Arizona Water Grab Part 4: A critical look at Lake Mead Storage goes into more depth on the market-based mechanisms of System Conservation and Intentionally Created Surplus (in the meantime see the DCP/ICS page.)
Imagine if it got to the point where the state and corporations were buying water from tribes to maintain business-as-usual. In a sense, that is actually what is already happening in Arizona, and it’s setting a precedent for water-marketing activities, the long-term effects of which are both alarming and difficult to predict.
What if I told you that big environmental NGOs and corporations are patting themselves on the back for collaborating with Tribes when in fact, for example, a $38 million market-based deal for water from the Colorado River Indian Tribes (CRIT) is not fully supported by the Tribe? The deal would probably not be possible without the Walmart fortune heirs’ Walton Family Foundation (WFF) and associated massively-funded NGOs’ ever-increasing influence on the development of a water market in the Colorado River Basin and beyond. One of these NGOs, the Environmental Defense Fund (EDF) described the deal as “a harbinger of the unprecedented collaboration.”
According to Business for Water Stewardship (BWS), which is a program of another WFF-funded NGO, “The CRIT System Conservation Project is a key part of Arizona’s interstate commitments under the [Drought Contingency Plan (DCP)] and is one of the most important projects needed to achieve water security for Arizona… These water rights are among the most senior in the state, meaning they have priority over other rights and are more reliable.”
Todd Reeve of BWS stated in an interview that the water deal with CRIT was meant “to shore up water levels in Lake Mead and over the long term pave the way for conserved water ultimately to serve other non tribal interests in the state of Arizona.” This second part deserves extra attention, as this is not something that is really clear just by reading about the deal. This is just a step in the direction of an increased ability of those with the funds to secure water through market mechanisms, from those who are in a position to be swayed by the money.
This is a deal for water security for those with money and power, but is only part of an ongoing effort. WFF has spent around $200 million on Colorado River projects in the last decade, with one of their primary goals being development of a water market.
Now, if ever a water market in the West could gain a foothold, it’s with a combination of officials with WFF associations in the Biden Administration, the new Infrastructure Package, continuing local drought planning, and legislation like the Colorado River Indian Tribe Water Resiliency Act (S. 3308) introduced in early December 2021 that would allow CRIT to expand their water-marketing abilities even further.
The water deal with the Colorado River Indian Tribes (CRIT) was in motion and mostly funded by 2019. Once it got that corporate and NGO boost in June 2021, this is how it was portrayed:
“A total of $38 million in state, private and philanthropic funding has been raised as part of the landmark water conservation project with CRIT, which has senior Colorado River water rights. In addition to $30 million from the state, the funders include a powerful lineup from the corporate sector: Intel Corp.; Google; Microsoft; Procter & Gamble; Reformation; Keurig Dr Pepper; Ecolab; Cascade; Cox; The Coca-Cola Foundation; Silk; Target; Brochu Walker; and Swire Coca-Cola, USA. Philanthropic funding was led by the Walton Family Foundation and Water Funder Initiative and also came from the Gordon and Betty Moore Foundation and the Arizona Community Foundation.”
Note that several of these are major water-users in Arizona, and would like to keep it that way. As will be discussed further, these are not just donations, these are investments to decrease risk: to improve water security (for some) in Arizona. Were it not for the threats posed to various sectors by these cuts, it’s unlikely that this deal would’ve gone forward.
A total of 150,000 acre-feet of water left in Lake Mead as System Conservation, divided into one third each year for three years beginning in January 2020. This amount of water can be subtracted from their water delivery based on a certified quantity of what’s called “consumptive use” they can say they are conserving by fallowing farmland, in exchange for the compensation.
Lake Mead is the Colorado River’s reservoir for the Lower Basin states of Arizona, California, Nevada, and part of Mexico. Based on previous agreements between these states, Upper Basin states, Mexico, and the federal government, the water level is tracked to indicate the supply of the river. Leading up to a possible shortage declaration in 2020, there was a lot of uncertainty before the DCP agreement was signed in 2019.
The Arizona Implementation Plan had made arrangements with various agencies and communities to determine where voluntary cuts and other maneuvering could lessen the blow if/when the big reductions are imposed, and this continues to be the case. WFF pointed out that, “In Arizona, the Colorado River Indian Tribes (CRIT) and the Gila River Indian Community (GRIC) were critical partners in making the Drought Contingency Plan possible.” GRIC is in a similar though distinct situation to CRIT and has participated in market-based activities as well. (See more on GRIC here.)
In August 2021, a first-ever shortage, at Tier 1, was announced by the Bureau of Reclamation, meaning Arizona will receive about 18% less water in 2022 compared to 2021. Each state has varying allocations, and different sectors have priority rights based on water law, and so those sectors with more junior water rights will get cut first. Officials do not seem too confident that additional tiers won’t be met by 2026, but are trying to delay this by slowing the rate at which the water level drops.
Without the participation of GRIC and CRIT, the Lower Basin DCP would have likely been impossible, due to the lack of parties willing to part with such quantities of water and for the price. In CRIT’s press release about the deal, Vice Chairman Keith Moses stated, “We know our water is worth more than $250 an acre-foot. We are making this proposal at this price for the benefit of the River and to move the process forward in Arizona for approval of the Drought Contingency Plan.”
What this means long-term and on a broader scale is very troubling. As Arizona expands, urban and industrial sectors will continue to rely on larger quantities of water. None of this is to take away from the fact that water law is far from perfect and is very complicated. Tribes should have control over their water, but the context in which leadership makes decisions for their membership needs to be taken into account. When discussing “solutions” such as these, it is very important to ask, for whom is this water security?
CRIT leadership was discussing marketing their water as early as 2014, but despite their secrecy, word got out, which led in 2018 to a temporarily successful recall of Tribal Council members to try to prevent water marketing.
It was years before this that the NGOs were working out their ideas on how to shift to a water market. Peter Culp, who has various relationships with WFF and other Walton-funded NGOs, takes credit for both the Colorado River System Conservation Program and a similar model proposed for the 2007 Shortage Guidelines for the Colorado River lower basin states (it wasn’t adopted then, but had influence). Described as a market-based mechanism, that proposal was called “Conservation Before Shortage” (CBS) and it strongly influenced the development of ICMA in the Minute 319 agreement with Mexico.
The Pilot System Conservation Project (PSCP, also called System Conservation Pilot Program, SCPP) in which CRIT, GRIC, and the Tohono O’odham Nation (TON) and others began participating a few years ago was meant to test this System Conservation approach to keeping water in Lake Mead to prevent or slow the lowering water level. A Wilson Center report credited as pioneers of the CBS proposal, both Culp (who also listed it on his law firm’s website), as well as Jennifer Pitt, who had been the Colorado River Project Director of the EDF (now she has a similar position in the National Audubon Society). A footnote in the report pointed out a relationship between the CBS proposal and the PSCP noting the commonalities. Culp also advises EDF, The Nature Conservancy, and Trout Unlimited, which have all played parts in funding such projects.
A big selling point was that this approach could get around some of the water law red tape. “In practice, this would replace conventional rights-based shortage allocation with market-based allocations and could protect municipal water users, those least able to absorb shortages,” wrote Pitt and Tom Graff of the EDF about CBS in 2008. A few years later, EDF and WFF contributed funding to the pilot program, which was run by the Bureau of Reclamation. (Read more on the PSCP, System Conservation, and Intentionally Created Surplus on the DCP/ICS page.)
In, “How ‘Impact Investing’ Can Increase America’s Water Security” Barry D. Gold spelled out the potential in 2017 while he was still director of WFF’s Environment Program:
“Like many innovative approaches, initial demonstration projects are needed to prove the viability of the concept before they can be taken to scale. At the Walton Family Foundation, we funded a research project to explore the opportunity for impact investing in water and design sustainable water investment blueprints.
That research focused on the Colorado River basin and identified several types of investments with potential to advance water solutions while generating a financial return.”
According to Conservation Finance and Impact Investing for U.S. Water (2016), foundations and NGOs,
“can guide the development of pilot projects that demonstrate how impact investing can benefit the water sector while generating financial profit. Once blueprints are established for structuring deals, the transaction costs and perceived risks will decrease, opening the water market to private and corporate capital.”
Indeed, Water Funder Initiative (WFI) lists among its key accomplishments, that their,
“funders and partners have made gains that demonstrate large-scale, lasting impact is within reach if philanthropy continues to elevate its sights, such as: …contributing to a series of agreements that secure a more sustainable future for the 40 million people and critical ecosystems that depend on the Colorado River [and] …investing in local and state pilot projects that use market-based strategies to efficiently match water supply with demand.”
WFI includes WFF and a number of other major foundations that matched some of the corporate funds for the CRIT deal. Among the projects for which they also combined some funding includes contributing to US/Mexico water agreement Minute 323. Before WFI existed, a couple of these foundations also contributed to its predecessor Minute 319. These agreements also help address the water level in Lake Mead. As described in “Desert Water Market,” loans from the Packard Foundation allowed NGOs to purchase low-cost permanent water rights in Mexicali, and other arrangements enabled US acquisition of water by funding “conservation” projects in Mexico such as canal lining, of which the adverse effects go largely unacknowledged.
The Bottom Line
Now, this corporate capital is in play on a bigger scale for such a project than before. Kevin Moran of EDF explains the involvement of the corporations who have put money into the CRIT deal: “The participation of so many multinational companies underscores how much businesses value the need for predictable water supplies.”
After a couple major corporations contributed a portion of funds to the $38 million deal, Ted Kowalski, Senior Program Officer for the Colorado River Initiative at the Walton Family Foundation says that the corporate support, “sets a new gold standard for corporate water stewardship.” He continues, “We applaud Microsoft and Intel for their leadership and commend them on sending a message that good conservation is good for the bottom line.”
So while each corporation that put in money is not directly obtaining access to that water, it is clear that they gain more than just being able to brag about doing their part for water conservation, which actually does have its own value that mustn’t be disregarded. One can see what the greenwashing of Intel, Microsoft, and Facebook with reference to their water use looks like if one is inclined to get even more outraged.
The philanthropic organizations that have strategies favorable to big corporations are the ones that continue to partner with them and therefore have the most funds to make a greater impact. While there may be many people in these organizations that care about the environment, the reality is that money talks louder than anything.
The first of four strategies WFF lists in its 2020 Environment Strategic Plan for the Colorado River is “show water markets work for agriculture, cities and rivers.” They provide millions of dollars per year to a few NGOs that work on Colorado River water projects and reports with an emphasis on water marketing. These include the EDF, the Bonneville Environmental Foundation (BEF)/BWS (BWS is a program of BEF), along with the Nature Conservancy, National Audubon Society, American Rivers, and Western Resource Advocates. Most or all of these have similar and overlapping roles to play. Water for Arizona Coalition brings together five of these NGOs, with EDF’s Kevin Moran as the chairman.
While WFF is the organization that can spend the Walton Family’s Walmart profits, EDF has a long history of collaborating with corporations, and their approach has had a major influence. As I wrote in Arizona Water Grab, Part 2,
“EDF, whose economists are also credited for their role in the development of emissions trading, the carbon market, REDD+, etc., has worked with California’s Metropolitan Water District and others for decades on market-based, so-called water conservation projects and farms-to-cities water transfers, which caused a decrease in flow of water into the Mexicali aquifer and the Salton Sea, leading to massive problems still yet to be resolved years later.”
Their history with water transfers and market-based strategies is very relevant here. (More on EDF on the Water for Arizona Coalition page.)
Kevin Moran of EDF and the Water for Arizona Coalition is also a member of the Arizona Reconsultation Committee. This committee, formerly known as the Arizona DCP steering committee for which Moran was Ted Kowalski’s (of WFF) alternate, comprised the decision makers behind the DCP and continue to be central to the decision-making concerning further planning around arrangements made to keep more water in Lake Mead at least until 2026.
WFF and at least two other NGOs that are also heavily WFF-funded are sponsors of the Water & Tribes Initiative. With a bit more nuance than is generally typical, probably due to the diversity of the coalition, the Initiative nonetheless supports, “a. Compensated forbearance of tribal water rights; b. Off-reservation marketing for all Basin Tribes; and c. Allowing Basin Tribes to dedicate currently unused water to compensated system conservation programs.” Would this be the case without so much of the influence of WFF? WFF and their associates prize and amplify the voices that agree with them. WFF makes a point to appear to have an interest in Tribes’ input beyond their use as collaborators in water marketing, as you can see in Tribal Expertise, Engagement is Critical to the West’s Water Future and We Need Tribes at the Water Negotiating Table, Now More Than Ever for bonus eye-rolls. We will not see amplification of voices that are in opposition.
It probably goes without saying, a clear agenda with millions of dollars behind it has a lot of power. David Callahan, the editor of Inside Philanthropy, noted, “If you have one funder that is giving money to everybody, but it’s only one funder, then that funder has disproportionate power over how this new ecosystem evolves,” Callahan said. “Walton is deciding what civil society voices are able to be at the table.”
The EDF, BEF, and National Audubon Society all contributed funds to the CRIT water deal. Only the state of Arizona and EDF are listed in the legislation for the Arizona System Conservation Fund that was created for this deal (not to be confused with the Colorado River Indian Tribe Water Resiliency Act), so it sounds like EDF is a stand-in for the non-state parties. It is worth noting that the money remaining in the fund was invested, and that any interest earned will go back to these parties. It is unlikely that this was a primary incentive for putting money in, but it clearly makes it an investment rather than a donation. No information seems to be readily available about whether the other NGOs and corporate partners could also earn interest.
BWS takes credit for taking part in facilitating more than $4 million in corporate and philanthropic funding. “BWS and its diverse partners across the drought-stricken West are the vanguard. Corporate leadership and action remain a critical part of the solution, and we and our partners will continue to leverage corporate leadership to drive positive change.”
BSW is a project of the BEF, which also sells Water Restoration Certificates (and carbon offsets, by the way), essentially allowing companies to claim they’re offsetting their water use. Over the years, BEF has received millions from WFF for the purposes of such things like, “Support for a corporate engagement platform that will raise $1M in support of a water market strategy’s and leverage corporate voices in favor of solutions for water management in the Colorado River basin,” and “To support grantee’s Business for Water Stewardship (BWS) – the collective voice and engagement platform for business and corporate partners to engage on Colorado River issues.”
While most of the projects that BSW and NGOs support are portrayed as more directly benefiting ecosystems, the CRIT System Conservation Project benefits listed are, “Enhancing Recreation & Economic Benefits, and Securing Water for Communities & Food Production.” Water sitting in Lake Mead is not restoring flows, and it seems that precisely because it lowers economic risks to bolster the water levels in Lake Mead, this project was a bigger selling point than any other project.
BWS not only still lists the CRIT project as needing funding, but they also make a claim about recent legal changes accompanying the DCP allowing off-reservation leasing. “…as a result of recent legal changes ushered in by the DCP, off-reservation leasing is now allowed, making the CRIT an important partner in helping achieve water security outcomes for Lake Mead, Arizona, and the lower Colorado River Basin.”
What they’re referring to is unclear. CRIT’s attorney, Margaret Vick, said in October that “the CRIT’s decreed water rights generally prohibit the tribe from directly leasing its water to off-reservation users”. Again, this will change if the legislation passes. BWS could be confused or uninformed about the status of the Colorado River Indian Tribe Water Resiliency Act that was only just introduced in December 2021 (the quote above was copied from the website prior to that), or there may be even worse lack of transparency around the potential for water deals than it seems, if it refers to some embedded loophole in the storage arrangement.
The legislation, by the way, received written support from the Water for Arizona Coalition (EDF, BWS/BEF, National Audubon Society, American Rivers, Western Resource Advocates). The National Audubon Society put in their own letter for good measure.
The final draft of that legislation for marketing CRIT water was posted in October 2020, and they received a grant that likely enabled some of the complicated aspects of the bill to be formed, and prepares CRIT to implement it if the bill gets passed. In 2019, the Bureau of Reclamation “announced awards totaling $2 million to ten projects to establish or expand water markets or water marketing activities” one of which was for CRIT. The grant, titled, “Water Marketing Strategy for the Colorado River Indian Reservation (Arizona) provided: “Reclamation funding: $184,250; Non-federal funding: $210,890.” It’s uncertain as to whether any of the non-federal funding for a grant received by CRIT in 2021 was from WFF, but it’s possible considering they funded the pilot program discussed above. Either way, the NGOs are not the only ones interested in water marketing (especially now that former WFF people are now part of the Biden Administration.
Details on the grant are as follows:
“The Colorado River Indian Tribes (CRIT), located on the borders of Arizona and California along the Colorado River, will develop a strategy to market water in both states, increasing regional water supply reliability while maintaining an agricultural economy on the reservation. The project includes conducting outreach to potential short-term, medium-length, or long-term buyers, conducting economic studies of water demand and transaction costs, analyzing potential legal constraints related to developing a water market across two states, and researching potential environmental, social, and cultural impacts of the water market. Project results include a water marketing strategy document that will serve as future guidance for the CRIT Tribal Council for proceeding with off-reservation water agreements, as well as increased collaboration with potential agricultural and municipal water partners in Arizona and California.”
The ability of CRIT to market even more of their water seems rather important for further drought contingency planning, as it would free up water for the “500 Plus Plan” and/or the recently passed federal infrastructure bill. Even if a plan such as Arizona’s is a band-aid approach that only buys a bit more time.
The 500 Plus Plan is a plan for the Lower Basin states as further mitigation against the risks of the water lowering to levels at which it will be out of state leaders’ hands what will be done about access to Colorado River water.
“Through modeling, the Lower Basin States determined that another 500,000 acre-feet of water needs to be saved annually in Lake Mead through 2026 to bend the model curve and decrease the risk of Lake Mead’s elevation reaching that critical 1,020-foot mark. This 500,000 acre-feet of water would be on top of the already agreed-upon reductions outlined in DCP…
What does this mean for Arizona, and more specifically, the Valley? Under the 500+ Plan, Arizona’s contribution is anticipated to be about 223,000 acre-feet. Arizona’s water leaders have been working with Colorado River water users in the State to put together supplies that would reach this target.”
“The bill includes $250 million from 2022-26 for Reclamation to implement the Lower Colorado River Basin Drought Contingency Plan (DCP)… Under the DCP, the Secretary of the Interior is obligated to create or conserve 100,000 acre-feet or more per year of Colorado River water. The bill requires Reclamation to use these funds in the Lower Basin to establish or conserve recurring Colorado River water that contributes to supplies in Lake Mead and other reservoirs, or to improve the long-term efficiency of operations in the Lower Colorado River Basin.”
No specifics as to how they will attain this seem to be available.
The infrastructure bill is also meant to provide funding to resolve water rights claims among other tribes in Arizona. Obtaining certainty of water rights can be an advantage to a tribe as long as it is a just resolution, which is difficult for an already over-allocated river. Various stakeholders in Arizona water require that these water rights are resolved sooner than later so that everyone knows how much is available for others. Additionally, resolved water rights claims may also open up additional opportunities for marketing. (See also: Arizona Water Market Part 1: Water Rights and Water Markets.)
It should be clear by the numerous examples of quotes from NGO spokespeople about transferring water to other users, the history of and publications on strategy around such activities, and the corporate participation, that the “conservation” efforts are only meant to shift water to purposes considered more valuable: urban, industrial (including homebuilders). The CRIT water deal, and similar deals for Intentionally Created Surplus, are nothing but innovative water grabs. NGOs like EDF and BWS are arguably tools for corporations to put on an environmental façade and achieve workarounds to challenges to further accumulation of resources.
ADWR’s Tom Buschatzke stated that, “The Arizona DCP Implementation Plan is a monument to collaboration and creativity.” The state and NGOs collaborated with tribal leadership, yes, but against the wishes of some of their constituency.
There is no simple answer, but between all the data centers, Resolution Copper Mine and other mines, the Interstate 11 freeway and all the intended and expected development along it including hundreds of thousands of new homes, other home-building projects, pools, golf courses, and beyond, it is clear that there’s no intention to curtail resource extraction and development in Arizona. There’s certainly not enough groundwater for it either.