles to the west. That will add enough water to serve about 18,000 households every year for the next century. But, in all, Buckeye officials estimate they will need about 30 times that amount a year.

“It’s going to be incredibly expensive,” Mr. Orsborn said.

Buckeye is also exploring a range of ideas: new wastewater treatment plants; capturing brackish water near a bend in the Gila River that is currently pumped away; teaming up with other cities to expand a reservoir in the mountains northeast of Phoenix by building a higher dam.

Ultimately, Buckeye’s goal is to convince Arizona it has enough sources of water to merit a coveted state “designation” — what one water-users group calls the “platinum standard” for water supplies in the desert.

Phoenix and most other major cities around Maricopa County have already received these designations from the state, meaning they can continue to grow despite the halt in groundwater-based development.

“Anybody who has complained about urban sprawl, lack of transportation — those issues are all going to be helped by this change,” said Benjamin Ruddell, a professor at Northern Arizona University who studies water use. “It’s not the worst thing in the world unless you’re a land speculator looking to turn desert into housing.”

Land buyers like Anita Verma-Lallian are still bullish on the future of development on the edges of Phoenix. She said undeveloped land with a confirmed water supply has been in greater demand since the state’s announcement. Developers are looking for other uses for land without those now-halted state water certificates. Ms. Verma-Lallian said she was working to convert a 2,000-acre parcel once slated for homes into sites for factories or warehouses that are not legally required to show a 100-year water supply the same way subdivisions are.

Intel and a Taiwanese semiconductor company are building new chip plants around Phoenix. In Buckeye, work is underway on a new lithium-ion battery factory.

“There’s a lot of that happening,” said Ms. Verma-Lallian. “There’ll be a lot more industrial development on land that was intended for residential.”