Water policy and the West’s housing market

One of the intellectual frustrations with trying to wrap my head around water policy in the western United States is that it’s really sort of everything policy. There’s climate science and hydrology and history and law and agricultural economics. And, the subject for this afternoon, there’s urban development economics.

Much of the policy struggle has been driven by the explosive growth in sunbelt cities. We started building houses in the 1980s like gangbusters, without a whole lot of thought about how we were going to get enough water to flush their toilets. Here, for example, is single family homes by number of annually issued building permits in Las Vegas:


But then, as you can see, around about 2006 or so we stopped building so many houses. What’s up with that?

Here are the three major metro areas that interest me right now – Albuquerque, Phoenix, and Las Vegas (indexed so that 2001=100 so you can get a feel for the trends in all three, independent of absolute numbers):

My former Albuquerque Journal colleague Richard Metcalf wrote about our situation in this morning’s paper:

The pace of home construction in the Albuquerque metro area has taken a step backward during the first five months of the year, getting off to the second slowest in what is likely decades, according to building permit numbers from DataTraq.

“Population is a huge driver of home construction,” said John Garcia, executive vice president of the HBA, the home builders group in the metro. “We focus on job growth, where we’re at the mercy of business. We need to improve our population growth.”

There’s a rhetoric around this, which you can see in Garcia’s comments, that suggests that many of the region’s economic boosters presume that growth is the norm, and the current situation is not the norm, that we’re gonna somehow “pull out of this slump.”

I’m frustrated that I don’t know enough about the economics of urban development to understand what’s going on here, because the water policy implications of whether this is the new normal, or a slump we’re going to pull out of, are huge. I suspect that if I did understand more urban development economics, I’d simply have a clearer understanding of why we can’t really know what comes next.

What does all this mean as a matter of water policy? Mainly, I guess for now it means that the west’s water policy problems are a lot easier right now, since we’re not building so many new houses. It means that those pie-in-the-sky population growth projections that have driven a lot of the planning and analysis about how much water we have and will need (like the Bureau of Reclamation’s Colorado River Basin Study) are wrong, in a good way. (Yay, our growth-based economies have tanked! We don’t need as much water!)



  1. But if you look at it if you put in a ban on outside irrigation on new homes how much consumptive use of water is occurs inside. If you ban outside watering period total zeriscaping, then most of the consumptive use goes away. In the case of Abq you run the sewage thru the plant and back into the river it goes. Yes swimming pools are the next candidate perhaps a cover required when not in use.

  2. John, you probably know the answers on this but you are challenging your readers, right?

    You cite the explosive growth of some western cities for many years then say that there was a change in 2006. You ask why? The answer didn’t factor in water use but had everything doing to the real estate bubble bursting. I saw this first hand for Las Vegas. I saw a hot real estate market for Las Vegas as many Californians sought refuge in their retirement in Nevada. Phoenix was the same. In 2005 to 2008, things changed. The market imploded.

    The interesting thing that I saw in the Las Vegas real estate market was how Boulder City handled new growth. Boulder City would only allow a handful of homes to be built every year. Las Vegas, on the on the other hand was going gang busters, I sometimes wonder why Boulder City was the exception to the rule?

    About growth in the west and water distribution. I did comment in a post five years ago https://www.inkstain.net/fleck/2010/05/river-beat-why-is-lake-mead-dropping/ that I thought that there was a disconnect between the Federal, State and local levels about water usage. I still believe it.


  3. DG – Yeah, I wasn’t very clear on what I know and don’t know. I’m comfortable that we know why we crashed, what I don’t know is whether/when/why we do or don’t return to previous pre-cash new home construction rates.

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