Heads up, Arizona, part two: The cost of water and wastewater infrastructure to 2032

The cover of the New York Times magazine last fall showed an old, disabled speed boat lying on a barren, cracked expanse of earth — which used to be covered with water. The title read "The Perfect Drought: Will population growth and climate change leave the West without water?" The story echoed a warning that many observers have intoned of late: that a decade-long drought is just the beginning of painful water shortages in Arizona. The fast-growing state is likely running out of water, they say. But a recently-released report came to a very different conclusion — one supported by a wide variety of water resource experts. Knowledge@W. P. Carey explores the report's findings in the second of our five-part series on Arizona's infrastructure needs.

The cover of the New York Times magazine last fall showed an old, disabled speed boat lying on a barren, cracked expanse of earth — which used to be covered with water. The title read "The Perfect Drought: Will population growth and climate change leave the West without water?"

The story echoed a warning that many observers have intoned of late: that a decade-long drought that shrank reservoirs is just the beginning of painful water shortages in Arizona. Cities will be forced to pump aquifers, with no source to restore what's used. Fast-growing Arizona is likely running out of water, they say. But the AIC report came to a very different conclusion — one supported by a wide variety of water resource experts.

No one-word answer

"Will we run out of water? There's not really a one-word answer to that question," said Molly Castelazo, the principal author of the report's water and wastewater section. "In our analysis we found that in the 25-year period going to 2032 in Central Arizona — Maricopa, Pima, and Pinal counties — no, we're not going to run out of water. Supply will still exceed demand," she said.

According to the report, the analysis includes adherence to the state's assured water supply rules, which regulate the amount of groundwater that can be withdrawn. It also doesn't make any assumptions about leases of Indian water rights, except those that are currently authorized. That doesn't mean that Central Arizona can grow forever on its current water supplies.

"The water surplus in Central Arizona shrinks pretty dramatically in our 25-year period," Castelazo said. "Certainly water resource managers and policymakers will be tasked with looking at supply augmentation options in Central Arizona well before 2050." And outside Central Arizona, the analysis found, gaps between demand and supply do exist — or will exist in the near future — in four of Arizona's counties: Coconino, Cochise, Gila, and Yavapai.

In Cochise County, supply augmentation (bringing in new supplies to meet demand) will cost $217 million — about $1,547 per capita. In Coconino County, the bill to increase supplies sufficient to meet demand is $652 million — $4,752 per capita. In Gila County, the bill is almost $31 million — $543 per capita; and in Yavapai County it's $197 million — $817 per capita.

Tim James, Seidman's director of research and consulting, in a presentation to industry leaders and policymakers, suggested that the question in this case is: why should residents of Maricopa County pay a lot of money in order to fund the infrastructure improvements necessary for the outlying areas of the state? "There's a big debate that needs to happen over who gets what, where, and when," James said.

Paying the infrastructure bill

In addition to the cost to augment water supplies in areas of the state where demand will outstrip supply, Arizonans will also be faced with costs to rehabilitate and replace existing infrastructure that's nearing the end of its life cycle, and build new infrastructure to accommodate new populations.

The total 25-year water and wastewater infrastructure bill, including supply augmentation costs, is $109 billion. Yet the ability to cover that bill with current funding mechanisms is relatively good — especially compared to the energy, telecommunications, and transportation sectors, which will require creative thinking to bridge the funding gaps.

According to James, the gap here is such that current funding mechanisms, if appropriately applied and adjusted upwards, would be sufficient to plug the gap over that period. Specifically, according to the report, an annual water rate increase of 3 percent would cover the gap between funds available under current mechanisms and total costs. The annual rate increase necessary in the wastewater sector is 3.3 percent.

Climate change: the big unknown

The report calls climate change the big unknown: "Climate change will have unknown, though potentially adverse, effects on Arizona's water resources," the authors write. "Climate change has the potential to drastically change the supply scenarios we set forth in the previous sections," the report reads. "Perhaps most frustratingly, we simply don't know exactly how climate change will affect our water supplies."

Yet despite the uncertainty, the report does suggest some possible scenarios. Central Arizona Project's "bad" and "worse" scenarios have the water supplier hitting shortage triggers as early as 2010. Yet those scenarios are by no means predestined. And even under the "worse" scenario, CAP's municipal and industrial customers (residences and businesses) would still have access to all the water they need.

For their part, SRP "doesn't make management decisions based on climate change."

"The fact that the predictive value of climate change models is not fully developed (at least, for the climate affecting Arizona's water resources) means that basing water resource plans on an uncertain future climate can be very difficult," the report concludes.

Innovative supply augmentation options

The researchers used cost estimates for those augmentation projects that would be most effective in securing long-term supplies in the four counties with current or impending water deficits. Yet even those projects, in many cases, are fraught with conflict. The favored supply augmentation method in Cochise County, for example, is an extension of CAP for delivery of Colorado River water to Sierra Vista. Yet the area has no Colorado River allocation.

The favorite option in Coconino County would deliver water from Lake Powell to the Hopi, Navajo, and Flagstaff communities and to Williams from the R-M Aquifer and to the Grand Canyon from the Bright Angel Creek Infiltration Gallery. Yet, again, water rights are not clear and the costs, on a per-capita basis, are huge.

In Yavapai County, the Big Chino Pipeline has been the subject of extensive conflict. "Concerns about pumping from the Big Chino aquifer center on its relationship to the Verde River watershed, which supplies water to SRP's Central Arizona customers and serves as an important habitat for a number of endangered species," Castelazo said.

Alternative supply augmentation options may be necessary in the four counties with current or impending water deficits. They'll certainly be necessary in Central Arizona — perhaps not within the 25-year study period, but well before 2050. "Easy supply augmentation options are no longer available," according to the report, "and the era of cheap water in Arizona has passed."

Yet while augmenting water supplies in Arizona to meet future population demands will no longer be easy, nor cheap, it is possible. The report outlines a number of likely options, including:

• Increasing effluent reclamation and reuse;
• Desalination;
• Importing water; and/or
• Pursuing additional water leases with Indian communities.

The report also highlights demand reduction options, including price signals and conservation programs.

Planning is critical

Rapidly increasing demand, relatively fixed supplies, legal and institutional complexities, and the uncertain role of climate change all make for an environment in which planning for future populations is critical, Castelazo said. "In some cases effective planning will involve securing new water supplies — which can be legally, institutionally, and financially very complex. In other cases it involved large-scale capital projects, which take time to finance and build," the report reads.

The message: planning now is essential. The report's introduction lists a rich history of forward thinking and infrastructure planning, from as early as A.D. 50 when the Hohokam built a series of canals on the Salt River to irrigate their farmlands. SRP's dams, reservoirs, and canals are the backbone of water supplies for much of Greater Phoenix.

And Central Arizona Project delivers Colorado River water through 336 miles of canals from Lake Havasu to Maricopa, Pima, and Pinal counties and is the single-largest water supplier in the state. But, the report says, "despite a history of water resource management and forward-thinking infrastructure planning, the state is once again at a crossroads.

The infrastructure built several decades ago — principally the SRP and CAP systems — will not meet the demands of a rapidly growing population. Significant new infrastructure investments — in Central Arizona and in other parts of the state — are required to provide a sustainable water supply to future populations." So heads up, Arizona, we may not be running out of water yet, but if we don't plan now for the future, that bleak vision portrayed in the New York Times could become a reality.

Bottom Line:

• In Central Arizona — Maricopa, Pima, and Pinal counties — water supplies will continue to exceed demand through 2032.
• In four of Arizona's counties — Cochise, Coconino, Gila, and Yavapai — water deficits already exist or will develop within the next five years. The costs to augment supplies in those four counties are huge — and they're spread over relatively small populations.
• The total 25-year water and wastewater infrastructure bill, including supply augmentation costs, is $109 billion.
• Climate change will have unknown, though potentially adverse, effects on Arizona's water resources.
• Rapidly increasing demand, relatively fixed supplies, legal and institutional complexities, and the uncertain role of climate change all make for an environment in which planning for future populations is critical.