Arizona to restrict housing construction because of water supply

Arizona to restrict housing construction because of water supply
Arizona has determined that there will not be enough groundwater for all the residential construction it previously approved in the Phoenix area. The state is trying to postpone developers from starting construction already approved subdivisions. The state said it would not revoke building permits that have already been issued, rather it is scrambling to try and secure additional water supply. The state is focusing on water conservation measures and alternative water supply sources for the permits that have been previously approved. Alternative supplies could come from Native American reservations, but I do not see that as viable as they are facing their own shortages. Phoenix and surrounding cities have to obtain permission from the state for development every 10 to 15 years. So what I see happening is development requests start getting denied as that 10 to 15 year period expires and they have to get renewed.
This is likely the end of the construction boom in Phoenix.
There’s a couple ways you could analyze this. If there is adequate water for the existing population, and construction slows down, even if housing demand continues ever so slightly, you are going to have house prices that increasing at a rate higher than the national average. That is to say, elevated demand, with inadequate supply, will result in high housing prices. I get that housing prices are already very high. What I’m thinking is they could go higher in areas where construction slows down for whatever reason but the demand is still there. In the case of Arizona, we are talking about not having enough groundwater for new residential construction.
The state could have come at this issue from the angle in increasing water prices significantly, or even limiting water, which would have curtailed housing demand. By restricting housing, prices are going to be driven up. A good conspiracy theory would be that well connected residents are using this crisis to make Arizona a more exclusive place to live and drive up their own home prices.
A discussion that has been taking place in California, and has been taking place for more than 100 years, is the fact that agriculture consumes a lot of water. Alfalfa seems an especially wasteful crop in terms of water consumption. I’m not a farmer. I’m not sure how prevalent the practice of flooding fields is in the western part of the country, but this seems wasteful considering the water scarcity issue.
I’ve explored desalination and that is extremely expensive and energy intensive. Desalination is not a viable solution unless there are absolutely no other options. It is const prohibitive.
Let’s consider the water usage breakdown of Utah. 50% of the water in Utah goes to alfalfa production, and that crop is exported to China. 32% of the water goes towards other agriculture. 8% goes towards industrial and government uses. 10% is residential consumption with about 6% being for outdoor residential use.
I encourage you all to take a long term, conservative view toward the future. You need to be thinking about 5, 10, 20, 30 year or longer time horizons. I personally would not be purchasing or investing in areas with water scarcity.

Works Cited:
https://www.nytimes.com/2023/06/01/climate/arizona-phoenix-permits-housing-water.html
https://www.azcentral.com/story/opinion/op-ed/joannaallhands/2022/04/12/arizona-water-future-hinges-how-answer-questions-conservation-growth/9519017002/
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