I deeply misunderstood central Arizona’s readiness to respond to declining Colorado River supplies. Because I thought Arizona had a plan.
In fact, Arizona did have a plan, a carefully crafted priority system that provided some users with deeply subsidized water in the short run, with the understanding that they would be the first to have supplies curtailed in the long run, as Colorado River water inevitably ran short.
That actually was a pretty good plan – essentially a subsidy from urban to rural water users to provide a resilient cushion on which to land as supplies run short.
When that time came, however, those with the lowest priorities, after taking the subsidies for years, used political power to end-run the plan.
There’s a nice explanation of this in the staff report for the Phoenix City Council’s discussion on tomorrow’s agenda of the Colorado River Drought Contingency Plan:
In addition to the existing priority system on the main-stem of the Colorado River, a separate priority system for Colorado River water exists for users of the CAP. Various cities, Indian communities, mining companies, and private water companies in Maricopa, Pima, and Pinal County, including Phoenix, hold federal contracts in perpetuity for the three highest priority classes of water. In priority from highest to lowest, these are Wellton-Mohawk water, Municipal & Industrial and Indian water as co-equal priority, and Non-Indian Agricultural water. These federal contracts guarantee that delivery of water in the CAP occurs in accordance with the established priority system. All other water delivered through the CAP is in a category called Excess water. Excess water is the water not used by long-term federal contract holders in any given year. Long-term contracts for Excess water are not available, but rather are entered into with the Central Arizona Water Conservation District (CAWCD) on a year-by-year basis. Because the volume and availability of Excess water is based on the orders of higher priority water users in Central Arizona, there is no guarantee that Excess water will be available in any given year. Moreover, this water is subject to the first reductions in deliveries under shortage conditions on the Colorado River. In any given year, Excess water is only available after the water orders of those holding contracts for Wellton-Mohawk, Municipal & Industrial, Indian, and Non-Indian Agricultural water are fulfilled.
For users in Central Arizona, the cost of Colorado River water consists of: (a) a capital charge to repay the federal government for the canal infrastructure; (b) operation, maintenance and replacement (OM&R) costs for the canal works; and (c) the energy costs associated with pumping the Colorado River water uphill from the Colorado River into Central Arizona. At the time of the 2004 Arizona Water Settlement Act, agricultural districts in Maricopa, Pima, and Pinal counties were struggling to maintain their long- term contracts to Non-Indian Agricultural water because they could not afford the full cost of Colorado River water. To solve this problem, the agricultural districts relinquished their higher priority Non-Indian Agricultural contracts to cities and tribes (including Phoenix) in exchange for a right-of-first-refusal to Excess water at a substantially subsidized cost. Agricultural districts do not have a right to Excess water, but rather only a right-of-first-refusal whenever Excess water is available. CAP agricultural districts do not pay capital charges or OM&R, but only pay the energy costs for Excess water when it is available. According to the agreement between the agricultural districts and the CAWCD, this right of first-refusal for Excess water expires in 2030. As a result of this agreement, to date, the agricultural districts have received subsidies through reduced-cost deliveries of Excess water and other concessions valued at nearly $400,000,000. The CAWCD has taxing authority on real property in Maricopa, Pima, and Pinal Counties and uses the taxes raised to pay for the subsidies provided to the agricultural districts.
This seemed like a good plan, until the water began to run short and it actually required the next steps of implementation – using less water.
Under the terms of the DCP, less Colorado River water will be available in Central Arizona and the likely impact is that Excess water will not be available at all because it is lowest in priority and first to be cut. Because the agricultural districts in Central Arizona depend on Excess water, one impact of DCP is the likely elimination of any deliveries of Colorado River water to the agricultural districts. This was an unacceptable result to the Governor’s office and the Board of Directors of CAWCD, so they determined that the loss of water to agricultural districts must be mitigated as a prerequisite to passage of the DCP in the Arizona Legislature.
The Phoenix City Council seems ready to approve their part of the deal tomorrow.