Is Water a Commodity?
By Stephen Tuttle | May 8, 2021
There will be one overriding issue in the next couple of decades, one of the few that is literally an existential threat to our future. It isn't terrorism, or white supremacy, or socialism, or Trumpism. It's water, or the lack of it.
The looming water crises — and multiple crises is what this will become — will be the most obvious result of climate change. It has already begun.
There is a daily report called the U.S. Drought Monitor. It features a nifty little map that shows us where the country is most in need of water. If you start at the Minnesota/North Dakota border and draw a line due south, pretty much every area west of that line is in some stage of drought.
West Texas and large chunks of New Mexico, Arizona, Colorado, Utah, and Nevada are in their third decade of what is categorized as “exceptional drought.” All of them get part of their water from underground aquifers and part from the Colorado River Compact, which divides Colorado River water among seven states, several tribal nations, and Mexico. Unfortunately, those aquifers are slowly receding as states use far more groundwater than is being recharged. Greater dependence on Colorado River water isn't working out so well, either.
The Colorado and its tributaries are subject to various dams and impoundments, some to generate hydroelectric power and some to preserve and provide water for agriculture and households. The two largest reservoirs are lakes Powell and Mead, created by the Glen Canyon and Hoover dams respectively.
Both Mead and Powell are hovering at dangerously low levels. Mead, at only 42 percent of capacity, is nearly 200 feet below its full level. Lake Powell is at just 50 percent capacity. This is a problem since about 30 million people and five million acres of farmland count on these reservoirs for their household and irrigation water.
Arizona and Nevada have already lost a small share of Colorado River water in accordance with the Compact and will lose considerably more if the drought continues. Things will get stickier still if Lake Mead sinks another 18 feet and goes below intakes for the hydroelectric system, power on which more than a million households depend.
All of this despite the fact that most of the states involved in the Colorado River Compact have actually reduced their water consumption over the last two decades despite rapid population growth or, actually, because of it. In states like Arizona that are dry even in the best of times, it turns out sprawling suburbs use less water than the incredibly thirsty agriculture they replace.
It isn't just the desert southwest or Southern California having water issues. The Dakotas, Nebraska, Iowa, Kansas ... the so-called breadbasket of the country is also in various stages of drought. That's a goodly chunk of our food supply at risk.
Into this growing problem comes a disturbing new wrinkle: water as a commodity to trade.
An investment group purchased several large farms in western Arizona. Their intent was not to work the land that they've allowed to go fallow. No, their interest was the Colorado River rights, which came along with the property. Now they would like to sell the water to which they have the rights to Queen Creek, an exurb about 35 miles southeast of Phoenix that has grown from a sleepy agricultural area of some 4,300 in 2000 to a residential boomtown of nearly 60,000 today. The water rights are about 200 miles northwest of there, but Arizona has something called the Central Arizona Project, a canal bringing water from the Colorado River all the way down to Tucson. And it goes plenty close enough to Queen Creek.
This investment strategy, colloquially known as “buy-and-dry,” is playing out in other regions as well. Opponents decry it as destructive to agriculture and, since water is wealth during droughts, an inappropriate transfer of wealth from farmers to investment groups and on to the highest bidder. Communities with money will not go thirsty.
The courts are now trying to sort this out; since water is essential to life, it might not qualify as a commodity. If it does, there's little to stop the investors from looking our way for a resource they can buy and sell like soybeans or pork bellies.
Never happen, you say? Michigan has already established the precedent that our groundwater is for sale by allowing Nestle to pump billions of gallons and sell it in plastic bottles. And a water pipeline would have none of the downsides of the fuel pipelines that already exist.
We've already failed to secure our groundwater. It's not clear that agreements protecting Great Lakes surface water will matter much if parts of the country are dying of thirst. Our bounty is a potential lifeline that others might ultimately decide they need.