From oil and natural gas to rare earth minerals in the deep sea, we've looked at the competition for critical natural resources. Today, we examine the battle over a natural resource that's even more fundamental, water. There's every chance that America's Water Wars may be overflowing into your neck of the woods soon.
When it comes to America’s Water Wars, the West is as wild as it ever was. And the mighty Colorado River is one of the spoils.
The Colorado River cuts through the Grand Canyon and spans 7 states providing water for about 40 million people and 5 and a half million acres of farmland. To some, the water is as valuable as oil.
Sharyl (on-camera): Early Americans settling the West started moving water from the start for mining and farming establishing the very system that laid the foundation for who has the right to do what today.
In 1922, seven states signed onto The Colorado River Compact, a water sharing agreement that divvies up the river’s annual flow.
The water must be shared equally between Upper Basin states: Wyoming, Colorado, Utah and New Mexico and the Lower Basin: California, Arizona and Nevada. There’s been infighting ever since.
A recurring question: Who has the right to move and use the river water— where.
Sharyl: I kind of thought nobody could really own water?
Michael Pearce It's true. And in the Western United States, the rule has always been, you don't own water, you don't own the molecules of water, you own the right to divert it and put it to beneficial use.
Attorney Michael Pearce represents both buyer and seller in one of the most important water disputes involving the Colorado River.
The owner of farmland in Arizona’s Cibola Valley wants to sell the right to transfer water 300 miles through the Central Arizona Project canal, to a town called Queen Creek.
Pearce: We’re talking probably less than 1%, way less than 1%, of the flow of the river. This water you wouldn't even be able to notice it. It will have no visible impact at all.
Queen Creek is a quickly-expanding suburb of Phoenix. It’s seeking the Colorado River water not because its own supply is running dry; there’s plenty of that for the moment.
But Paul Gardner says importing surface water from the Colorado River is cheaper than using the city’s underground water. He’s Queen Creek’s utility director.
Paul Gardner: And so part of the law here in Arizona now is to, if you pump out a gallon of water, a gallon of water has to go back in to the ground. And there's a district that we belong to, it’s called a replenishment district, that does that. It sometimes can be very costly. And we decided as a town that we could do it more efficiently and that it would be more cost-effective if we had the control of what those costs were by getting our own water supplies.
Sharyl: When you're paying someone to have it done, like you've been doing, how do they put a gallon of water back into the ground?
Gardner: So throughout the metropolitan area of Phoenix, there are what we call recharge sites. And so there are areas that they take surface water and they put it basically in these basins and the water returns back into the aquifer in so that you're able to then replenish that area where you pumped out.
Sharyl: So that way the groundwater is not being used up?
Gardner: That's right. It's called sustainable.
Queen Creek argues the water it wants to bring in from the Colorado River will go to much better use in their town than back on the farm. It would support over 5,000 homes, 2,700 permanent jobs, $115 million in annual wages.
Sharyl: Have you done any calculations that you can describe that show how much less expensive it is to ship it in versus having to pay people to return it?
Gardner: This water supply, and future ones, this will end up saving our residents into the tens of millions of dollars as we go forward.
So if the seller wants to sell and the buyer wants to buy, what’s the issue?
Regina Cobb: I would say it is commoditizing water and is picking winners and losers.
Regina Cobb is an Arizona state representative. She’s fighting the water transfer, in large part because of who owns the farmland that’s selling the water rights: a multi-national hedge fund.
Cobb: This will be the first case that that water has been able to be transferred from the Colorado River internally into urban Arizona.
Sharyl: Is it a hedge fund group that's involved in this particular transaction that you object to?
Regina Cobb: Yeah, it's called Greenstone. And they have bought up more than just this one piece of property.
Cobb says she worries that investors thirsty for profits will complicate the Water Wars. Turning H2O into a commodity where shareholders make money off droughts and water shortages.
Cobb: Water is scarce commodity in Arizona. So yes, it does become like oil here. And it's just like any product that's scarce. You start putting it up on the market and guess what it starts going for the highest price
Cobb isn’t alone. When the state collected written public comments, for every one that favored the Queen Creek deal, there were 47 opposed.
Pierce: It's almost a religious fervor that this water cannot go to central Arizona. And that's a difficult argument to defeat with logic. And if you look at this objectively under Arizona water management principles, Queen Creek needs this water. They need it more than we need alfalfa growing in Cibola Valley.
Despite strong opposition, the Arizona Department of Water Resources last fall gave the thumbs up to the water transfer. The final hurdle now is approval from the federal government.
Sharyl: Is there anything that would prevent private investors from moving where this has been for a long time, how water rights are handled, into water as more of a commodity and investment and a profit center for investors?
Pearce: Yes, I've been doing water transfers for onto 30 years now, and they're very difficult to do. It's a very regulatory process, there are a lot of hurdles to overcome, and it's not always even possible. So the idea that you're going to just roll into town and buy up water rights, turn around next year and sell them for a fabulous profit is just a myth.
Whatever the final decision on Queen Creek, it could help determine whether more international investors choose to dip their toes into America’s Water Wars. And forever change how our most critical natural resource is divvied up.
Sharyl: What do you think happens if this land grant or the grant of the water to be moved is approved?
Cobb: It's going to commoditize the water. I think the price of water is going to become sky high. It's going to be just as if you were buying gold or silver or copper. And so that's going to make it difficult in the future.
An area of agreement is the idea that in one form or another, skirmishes over water will be spilling into more U.S. cities and towns.
Sharyl: Are these sorts of issues coming to them in the next 50 years do you think, in other parts of the country?
Pearce: Yes, even in what you would think would be the water rich states of Georgia and Alabama and Florida, there’s a dispute over the Chattahoochee, Apalachicola rivers. So those kinds of disputes I think, are going to grow and become more common in the Eastern States than they ever have been in the past. So maybe they will learn a few lessons from the West. I don't know. Maybe they'll come up with something better than we did.
Sharyl (on-camera): Regina Cobb, the Arizona legislator, is pushing for a law to ban the sort of water transfer proposed for Queen Creek.