Feds Bet on Paying for Water Conservation to Protect the Colorado River

PHOENIX—Arizona’s future was at a critical juncture at the beginning of 2023. 

Massive cuts to the state’s Colorado River water supply were being imposed. Deadlines loomed from the federal government for the seven states that rely on Colorado River water to come up with a solution for how to cut use even further as the nation’s two largest reservoirs recorded among their lowest levels ever after decades of drought caused by overconsumption and climate change.

All the while, Arizona’s growth—both in population and in business—continued to boom, prompting questions over the long-term sustainability of the state’s economy.

That precarious moment has now passed, Gov. Katie Hobbs said Friday at Phoenix City Hall as state, city, tribal and federal officials gathered to celebrate voluntary reductions of Colorado River water that will help preserve the system through 2026 as new operating guidelines for the entire region are negotiated. 

“Almost every challenge has a solution,” Hobbs said. Along the Colorado River Basin, that solution, for now, is coming in the form of a wet winter, a bit of collaboration between stakeholders in the region and billions of dollars from the federal government to entice users to conserve water. 

Friday’s event celebrated Arizona tribes and farmers agreeing to leave 162,710 acre feet of water unused through 2026, when current drought operating guidelines expire and new ones currently being negotiated will be implemented. That water will come at a cost—$64 million from the federal government. It’s a small portion of what’s planned to be spent, with Arizona users already pledging to conserve about 786,000 acre feet for $314 million. Under the Inflation Reduction Act, $4.6 billion was allocated for addressing drought throughout the Western U.S.

Phoenix, for example, will leave 50,000 acre-feet of its Colorado River entitlement each in exchange for at least $20 million a year from 2023 to 2025. These agreements, Hobbs said, “shows the rest of the country that a thriving economy and water conservation are not mutually exclusive.”

To make the reductions possible, the state’s farmers, who use the bulk of the river’s supply, have left fields unplanted.  Also,  cities like Phoenix have raised water rates to incentivize conservation, passed new water consumption measures for future developments and bet big on recycling wastewater for consumption.

Friday’s announcement comes in the wake of the Biden administration releasing a study on Oct. 25 that found the voluntary cuts proposed in May by Arizona, California and Nevada, members of the Lower Colorado River Basin where most of the river’s water is used, would be enough to prevent Lake Powell and Lake Mead reaching critically low levels over the next three years. 

The study cites this year’s above-average snowpack in the Rocky Mountains as vital for reducing the risk of the system collapsing, at least for the next three years. Already, that’s led to reduced water cuts for 2024.

The agreements are “a good option right now,” said Kevin Moran, associate vice president of Southwest regional affairs for the Environmental Defense Fund. “It provides a certain amount of certainty, it avoids litigation and gives us some breathing room so that we can work on the longer term issues which require a lot of attention and additional conservation commitments to address the long term challenge of the Colorado River.”

Under the proposal, the three states would voluntarily cut 3 million acre-feet over the next three years, about 14 percent of the region’s supply, in exchange for federal funding. California would reduce use by 1.6 million acre feet; Arizona 1.1 million acre feet; and Nevada 0.29 acre feet.

“Throughout the past year, our partners in the seven Basin states have demonstrated leadership and unity of purpose in helping achieve the substantial water conservation necessary to sustain the Colorado River System through 2026,” said Deputy Secretary of the Interior Tommy Beaudreau when the study was released. 

The state’s efforts, and money from the Biden administration, “ensure we have long-term tools and strategies in place to help guide the next era” of the Southwest, he said.

Despite the wet winter, experts and environmentalists have cautioned that 2023 was just a reprieve from 23 years of drought and the system still lingers on the verge of collapse. Lake Mead is 34 percent full, and Lake Powell is slightly higher, at 37 percent. The federal analyses found that through 2026, the chance of falling below critical elevations was reduced to eight percent at Lake Powell and four percent at Lake Mead. 

Already, those voluntary conservation efforts are showing results. This year, Arizona, California and Nevada have used just 5.8 million acre feet for 2023, the lowest they’ve used collectively since 1984, said Tom Buschatzke, director of the Arizona Department of Water Resources. “But our work is not done,” he said. “This outcome has allowed us to focus on negotiating alternatives to stabilize the Colorado River system” for post-2026 operations.

With the system near collapse last summer, federal officials called for 2 to 4 million acre feet to be cut yearly, more than half of what is now likely to be implemented. Before the states reached an agreement, which came after they missed multiple deadlines, federal officials revealed two plans that would have both cut the Lower Basin supply by around 2 million acre feet a year.

A proposal negotiated and agreed to by the states themselves, even if it didn’t go as far as once thought needed, was always the likely option, experts said, as it avoided the risk of litigation in the event the federal government was forced to make involuntary reductions of a state’s supply. With this year’s wet winter, the states have been able to cut less than once asked of them, all while getting millions of dollars that could potentially be used to fund other water conservation projects. 

“We have a river that needs our help,” Moran said. “The river is an expression of a basin-wide ecosystem. Unless we make additional conservation commitments on a major scale, including the health of watersheds and ecosystems, we’re going to continue to be playing catch up.”