Hey, Uncertain Hour friends and listeners, Amy Scott here, senior correspondent and host at Marketplace. We're dropping into your ears today to tell you about another podcast we make that we think Uncertain Hour fans will really like. It's called How We Survive, and it's about how people are navigating solutions to a changing climate. We have a whole new season out now about water scarcity in the American West. So here's the first episode of the new season. let us know what you think. In a quarter mile, turn left. I'm not a person in sight. It's late July, and I'm way out in the Arizona desert. Now there's some more green. About 70 miles west of Phoenix in the Harquihala Valley. Just sort of went through a little speck of town, basically, and now back in the middle of the desert. It's 108 degrees, the kind of blazing hot day where you just pray your car doesn't break down. Your destination is on the right. This may be the weirdest place I've ever Google mapped to, my destination being a field. I drove all the way out here to look at a one-acre plot of land. Well, here it is. because this dusty field is about to be sold for a staggering amount of money. This acre of grass and dirt surrounded by not much is apparently worth $80 million. I've toured some pricey properties, and at $1,800 per square foot, This one costs far more than a plot of land in Miami's billionaire bunker, if you listen to season two. It's just a bunch of scrub and a couple weeds, but the water underneath is absolutely precious. Yep, there's a vast aquifer underground, a possible lifeline for one small city many miles away. The thing with water in Arizona is it's really not how much water is there going to be. It's how much do we want to pay for it. This little acre of land, it kind of encapsulates what's happening in Arizona and a lot of the West right now, where people are adapting to and profiting from the climate crisis. Does it hurt a little bit to have to pay so much money to investors who basically just made a water play and now are cashing in? No, I mean, that's business. Do you think people should be able to profit from the crisis, the water crisis in the West? Well, my own personal view has always been no. Hi, I'm Amy Scott. Welcome to How We Survive, a podcast for Marketplace about people navigating solutions to a changing climate. This season, the worth of water. More than 20 years into a mega drought made worse by climate change, a lot of scientists think the word drought doesn't really cut it anymore. That what we're looking at in the American Southwest is aridification, a long-term drying out of the region. And one wet year doesn't change the trajectory. And yet, people keep moving here. Some of the fastest-growing cities in the country, Denver, Phoenix, Las Vegas, depend on a dwindling resource. So this season we're asking, how can we continue to live in the hotter, drier Southwest? It has been a constant battle against Mother Nature. Whiskeys for drinking. Water. It's for fighting. You want water? I can get you all the water you want. You're just going to have to pay for it. In the West, water is going to be gold. And it's not just the American West. Scientists tell us by 2050, more than 5 billion people around the world will face water shortages. This season, we're diving into water and what happens when there's not enough of it. We're going to start with the story of that scrubby acre of land in the desert, how it came to be owned by a group of investors, why it's worth so much to a small city with big dreams, and what it tells us about how the rest of us can adapt to an uncertain future. This is Episode 1, The $80 Million Acre. Before I tell you more about that $80 million acre of land, I want to introduce you to the city that wants to buy it. Going down to Buckeye, Buckeye, Buckeye. Buckeye is in Maricopa County, at the far western edge of the Phoenix metro area. And when the band Funk Junkies released this song in 1992, Buckeye was a cow town. Only about 5,000 people lived there. When I turned 16, we went to buy a car and bought it on a pig farm at Buckeye. Joe Valiente, a.k.a. Soul Man, was a member of Funk Junkies. Joe grew up in Phoenix and lives there still. And he says in the 90s, Buckeye was a place he and his friends had to pass through to get to Mexico. There was nothing in Buckeye. There's one gas station in Buckeye. So it used to be a one stop town. You would go through, you would stop at the main light right there where the train tracks were and you would roll through. But getting through Buckeye was a catch because they had a sheriff. They had a, you know, it was a really small town. So if you got popped in Buckeye, more than likely your weekend is done. Sometimes Buckeye was the weekend plan. We would all do like desert parties at Buckeye. So it was kind of like one of those things where it was farm town then. And it definitely wasn't the boom town that it became. We have grown to a population of over 110,000 right now. Eric Orsborne is Buckeye's mayor. From 5,000 people in 1992 to more than 110,000 today, that's more than 20-fold growth in just a few decades. One of the fastest growing cities in the United States. And some of the city's boosters are even betting it'll become the next Phoenix. And what's bringing people here? I think it's opportunity as part of it. Available land, good home values, amenities in the White Tank Mountains and the Gila River and now jobs are bringing people to the city of Buckeye. Opportunity is what brought Jonathan Drawn to Buckeye. He's originally from Tennessee and moved here several years ago for an ironworking job. And then over the years, there's more work out here, so we just stayed. My producer Caitlin and I met Jonathan one afternoon in June as we were driving around Buckeye and came across an oasis in the desert. You're greeted by palm trees, lighted tennis courts and splash pad, lush green lawns. Okay it's really just a master planned community with one of those vaguely exotic sounding names developers come up with that Caitlin and I cannot seem to remember. Terra Nova? Terra... what did you call it? Terra Santo. Terra Santo. Terrazzo. Actually, it's Tartesso, a community of about 3,300 homes so far. All of them look about the same. Beige, two stories with a garage, desert landscaping. One house caught my eye because of all the cars in the driveway That where we found Jonathan in a backwards baseball cap and sunglasses working with a buddy to install air conditioning in the garage So I run a tailor-made motorsports. I run a side business out of here. I was wondering what was going on here. You got a nice Mercedes over there. Oh yeah, I've got a few view around here. Oh yeah, these are all Mercedes. Is this one too? This is a Subaru. Oh, okay. Yeah, it's a rally car for a customer. We're just building it out and doing some cool stuff for him. For his day job, Jonathan now works at a solar power plant about an hour away near Gila Bend. He lives in Tartesso with his wife and five-year-old daughter, Harley. She's inside coloring magnets for the fridge. Nice. Yeah, a little art project while we're out here doing some work, keep her busy. Jonathan bought his place here in Tartesso in 2019. We got our keys Christmas morning. When the more developed part of Buckeye was starting to feel too crowded. Too congested, just too much going on. And Tartesso is a good community. It's far enough out of the way, but it's close enough to everything. The closest gas station is 15 minutes away. There's no grocery store or shopping. But that's why houses here are also more affordable than closer in to Phoenix. We got in good time, great price. Now it's equities is impressive. But as far as paying what the prices are for homes now, what I would sell my home for today, I would never buy my home for that price. Like the rest of the country, Phoenix doesn't have enough houses to meet demand. And Jonathan doesn't expect his peaceful neighborhood to stay that way very long. Once a gas station goes in and once something pops up, then it just kind of explodes into a populace. Everyone wants to be somewhere new, so they sell, they move, they buy, they build. And yeah, it's coming this way. North of where Jonathan lives, builders are scraping the Raw Desert to make way for a massive new development called Terra Vallis. with plans to eventually add 100,000 homes. By 2060, officials estimate Buckeye's population will reach more than 375,000. The only problem, growth requires water, and Buckeye doesn't have enough of it. Everyone good? Just before our visit, Arizona Governor Katie Hobbs held a press conference. Well, good afternoon, everyone, and thank you for joining us for an important water update. To build new subdivisions in this part of Arizona, developers have to prove they have a 100-year assured water supply for the people who live there. New modeling by the state had shown that there wasn't enough groundwater for all the housing planned in the Phoenix suburbs. If we do nothing, we could face a 4% shortfall in groundwater supplies over the next 100 years. So the governor had some grim news for builders. We will pause approvals of new assured water supply determinations that rely on pumping groundwater. In other words, she's pumping the brakes on new development in places like Buckeye. Unlike Phoenix or Scottsdale that have renewable supplies of water from the Colorado and other rivers, Buckeye relies almost entirely on groundwater. The state projects that the part of the aquifer beneath Buckeye will come up 15 percent short within a century. Standing behind the governor at that press conference was a woman with blonde hair wearing a pale green jacket named Kathleen Ferris. She's a big deal in Arizona water, a longtime attorney and policy expert at Arizona State. And how would you describe your role in the landmark 1980 Groundwater Management Act? Not going to lie, it was pivotal. Kathy helped write the law that governs groundwater use in the state. She says the law was weakened in the 1990s to allow builders to rely on groundwater and push further into the outskirts of Phoenix. Groundwater, for the most part, is a finite resource. We call it a fossil source of supply. And drought affects that supply in two ways. Groundwater can't be replenished as fast. And less precipitation means less water flowing through rivers. So communities have to rely on groundwater even more. When I was starting in this business, we always talked about groundwater as being a savings account. It was intended not to be a supply that you used on a day-in, day-out basis. It was supposed to be preserved for when you had shortages of surface water supplies, just like is really happening now. So climate change really does affect our groundwater supplies. And we cannot continue to overdraft our groundwater basins if we're going to have any kind of meaningful civilization here in the future. How confident are you that we can continue to live in an increasingly arid southwest? Well, not as confident as I used to be. My thinking is that Buckeye can have a lot of dreams about what it wants to be, but it better secure the water first. To just assume that it's all going to be there is rather frightening. So what's a small city with dreams of becoming the next Phoenix to do? It'll have to find new sources of water. That's where that $80 million acre of land comes in. after the break. I'm standing next to a canal watching murky brown water flow by. I see algae, bits of trash. Dead fish. Phoenix, probably from the Verde River. Most of this water is effluent, as in wastewater. From Phoenix. It's coming from a wastewater treatment plant at 91st Avenue and the riverbed. So it's treated but not potable. It's not potable, but it's okay for farming. Dave Roberts is a former water resource manager in Phoenix. He ran the area's largest water and power utility. He keeps trying to retire and escape to the house he's building in Wyoming. But cities like Buckeye keep luring him back, paying him as a consultant to hunt down new sources of water. It's a tall order. Land-wise, Buckeye is huge, 640 square miles. That's even bigger than Phoenix. The city got that big about 15 years ago when some pretty excited mayors and councils decided they wanted to be really big. And now it's come home to roost in terms of how do you develop a water supply for that entire area, and it's practically impossible. But Dave likes a challenge, and he knows water. He's like a walking almanac. A much smaller amount, probably not more than an acre foot per acre. Which would create about 75,000 acre feet of storage. Which saves another 50,000 acre feet a year. When you total it all up, 180,000 acre feet. Acre feet. You're going to hear that term a lot this season. An acre foot is the amount of water it would take to cover one acre of land one foot deep. So picture a football field a foot deep in water and you got the idea In Arizona it enough for about three households in a year One solution Dave is working on to bring more acre feet to Buckeye involves the effluent running through this canal. Years ago, Phoenix made a deal to deliver treated wastewater to farms here. But that deal is set to expire in a few years, And Dave is helping negotiate a new deal to eventually let the city of Buckeye use some of this water, treat it to drinking water standards, and deliver it to homes and businesses. We're looking at this, like, canal of kind of gross water, slimy water floating by. And everybody wants it, right, in the future. Phoenix is going to be fighting for this water. Buckeye is going to be fighting for this water. Potentially the farmers who are currently using it are going to be fighting for the water. And so the idea is to get to certainty on water supplies for everybody. Another solution? Turn farmland into housing and shopping centers. Agricultural land takes about five to six acre feet per acre of groundwater. Urban land, about one to two. So if you retire that ag land, you're going to save a lot of groundwater. Now, it's not going to urbanize all at once. It's going to take 30 or 40 years to urbanize, but you're going to have a plan to save that water. Are there developers who want to build housing here? A lot of this land is owned by developers, and they lease it back to farmers. There are also farmers who would like to make that last big crop, which is homes. So part of the solution to Buckeye's water problem could lie in effluent and farmers selling out to housing developers, the last crop. But that's not enough. Other ideas include raising a nearby dam to store more water and leasing water from Native American tribes. Longer term, there's even talk of importing desalinated water from Mexico. But in the near term, there's that acre of land in the Harquihela Valley. This acre of grass and dirt surrounded by not much is apparently worth $80 million to the city. Of course, it's not the land the city is paying for. Nobody's spending that kind of money for a piece of land. It's the water. Terry Lowe is Buckeye's Director of Water Resources. He says the deal comes with rights to almost 6,000 acre-feet of water per year for 100 years, enough to supply about 18,000 homes. And Terry says they'd like to buy even more if they can. The thing with water in Arizona is it's really not how much water is there going to be, it's how much do we want to pay for it. The city is buying the acre from a group of landowners and a hedge fund who've teamed up to sell farmland for the water rights. Does it hurt a little bit to have to pay so much money to investors who basically just made a water play and now are cashing in? No, I mean, that's business. And that's foresight. And actually, if we didn't have that play out there, I don't know what we would be doing. So over 100 years, it's not a bad price. It's only going to go up. I wondered how farmers in the Harquihala Valley feel about that. Well, I guess I have mixed emotions. Bill Perry farms mostly alfalfa these days in the Harquihala Valley, a few miles from that $80 million acre of land. I'm a big believer in private property rights. If you want to sell your water and it's legal to do it, but I love farming and they love making smart investments. So it's not your preference, but you don't blame them for trying to make a buck. Hey, yeah. Bill's 72, with slicked back hair and a ruddy face tanned by the Arizona sun. His family has been farming and ranching in the state for generations. Growing up, I don't remember ever wanting to do anything but farm. That's all I ever thought about growing up. and after college Bill rented the farm right next door to his dad's which was handy because I was able to use a lot of equipment until I was able to purchase some and now he's farming with his own son I would have never known how much joy there is in being in partners with a son I'm sure the same way with the daughter but it's just it's one of the most incredible things I've ever experienced It's just awesome. It's just awesome. And he's really smart, and he loves farming. Bill says out in the Harquihala Valley, anything grows. It's just really, really good dirt. This year, Bill and his son are farming 4,200 acres of alfalfa together, which they sell to feedlots and dairies, and a little goes to export. There is nothing like the fragrance of fresh mown hay. I've often thought maybe I should get some cologne that smells like that. But farming in the desert comes with some challenges. It takes a lot of water to grow food. This year, Bill and his son had to scale back their farming operation because of the drought. They lost access to the little Colorado River water they had rights to. So now they rely entirely on groundwater. Is there plenty of groundwater? for now? Well, I guess it would depend on your definition of plenty. Bill says the water table has dropped a lot in the last 60 years. Used to be wells hit water at 150 feet deep. Today, Bill's wells are 600 feet deep. I read a quote by John Wesley Powell that said, every year you will find that you have a little less water than what you need. it's certainly true in farming in the desert anyway i've often wondered how long will it last have you been approached to sell your land yes but it just wasn't the right the number wasn't right and you'd say what they offered you you know i better not okay but it was it was tempting but it didn't pencil it was you know what it it my son and i perked up a little. Fucked up a little. Bill says when he got the offer, he felt like he was playing out a scene from the TV show Yellowstone. The character's played by Kevin Costner, the dad of the operation. The cash flow is impossible. They kind of insinuate that it's kind of having a tough time financially and they don't know how long they can keep this big, huge ranch going. So some hedge fund or something talks to the daughter and wants to buy a small part of the ranch for $500 million. So she goes to the dad and she says, look, got an offer right here in writing. You are a rancher. I am a businessman. And I have spent my career making $100 million deals for others. Now I want to make one for you. He just immediately says, nope, not going to sell it. I can relate. But I can tell Bill's torn. You know, as much as I love farming, it gets to a point where if those numbers are real, you just can't walk away from, they're talking some pretty good money. The offer to buy Bill's land came from a New York-based hedge fund called Water Asset Management, WAM for short, part of the same group of investors selling their land to Buckeye. They've been out there maybe 10 years, I want to say. We tried several times to interview someone at Wham. No one ever replied. But here's how co and president Matthew Deserio talked about investing in water in a 2020 interview with Institutional Real Estate Inc a trade publisher The biggest emerging market on Earth is water infrastructure and water resources in America It's a trillion dollar market opportunity. For years, they've been buying up farmland all over the Southwest, sometimes continuing to farm it, sometimes just holding on to it. But the ultimate play is the water. Obviously, these farms always have bulletproof water rights. And in an environment where climate change is impacting water supply, those farms, just as farms, become more valuable. WAM can then sell that land to thirsty cities at a premium price. We found more than 6,000 acres owned by WAM-affiliated companies in Arizona. And it's not the only one. I'm seeing a lot of this in Arizona. Wherever investors think they can make money, they will invest their funds. Kathy Ferris again, the architect of Arizona's groundwater law. Kathy says investors can have a role to play, building infrastructure, treating water, and moving it to places that need it. But if they're just holding the land and just speculating on a big payout, then I have more concerns about it. Because, of course, you can't survive anywhere without water, and least of all in the desert. So it drives up the costs of water, is what I'm saying. You know, when I talk to folks in the Harquahilla Valley, they kind of shrugged. It's like, you know, yeah, do I like it? No. but these are investors, it's capitalism. But I wonder if we as citizens should be concerned about private investors controlling more of the water in the West. And as you said, potentially raising the price of something that is already so precious and increasingly at risk. Well, I think we should have some concerns. I definitely think we should be skeptical. And the question is, are there enough safeguards in place that make it so that they're not adding significantly to the cost of water? Who is Water Asset Management, and what do you know about them and their business model? I don't know much. I don't know much. I don't think many people do. But Bill says the various players are well-known around the Harquihala Valley. One of WAM's founders, Disc Dean Jr., used to work for Vidler Water Company, a pioneer in water speculating. In the late 1990s, Vidler realized that the Phoenix metro area faced a long-term water shortage and that under Arizona law, groundwater could only be exported to Phoenix from a few basins in the state, including the Harquihala Valley. So Fiddler started buying up thousands of acres of farmland in the valley for the water rights. When Fiddler sold, they made a real good profit when they sold that in 05 or 06. So he had a real sense of what water was worth out there or what it could be worth. On its website, Fiddler says it made more than $123 million, selling to a power company, a real estate developer, and some golf courses in the Phoenix area. Bill says others involved in the Buckeye deal are a hotel magnate named Gary Tharldson. I know he's from North Dakota. I think he's the richest guy in North Dakota. Maybe that's not a very high bar. And a somewhat notorious land speculator named Conley Wolfswinkle. Everybody in the land business knows Conley. Conley Wolfswinkle. He's well known. He was convicted of bank fraud in the 1990s and caught up for years in a legal battle over a land deal in Buckeye, plus a bunch of bankruptcies involving him and his companies. For all the money that's changed hands over land in the Harquihala Valley, not a drop of water has actually been exported out of the valley yet. If the Buckeye deal goes through, it's still waiting on state approval. The next challenge will be delivering that water. I don't know that we have all of that figured out yet. Again, Buckeye Mayor Eric Orsborne. There are a couple of really good options for that. One is to pump the water out of the ground, treat it, put it into the CAP canal. That's the Central Arizona Project, the 336-mile canal system that brings water from the Colorado River to the greater Phoenix area and runs through the northern reaches of Buckeye. And then move it through to areas where we can pull that out of the canal. There's also the opportunity of piping that directly to us. It's maybe a 30-mile pipeline, which in the scope of pipelines is not that big a pipeline. As we're talking about all of Buckeye's plans to buy water, move it across miles of desert, just to keep growing in an increasingly inhospitable place, I keep thinking, that all sounds very expensive. Yeah, none of that is going to be cheap. And this is going to be the story all over the West, as rampant growth butts up against the hard realities of water scarcity. That's what we're digging into this season. We're on a hunt for solutions. From the mundane… You can lose about 15,000 gallons with a toilet leak. For one toilet? For one toilet. …to the fantastic… We're tapping into an ocean that's just around us right now. So the atmosphere is kind of a hidden ocean. We'll check out the technology that's making drinking water from some surprising sources. This direct potable reuse water is so clean and fresh. And this is wastewater, right? This is coming from the sewer? Originally, yes. And we'll look back at the unequal way water rights were distributed in the first place and the effect it still has today. This goes back to our historic fight to regain our water, right? Over 150 years ago, our water was stolen from us. Next episode, we'll look at a community that fought to bring water back and is now trying to protect it. How does that feel to have this precious resource that is increasingly in demand and valuable? Everybody wants this water, and you've got some. It's a tremendous responsibility as a community that we do not take lightly. But at the same time, we want to make sure that there's not a second taking of our water. That's it for this episode. Thanks for listening. If you like what you hear, please leave a review or share with a friend. It really helps. How We Survive is hosted by me, Amy Scott. Senior producer Caitlin Esch and I wrote this episode. Our producers are Haley Hirschman, Lena Fonsa, and Courtney Bergseger. Help this season from Peter Ballin-On-Rosen and Sophia Polisa-Karr. and Marketplace reporter Savannah Marr. Our editor is Jasmine Romero. Sound design and original music by Chris Julen and audio engineering by Brian Allison. Special thanks to John Gordon, Nancy Fergali, and our colleagues at APM Research Lab. Our theme music is by Wonderly. Bridget Bodner is director of podcasts. Francesca Levy is executive director. Neil Scarborough is vice president and general manager of Marketplace.
