Effect of purchase of AZ water rights by investment firms
Sarah Porter, Director of the Kyl Center for Water Policy at ASU’s Morrison Institute for Public Policy, joined Ted Simons, host of Arizona Horizon, to discuss two water topics of interest.
First, Wall Street firms are buying up land in Arizona only for the water rights. They turn around and sell water to the residents in the area. Also, Arizona Attorney General Kris Mayes just revoked the water drilling permits of a Saudi Arabian-owned alfalfa farm. Two deep-water wells were approved for Fondomonte Arizona LLC eight months ago, which Mayes called “unconscionable” given the state’s need to preserve water.
“The water right that’s part of the purchase is what the investment firm hopes to really make money from sometime in the future,” Porter said. “Very often, these investment firms will buy a farm and lease the land back to the farmer. So the land stays in agricultural production, and the investment firm then looks for an opportunity to transfer some of that water or possibly all of that water to another water user,” she said.
Porter said a transfer of all of that water is an issue that needs to be addressed in these kinds of transactions. “We should be clear that there are very limited opportunities for these types of transactions,” Porter said. “So we’re really talking about transferring surface water, first of all, that would be water from rivers and streams. And really the interest is in water on the main stem of the Colorado River, the western border of Arizona, because there’s the CAP, this aqueduct that’s a fabulous piece of infrastructure that would enable moving the water to potential buyers and cities. But yeah, if all the water were transferred off, then something has to be done to prevent a big dustbowl problem.”
There are guardrails, Porter said. She mentioned the final sign off is with the Bureau of Reclamation, which is part of the Interior Department, with the final decision resting with the Secretary of Interior. Before the Bureau of Reclamation even made a recommendation, they wanted to hear from our state department of water resources, which is what led to three public hearings, Porter said.