Arizona Water Grab Part One: Water Rights and Water Markets

Arizona’s chances of facing reductions to the state’s portion of water from the Colorado River by 2018 are close to 50%. Various water experts have asserted that addressing unresolved tribal water rights claims should be a top priority. Arizona’s priorities become clear as we see whose access to the water remains more secure.

Meanwhile, what makes Nestlé’s plans to bottle water in Phoenix so bewildering is not simply the dwindling water sources accompanied by messages about the importance of conservation and responsible water use. Access to water for corporations like Nestlé comes at the expense of tribes and others, especially at a time when cuts are due to be made to certain water sources in the next few years. Although many call the Nestlé water bottling plant ridiculous, it in fact represents an ongoing business as usual attitude about the availability of water which ignores the circumstances under which the water gets to the desert cities and the heated politics around water rights.

In particular, various water sources are being depleted, and the Central Arizona Project (CAP) which transports Colorado River water, from which over 40% of Phoenix municipal water is derived, has been a massively destructive project and is vulnerable to major cuts either when an official shortage is declared or perhaps even sooner if a Drought Contingency Plan is enacted. For many, the expectation continues to be that technology will allow for unyielding growth, but in the meantime, more of this vital liquid must be secured, according to so-called experts, by determining what happens with tribal water rights claims that have not been resolved, and by making cuts that impact some tribes before many corporations. Nestlé and various other big water users tend to have more secure water sources partly because CAP water, much of which is lower-priority, has been used to fulfill many tribal water rights claims. This Colorado River water, which continues to increase in cost, with still more claims remaining, is already over-allocated. And now turning water into a commodity is increasingly heralded as a solution to maintain Arizona’s current water use in the face of a scarcity.

This is a series that looks at the broader implications of the Nestlé facility, considering what the competition over water means, how this water gets to the city, and who it affects. Some, including Nestlé, seek to develop a water market on a much larger scale than bottled beverages. Nestlé aspires after a large-scale market in which water can be a tradeable commodity, bought and sold across borders. For a market to come to fruition, remaining tribal water rights claims would have to be resolved so everyone would know how much water is available and to whom. Arizona has officially made resolving water rights claims a priority, and pressure to do so along the entire Colorado River Basin comes from academia as well, calling upon the federal government to allow for water marketing as well. The Department of the Interior has already embraced aspects of water marketing. Certainty about water availability is important, but at what cost do water rights settlements, which involve major compromise come? And what does Nestlé’s local legal counsel have to do with all of this, and who else is interested in securing water for private interests?

A subsequent part of the series will discuss Nestlé’s and others’ interests in developing a water market and the ways that water is already traded on the market in Arizona (such as water “offsets” sold to corporations like Coca Cola, and Long Term Storage Credits which can function like offsets). The Walton Family Foundation (which is mentioned in this first part), run by the heirs of Walmart, plays a significant role in laying the groundwork for a water market by funding research on the subject and working with non-governmental organizations (NGOs) to develop and put into practice projects that facilitate a water market under the guise of conservation in the Colorado River basin states. Explored is the question of what conservation even means, and how people use it to capitalize off of nature.

Tribal Water Rights

Currently, Lake Mead, a major Colorado River reservoir, is at an all-time low, making a federal shortage declaration highly likely within just a few years, and perhaps even sooner, if state-mandated cuts proposed to prevent this are passed in the form of a Drought Contingency Plan. “Federal water managers say there’s about a 50-50 chance they’ll have to at least temporarily reduce Arizona’s share starting in 2018,” explained the AZ Central article, “What Drought? Nestlé plans $35 million plant to bottle water in Phoenix.” At the tier one level (out of a three-tier system), Arizona would have to reduce water allocations from the Colorado River by 20 percent, according to the 2007 agreement. Officials continue to work on ways to limit the impact of the water reductions on most water users, especially municipal/industrial (which would include the Nestlé plant), and tribal priority water users.

Nearly fifty percent of the Colorado River water transported through the Central Arizona Project (CAP) is designated for water rights settlements. When any individual or business, such as Nestlé, runs their municipal tap, over forty percent comes from CAP. Three percent of City of Phoenix water is leased from tribes, which is due to increase. Not only will Nestlé take CAP water, they have access, through the municipal water system, to other water sources, partly because tribal water rights claims have been resolved with CAP water.

In “Future Indian Water Settlements in Arizona: The Race to the Bottom of the Waterhole?” John Weldon and Lisa M McKnight of Salmon, Lewis & Weldon wrote, “…the crowning achievement of the CAP may have been its pivotal role in the settlement of tribal water rights claims based on the federal reserved rights doctrine.” Significantly, this alleviated “the need for neighboring non-Indian water users to curtail their use of local water supplies in order to achieve a settlement.” Access to water has been a major priority for mines and other major water users.

The authors warned in this 2007 article that tribes’ claims that have not yet been settled “exceed the amount of unallocated CAP water by several orders of magnitude.” They wrote that new approaches or potentially deeper compromises may be needed. Almost ten years later, with the water level on Lake Mead hitting record lows, this situation is much more dire. These new approaches may include more water marketing (perhaps in combination with increased use of reclaimed wastewater, and desalination).

A November 2016 report submitted to the presidential candidates’ transition teams argued, “The next Administration should put a high priority on settling unresolved tribal water claims in the Colorado River Basin. Much progress has been made in reaching agreements with Tribes, but several claims remain unresolved. As the basin struggles to manage demands in a sustainable manner, it is essential to quantify the remaining tribal claims and reach closure on how they will be satisfied.” The report was from a University of Colorado team led by Anne Castle, President Obama’s former Interior Department Assistant Secretary for Water and Science.

Specific to Arizona, the tribes that have not had their water rights quantified are the Havasupai Tribe, Kaibab Band of Paiute Indians, Navajo Nation, and San Juan Paiute Tribe. Another seven, Hopi Tribe, Hualapai Tribe, Pascua Yaqui Tribe, San Carlos Apache Tribe (On-Reservation Gila River tributary claims), Tohono O’odham Nation, Tonto Apache Tribe, and Yavapai-Apache Nation do not have fully adjudicated rights on all of their lands. Issues arise facing the tribes who have settled their claims, and those who haven’t.

There are corporations and cities that have access through leases to some tribes’ much more secure priority water rights. And in the case of a few water rights settlements, tribes’ water includes CAP water that will be affected sooner than those with senior water rights. According to “Tribes, farms wary of proposed CAP cuts as Lake Mead falls,” “Historically, tribes and cities stood at the end of the line for major cuts in CAP deliveries. But in more recent water-rights’ settlements, tribes, including the Tohono O’Odham, have taken blocks of what had been called non-Indian agricultural CAP water that once belonged to farmers.” The cost to access CAP water will also increase as it becomes more scarce.

There is no question that tribes continue to face economic disadvantages. Some of the settlements have the ability to market water built in, but this seems to be more about making certain that tribes’ weak economic standing will ensure that more senior water rights will be available to corporations and cities through long-term leases (locking in prices for terms as long as 100 years even if water value rises drastically) while the tribes will rely more than ever on portions of water in the “non-Indian Agricultural” (NIA) category more vulnerable to cuts. Now, NIA water is supposed to be “firmed“;or replaced by other sources of water (which could include effluent, which some tribal members oppose) in times of shortage for 100 years, but under the Drought Contingency Plan, earlier non-mandatory reductions are meant to delay an official shortage, so it would seem that firming would not be required until a shortage is officially declared.

The option to sell or lease water not being used is arguably important to tribal sovereignty, even while this act may run counter to beliefs about relationships to water as well as relationships to places that are much easier for settlers to abandon once the finite resource is depleted. Not recognizing the need to seriously recognize the limits to water availability has shaped western water law, providing for the context in which tribes’ ability to lease unutilized water makes sense if they have “too much.” But as water is depleted and its value increases, major issues can emerge.

As it is, some in tribal leadership have made water deals without the knowledge and consent of many of their members such as in the case of the Gila River Indian Community, in partnership with the Salt River Project (SRP), making an arrangement with Rio Tinto to provide water credits for the Resolution Copper mine planned for the Oak Flat and Apache Leap area, which is considered sacred. This partnership, called the Gila River Water Storage (GRWS) has sold at least 36,000 acre-feet in long term storage credits  to Resolution Copper for nearly $12 million in 2012-13. Having found out about this after the fact, some tribal members publicly announced opposition to this arrangement.

Resolving the remaining tribal water rights claims is a big deal for Arizona water officials. It would seem important for everyone to have certainty about water availability, but the resolution of these claims come with major problems beyond those already mentioned. For example, some tribes, such as the White Mountain Apache and the San Carlos Apache tribes have been met with various obstacles including lack of physical means and/or the increasing cost to obtain the water. Not only is CAP water (the cost of which is going up) meant to substitute tribal access to local surface- and/or groundwater in some cases, but reclaimed wastewater, aka effluent, has been proposed as a substitute in others. There is a lack of information on the long-term impacts of rising proportions of contaminants as effluent/wastewater is added to pure freshwater or used on the land (as much as 350,000 acre-feet per year). Even class A+ treated wastewater can still contain contaminants including endocrine disruptors, antibiotic-resistant bacteria, and hundreds of other thus far unregulated contaminants of emerging concern, and we’re trusting (or not) the government to address this appropriately. Nonetheless, as an alternative to nothing, effluent, as an inferior substitute, can support life and so it is missed when diversions such as in the case of effluent are being used to create and sell credits—essentially groundwater-pumping offsets—that are more profitable when not added to the river, to raise money to make up for low funding for Indian firming.

The West’s “first in time, first in right” historical water rights policy, or prior appropriation, regarding surface water (groundwater is regulated—or unregulated—differently) largely or completely ignored indigenous water use. The Winters Doctrine later provided the legal basis for senior water rights for tribes, at least for “paper water” a term for rights to water on paper which may not accompany actual “wet water”. Water rights settlements have become a more common recourse to attempt to resolve the problems of non-Indian interests increasingly threatened by the seniority of the water rights declared by Winters, in conjunction with the lack of access to sufficient, clean and “wet” water by tribes. For the most part, the settlements are not on indigenous peoples’ terms, not only because often their leadership does not represent them, but because the entire legal system is on settlers’ terms, and power is clearly skewed in favor of interests representing industry and urban growth.

In Native Waters, Daniel McCool points out a number of problems with tribal water rights settlements. Settlements often include making sacrifices such as permanent forfeiture of certain rights and damage claims, and agreeing to less water than the amount to which they should truly be entitled. The decline of water supplies definitely means less favorable compromise for the remaining claims.

McCool writes that a lot of the settlement funds go toward compensating non-Indians and to fund water infrastructure that benefits non-Indians, an arrangement termed “Indian Blanket.” Settlements often involve diverting money from other Bureau of Indian Affairs projects including housing, education, and other federal trust responsibilities to fund the water settlements, therefore resulting in no real net gain. Litigation, as opposed to settlement, can involve some of these problems as well, but in some cases might be more favorable to tribes. On the other hand, they tend to be more costly and time-consuming than settlements for all parties involved.

All of this is not to make judgements about tribes’ past or future decisions regarding their water rights, but to impart some of what can be known about the context in which these decisions are made, and about those with the real power and what their interests are.

Of the remaining water rights claims are those that senator John McCain and former senator Jon Kyl attempted to resolve with the Navajo-Hopi Little Colorado River Water Rights Settlement, submitted as a bill in 2012. Ed Becenti, a vocal Navajo critic of the settlement said of this bill that it “asks the Navajo and Hopi peoples to waive their priority water rights to the surface waters of the Little Colorado River ‘from time immemorial and thereafter, forever’ in return for the promise of unspecified federal appropriations to supply drinking water to a handful of reservation communities.” A water rights settlement in Utah which was passed in January 2016 but still has yet to be funded, forces the Navajo Nation “to waive its right to assert its seniority on the vast majority of the water that the settlement allots to it.” Interviewed for Takepart, Shirley Peaches from Tall Mountain in the Navajo Nation opposes this kind of arrangement saying, “We don’t want our grandchildren to say, ‘Why did you waive that?'” Becenti pointed out that there had been no public meetings for the settlement process in Utah. A lot of the settlement process happens behind closed doors.The group Tó Bei Nihi Dziil has also expressed that their voices are not heard by tribal government. The Navajo Nation’s non-Indian water rights attorney, Stanley Pollack, represented those in Utah as he did in Arizona during the attempts to pass the Settlement in 2012. He remains involved as the settlement process continues in secret.

The Navajo Hopi Observer reported discussion on the Little Colorado River in April 2016,

“Water is the defining issue for the future of our state,” McCain said. “We cannot have a predictable future without completing the Indian water settlements.”

Ducey echoed McCain’s remarks.

“A water settlement for the Little Colorado River is a high strategic priority for Arizona,” he said.

Both McCain and Flake agreed to introduce federal legislation to implement a water settlement if the parties reach agreement.

Significantly, Navajo and Hopi leaders pledged to cooperate to present a unified position.

The leadership may not get support from tribal members for a settlement, just as in 2012, although one major thing has changed. One of the primary reasons the earlier bill failed is because of objections to a deal seemingly stemming from former US Senator Jon Kyl’s relationships the Salt River Project (SRP), described by the Navajo Times.

Under Kyl’s bill, the water projects could not go forward unless federal and tribal authorities approve leases allowing the Navajo Generating Station and the Kayenta Coal Mine to continue operating. The provision represents a gift to the Salt River Project, operator of NGS, which Kyl represented as a lawyer in private practice.

Stanley Pollack argued that the settlement agreement did not require the leases to be extended, but people were sure the bill was clearly meant to benefit SRP. What has changed is that at this point, the Obama Administration has moved forward on renewing the lease on the Navajo Generating Station through 2044 pending the NEPA process. It is uncertain how this will impact public acceptance of a settlement.

SRP, cooperating with or representing massive water-using customers in urban growth, mining, and agribusiness, has been at the center of water rights settlements. An E&E report examined a conflict between SRP and the Gila River Indian Community that exemplifies the threat tribes have represented and how much they might be compromising by settling their claims rather than litigating.

The Salt River Project, which supplies the lion’s share of water and power to the Greater Phoenix area, had been worried about the tribes’ rights since the 1970s.

Water managers there knew that the Gila River Indian Community had a strong case for what could be a massive amount of water, and they wanted to at least know what they were dealing with so they could plan for the future.

“The threat was, if we went to litigation, they might be able to prove a right—a very substantial right—to that water supply,” said Dave Roberts, senior director for water resources at the Salt River Project. “That would have a substantial impact … on the state of Arizona as a whole.”

Resolving water rights claims would provide more certainty about how much water is available, which serves to legitimize continued water exploitation or assist in making arrangements to mitigate impacts to big SRP customers. SRP’s shift from feeling threatened to enthusiastic about resolving water rights claims seems to make skepticism appropriate.

SRP’s influence remains palpable. Despite retiring, Jon Kyl remains involved in these water rights issues. Kyl wrote, along with the director of the Kyl Center for Water Policy, Sarah Porter, that this institution named after Kyl, is currently invested in “develop[ing] a consensus proposal for expediting resolution of the claims.” Kyl himself was the senior lawyer and chief lobbyist for the SRP and was involved in the Water Rights Settlement Act of 2004 as part of the law firm, Jennings, Strouss and Salmon. The son of this law firm’s Salmon is a founding member of Salmon, Lewis & Weldon (who has also represented SRP), which employs Richard Morrison. Morrison founded the Kyl Center with $1 million in seed money, as part of his own namesake, the Morrison Institute for Public Policy (vice president of SRP and at least two long-term SRP employees are on the advisory board and SRP has provided funding) at Arizona State University. A cattle-rancher who grew up on a cotton farm, Morrison, is also credited with negotiating “settlement of four central Arizona Indian water rights settlements representing local irrigation districts.”

The Kyl Center (SRP’s Deputy General Manager is on their advisory board), with their behind-closed-doors “consensus” process, has put themselves in a strategic position to have a major role in potential settlement of the remaining water rights claims. Water attorney and Kyl Center Senior Research Fellow and board member, Rhett Larson spoke to a reporter for an ASU Now series published in October 2016 about this role. “The center has a group of stakeholders who meet several times a month to negotiate. Larson said the work is promising. ‘We’ve made a lot of progress in the last 18 months,’ he said. The Kyl Center acts as a mediator to avoid litigation.”

The Kyl Center was launched in November 2014 to “jump start the planning process” of the proposals put forth by the ADWR in their Strategic Vision earlier that year. The number one priority laid out in this document is “Resolution of Indian and Non-Indian Water Rights Claims.” In October 2015, Governor Ducey announced his Water Initiative, which is meant to implement the Strategic Vision, specifically through the Governor’s Water Augmentation Council (GWAC), according to his executive order. Over a third of the GWAC is involved with the Kyl Center.

While the primary reason given to resolve water rights claims is to provide certainty about water availability to everyone, there are some interested in seeing a water market develop, which would require all claims be resolved. Some involved with the Kyl Center promote a water market.

The ASU Now series continued:

A water market could improve Arizona’s water management. If a clearinghouse or escrow was set up, people could buy and sell water through that escrow for nature or cities or mining.

“Once we have effectively priced water in a market, then maybe we’re reaching efficient water allocation,” Larson said. “Right now, we can’t do that because nobody knows who owns what.”

Until the legal cases, collectively called the general stream adjudication, is resolved, Arizona can’t have an effective water market because people can’t buy and sell water until who owns what has been resolved. The Kyl Center works on the general stream adjudication every day. Ideally, the courts will ultimately make a decree. But not everyone is in a hurry to see the case cleared.

Larson, along with an intern at the Kyl Center wrote a 2015 paper, described as “the product of ongoing negotiations facilitated by the Kyl Center for Water Policy attempting to resolve the general stream adjudications in Arizona,” entitled “Bankrupt Rivers” which promotes water markets as part of the solution. The authors thank, among others, Peter Culp and Robert Glennon, two of the primary promoters of water markets in Arizona and the West, who were among the authors of the 2014 report, “Shopping for Water: How the Market can Mitigate Water Shortages in the American West” which is cited in Larson’s paper. “Bankrupt Rivers” proposes reforms for resolution of general stream adjudications which include “increasing available water for claimants and the environment through water markets.” General stream adjudications, which are a major part of resolving water rights claims and vice versa, are “court actions to determine the type, amount, and priority date of every user’s water right in a particular watershed or basin,” according to the book, Negotiating Tribal Water Rights by Bonnie G. Colby (who is also pro water markets), et al.

One vehicle proposed in “Bankrupt Rivers” for expedited water rights transactions is a water trust involving water held back in escrow. The idea is that water users who lose their access to water in settlements could potentially buy water rights from others, using the trust to get around some of the laws limiting water rights exchanges. Water trusts were promoted in the “Liquid Assets: Investing for Impact in the Colorado River Basin” report published in September 2015 by Squire Patton Boggs (Peter Culp) an investment firm Encourage Capital, funded by the Walton Family Foundation. Founder of Encourage Capital, Ricardo Bayon, in 2004 co-founded Ecosystem Marketplace which is involved in the carbon trade and “seeks to become the world’s leading source of information on markets and payment schemes for ecosystem services.” “Ecosystem services” are commonly defined as “the benefits people obtain from ecosystems” and this has become an economic term that connotes a desire to understand the economic value of these “services” and to use them to profit in some way. In “Banking Nature: The Spectacular Financialisation of Environmental Conservation” Sian Sullivan argues that Ecosystem Marketplace exemplifies a transformation from simply recognizing the costs of environmental impacts “into an optimistic embrace of the financial returns that might accrue if this ‘value’ of environmental externalities could be priced and traded.”

Trusts are also promoted by The Nature Conservancy (TNC) in their report released in August 2016 titled Water Share: Using water markets and impact investment to drive sustainability (which was also promoted by Ecosystem Marketplace). This report gives a hypothetical example of working with a farmer to cut their water use by 15% which TNC portrays as an actual reduction in consumptive use by 15%. However, in order to make enough money to provide returns on investment, in this example they are dedicating only 5% of this to the environment while the other 10% goes to water leasing or sales to other farmers, urban users, or even industry (and this is troubling considering the partnerships TNC has with mines). In some cases TNC is buying permanent water rights that they can then lease or sell as they see fit, with the help of government grants, philanthropic donations, and “impact investment.” It is important to note that TNC played a role in the Resolution Copper land exchange by attributing value to the lands the mining conglomerate offered to trade. The Water Share report is not specific to Arizona, but on the cover is a photo of the Central Arizona Project and there’s a profile on Phoenix within the report. Pat Graham of Arizona’s TNC branch is also on the Kyl Center’s board of advisors and on the Governor’s Water Augmentation Council.

Read more on TNC activities in Arizona in the Verde River page.

The Kyl Center has not directly promoted commodification of water through markets, but they may be supportive of a market-based water pricing system. Sarah Porter, director of the Kyl Center discussed pricing as it relates to the Nestlé bottling plant.

Should we think about getting the most dollars per gallon or at least what kind of economic benefit we’re getting when we allocate, you know, pieces of that limited known supply of water going forward? It’s something that we should be talking about and I’m glad, in fact, that the Nestlé factory has prompted some thinking in that direction.

Nestlé’s bottling may be a catalyst in the direction of a water pricing system in effort to make water’s price reflect its value, which sounds somewhat reasonable except it could easily become a foundation on which water could be traded as a commodity, which is what Nestlé wants. We also risk the price rising to less affordable levels.

Pricing does not necessarily mean market-oriented pricing, but it can, especially in the context of a pro-market state, and the federal government embracing market-based solutions for resource management as well. Even if the Kyl Center hasn’t promoted commodification of water, Sarah Porter was one of the main authors of of the AZ Town Hall 2015 Recommendations Report, along with others from the Kyl Center, which recommends water pricing and water markets. In a different section, the report of course includes that, “to attract additional capital and move our economy forward, Arizona needs to have more definitive certainty with regard to its water supply, which may involve streamlining the water rights adjudication process and tribal water rights settlement processes.”

Nestlé’s current local legal counsel, Rita Maguire, who is a former director of the ADWR, is listed as being on the research committee of the AZ Town Hall report. Maguire, along with Sarah Porter, (as well as Thomas Buschatzke, current Director of ADWR) are also listed as workshop participants as part of the Walton Family Foundation-funded “Market-Based Responses to Arizona’s Water Sustainability Challenges,” with Peter Culp (of “Shopping for Water” and “Liquid Assets”) and representatives from the major Walton Family Foundation-funded NGOs including the Audubon Society (Porter was at that time executive director of the Arizona branch). This report obviously proposes a water market, but significantly, the authors argue that water rights adjudications are a critical step towards enabling a water market.

Porter and Maguire may not see eye to eye, as can be seen in Maguire’s Nestlé-defending column, “Don’t knock Nestlé’s bottled-water plant,“ but Maguire has also been part of the fight to settle water rights claims. “Rita Maguire, former director of the Arizona Department of Water Resources (ADWR), worked closely with [Jon Kyl] throughout the [Arizona Water Settlements Act of 2004] process. She has only good things to say about Kyl’s role in bringing about a settlement many thought was impossible,” the Phoenix New Times reported.

Maguire, who also has written in favor of a water market, had also once defended a now-failed Phoenix-area water park called “Waveyard” when she worked as an advisor to those trying to build it. Typical of the revolving door tendency, Nestlé snagged a former director of the ADWR just as Phoenix-based mining giant Freeport McMoran had with Sandy Fabritz-Whitney. Maguire also works for a mining project, the Florence Copper Project, which threatens to contaminate the groundwater in Florence, AZ.

Mining companies have a major interest in tribes not receiving the full amount of water they could if they didn’t compromise through settlement in a legal system skewed in favor of business. The mining industry represents the worst of injustices against indigenous people across the world.

Mining companies are among those who tend to have the means to obtain the water that others in economic straits may be forced to sell, but additional interests in a water market, like hedge-fund managers and others just looking to turn a profit have their eyes on Arizona water, which will undoubtedly bring problems. While Australia is often used as a model for a water market (TNC has set up their Water Sharing Investment Partnerships there), speculators and rising prices concern Australians as well as others, such as in Nevada where water market pilot programs modeled on Australian arrangements are being implemented. Economic consulting firm West Water Research pointed out in 2014 that there is an emerging market in Arizona for Long Term Storage Credits (LTSC) for water that “may eventually allow it to develop into an efficient market with active trading,” with tribes as the primary sellers. The LTSCs are a tool to incentivize water conservation but can be used to “ensure” water supply for developments, so the availability of them encourages further growth. They function as offsets for groundwater pumping, and they can even be earned by recharging effluent into an aquifer or river.

The recent Colorado River report from the University of Colorado addressed to the presidential candidates frames “the opportunity to lease water for off-reservation use” as an aspect of “allowing tribes to have more freedom in determining the use of their water rights.” They say,

“The Ten Tribes Partnership and the Bureau of Reclamation will soon complete a three-year study on the uses and possible marketing of tribal water rights and will likely publish their report in early 2017. This process should produce improved information about tribal water rights that can inform consideration of expansion of permissible uses and help resolve difficult issues concerning unused water. Amendments to existing settlement agreements and new legislation may be required.

This study resulted from the Ten Tribes Partnership’s request for participation in the Colorado River Basin Water Supply and Demand Study. The partnership’s member tribes include the Ute Indian Tribe, Ute Mountain Ute Tribe, Southern Ute Indian Tribe, Jicarilla Apache Nation, Navajo Nation, Chemehuevi Indian Tribe, Colorado River Indian Tribes, Fort Mojave Indian Tribe, Quechan Indian Tribe and Cocopah Indian Tribe.

The Quechan tribe on the Fort Yuma Reservation which exists in Arizona and California near Yuma, bisected by the Colorado River, has been marketing their water. According to a website associated with the University of Colorado law school,

In years when the Tribe does not utilize its entire Winters entitlement, the [Southern California Metropolitan Water District (MWD)] can receive the excess in exchange for a cash payment. The Tribe has the sole authority to annually choose to forebear (or not to forbear) from using a portion of its water rights to market to the MWD. The agreement was approved by the federal government and the Supreme Court in the 2006 Final Decree. The Ten Tribes Partnership used the Tribe’s circumstances as a poster child for satisfying diverse interests through water marketing.

What kind of accountability the partnership has to its tribal members is uncertain. It will be interesting to see if existing settlements will be amended to allow for broader water marketing, and what the impacts will be.

It is worth pointing out here that among the authors of the report is Jennifer Pitt of the Audubon Society, formerly of the Environmental Defense Fund (EDF). The EDF has been at the forefront of pushing for water markets in the west, including through parts of Minute 319, an extension of the 1944 U.S. Mexico Water Treaty signed in 2012 (the planning of which Pitt participated for many years, along with Peter Culp who worked with TNC and the Sonoran Institute) that involved a deal in which US water entities (including MWD as the major beneficiary, and includes CAP) invest in water conservation in Mexico, such as lining of a canal, in exchange for quantities of water Mexico had stored in Lake Mead. Minute 319 was recently addressed by the Latin American Water Tribunal, because of the impact of diminished water on Mexicali farmers. The water exchange was modeled on a 1989 farms-to-cities (Los Angeles and San Diego) “conservation” plan that also benefited the MWD, developed by EDF’s newly-hired economists whom are also credited with the development of emissions trading and the carbon market.

Arizona Department of Water Resources director Tom Buschatzke lists EDF and TNC as being part of a Colorado River Drought Contingency Planning workgroup on a powerpoint presentation from January 2016.

The federal government is clearly open to the idea of a water market. An April 2016 article covering the Business of Water Summit in Phoenix (of which Nestlé, SRP, Freeport McMoran, Peter Culp, and those involved with selling water offsets participated) reported,

Deputy Interior Secretary Michael Connor told The Arizona Republic that cooperation between the states and Mexico has increased over the last three presidential administrations and has helped forestall the coming shortage…

One important solution, he said, could be state-managed water banks that would allow farmers to sell some water they aren’t using without fear of losing their water rights. The federal government has created some such trading options on its projects in California and could help states model their own, he said.

At a Senate Indian Affairs committee hearing, Connor also stated a month later that “Settlements have been, and should remain, a top priority for the federal government.”

What has happened in Arizona exemplifies the ways in which the logic of those interested in market-based solutions to the scarcity of water is flawed. The concept called “tragedy of the commons,” popular among many conservationists, especially the pro-market ones, puts blame for the depletion of a resource, such as water, on the absence of private ownership. Water is considered by many to be a common resource, like air. Nestlé, and others who consider themselves “conservationists” seeking to solve the problem of water scarcity want water instead to be treated as a commodity that owners will presumably be more responsible with, knowing the value of the substance. This perspective serves to put responsibility for overuse onto individuals rather than on the scale and scope of extraction related to colonization, capitalism, and development of a hydraulic society in a desert. Water has not truly been treated as the commons in the West. It has been diverted and contaminated by settlers, and now tribes are forced to make decisions that are not on their own terms about their relationship to water.

It is clear that nearly everyone acknowledges that those tribes who have not resolved their claims would probably be entitled to much more water than they can get in a settlement, but a settlement, and likely some water marketing are the choices some tribes may make out of lack of choice or financial capacity.

Extreme Measures

Most Arizonans are willfully ignorant to the extreme historical efforts taken to beget this settler hydraulic society, which have continuing impacts on indigenous people, such as the coal mining to power the transport of Colorado River water south into Arizona. Here is a quick overview for context.

The Central Arizona Project has been an extreme and destructive undertaking to foster massive urbanization, expansion, and development. Yet either people do not really know what is involved, or they view it favorably. Consider the narrative of the Morrison Institute report, Watering the Sun Corridor, a follow-up to their original Sun Corridor document (sponsored by SRP) which describes Phoenix, Tucson and surrounding urban area as a megaregion and trade hub with an integrating economy called the Sun Corridor. “The Sun Corridor exists only because past Arizonans worked together tirelessly to build a vast, complex plumbing system. Using the power of government to do this represented the clearest consensus imaginable about serving the needs of society through collective action” (my emphasis).

This perspective of a clear “consensus” (notice that word being used again by the Kyl Center) disregards the indigenous people who have been impacted by this kind of infrastructure. The water and electricity required to urbanize both Phoenix and Tucson relies upon coal mined on Navajo lands to power the transport of Colorado River water. Many indigenous people have resisted both this coal mining and accompanying displacement, and many continue to do so. Authors of a 2011 statement addressing SRP (they deliver and stores CAP water, which has involved operating coal-fired plants) wrote, “The beneficiaries of the energy and water you sell must realize that our suffering is a direct result of their consumption. They must also understand that the continued taking of finite ‘natural resources’ is creating imbalances that threaten the survival of everyone’s future generations.”

From day one water provided to many Arizona residents via the mining industry in Black Mesa has involved manipulation, forced removal of families, and beyond, including livestock impoundment which is still happening. This is “economic development” in action. The consequences must be acknowledged.

As CAP moves Colorado River water south to Phoenix (and Tucson) lifting it 2900 feet, across at least 230 miles, it requires 750 mega-watts of electricity. The power used to run pumping stations is generated at the Navajo Generating Station (NGS), run by the now-bankrupt Peabody Energy, with coal sourced from a strip-mining operation in Black Mesa (Kayenta Coal Mine). Some of the energy also goes to Phoenix, Las Vegas and Los Angeles. The coal mining had previously used and contaminated massive amounts of water in its slurry process, and the water is also used in the generation of energy at NGS. ProPublica reported that NGS “spews more climate-warming gases into the atmosphere than almost any other facility in the United States,” with higher cancer and asthma rates attributed to it. The efforts to establish and maintain this project has displaced, poisoned, and created conflict among indigenous people living in the area.

According to the Black Mesa Trust website,

In the Peabody coal lease… the Hopi Tribe unwittingly approved payments… well below the market value that the federal government was charging mining companies on public lands… Black Mesa became a sacrificial area for producing cheap electricity. The Hopi Tribal Council did not understand the magnitude of the mining and the devastation it would cause. Little did they know that by the end of 2005, over 45 billion gallons of pristine groundwater would be used to operate a coal slurry project, enough water to sustain the entire Hopi population of 10,000 for over 300 years. Neither did they know that the hydrologic balance would be permanently and irreparably damaged.

Broken Rainbow is a good starting point for more of the historical context for this situation, and a much more recent video is Mining and Resistance in Dinétah: Special Report from Navajo Nation. Both can be watched online.

Not only is the electricity from the coal plant integral to maintaining the growth of urban Arizona, the lowering level of reservoirs, Lakes Mead and Powell, may impact the hydropower facilities, recently also confirmed to be emitting greenhouse gases. Therefore, Arizona (and other states) water policy will look to market-based mechanisms and other extreme solutions to keep water in the reservoirs, meanwhile continuing to allow businesses to use the water in large quantities.

As for the future, because Arizona was colonized and built as an extreme hydraulic society, it appears that many presume technology will prevail and business as usual shall not be disrupted. Plus, water infrastructure, along with financialization of these projects, is likely to be lucrative for certain companies as well. Treated wastewater is already being implemented for indirect potable use and potentially for direct potable use in the next several years, which will be examined more in a future article. Some Arizonans expect that the state will one day access the seemingly infinite supply of ocean water using desalination. Although still far off, it is being seriously investigated as a possibility, despite the harm it can cause. As of right now, it seems the most likely scenario is for Arizona to have water piped from a desalination plant on the coast of the Sea of Cortez in Sonora, Mexico to the Imperial Dam near Yuma (or for water produced at the plant to provide for Mexico’s Colorado River allocation). Studies for this project were initiated in 2008 by SRP, CAP, the Arizona-Mexico Commission (AMC), and others involved in water. ADWR listed desal as a priority in their 2014 Strategic Vision, and the same year, the AMC facilitated the Water Desalination Agreement of Cooperation between Sonora and the ADWR for investigation of binational desalination opportunities. Further AMC activity around this can be expected in a few months. The Governor’s Water Augmentation Council formed a desalination committee and has a couple meetings.

While water rights settlements are a priority over desalination, which will take many years to implement, water obtained through desalination may actually become a means to resolve the water rights claims, at the further expense to the environment. Note that water is available to Nestlé and other major water-users because of CAP’s role (past and future) in resolving Indian water rights claims. Yet at the same time, the Colorado River’s water is already over-allocated and is diminishing, and therefore, Nestlé’s activities would play a part in pushing Arizona in the direction of an official shortage declaration.

We have a declining water source being used to settle more recent tribal water rights claims so agribusiness and mining companies can continue to deplete and contaminate surface and ground water and so cities can keep growing without considering the sources of the water.

Western water laws are far from perfect, but a water market can only bring more trouble. While some point out the ostensible hypocrisy of a state that has to take on major conservation efforts at the same time as it accepts a water-wasting Nestlé plant, the conservation and a shift towards water as a commodity may in fact go hand in hand. More in Part 2.

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3 thoughts on “Arizona Water Grab Part One: Water Rights and Water Markets

  1. Pingback: Private sale to AZ Water Bank comes at high price | Desert Water Grab

  2. Pingback: How Environmental Groups Helped Resolution Copper Achieve their Arizona Land Grab | Desert Water Grab

  3. Pingback: The Resolution Copper Land Grab: How Environmental NGOs Expand Green Capitalism | Desert Water Grab

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