Hedge Fund’s $100 Million Arizona Land Acquisition Sparks Water Rights Concerns

A significant acquisition by Water Asset Management LLC, a New York City-based hedge fund, has raised alarms over potential corporate control of vital water resources in Western Arizona. The firm has invested $100 million to purchase 12,793 acres of farmland and associated water rights in La Paz County’s McMullen Valley Basin. This deal, completed without public consultation, has sparked fears of a looming “water grab” in the region.

County Assessor Anna Camacho confirmed the purchase, which could be a historical water deal for Arizona. “This area feels exploited by international companies already. Now, Wall Street is taking an interest, seemingly to sell water to rapidly-growing cities in the Phoenix valley,” remarked Arizona Attorney General Kris Mayes.

Mayes emphasized that the company is unlikely to prioritize agricultural use of the land. “They are not buying it for farming; they want the water resources,” she noted. La Paz County Supervisor Holly Irwin expressed similar concerns, stating, “I feel like we are the sacrificial lamb.”

In defense of the transaction, retired University of Arizona law professor Robert Glennon questioned the resistance to corporate involvement in water rights. He argued that similar brokerage exists across other facets of life, implying it should extend to water management.

The McMullen Valley Basin, located approximately 100 miles west of Phoenix, is already facing groundwater depletion. Water Asset Management has previously sought to acquire additional water rights in Arizona’s rural areas, and its latest purchase follows multiple similar moves across the Southwestern United States, raising alarms among residents and officials.

Based in Delaware, the company, whose address is linked to Water Asset Management in New York City, obtained the land from International Farming Corp, which had previously purchased it from the city of Phoenix for $30 million in 2012. The land includes parcels around the unincorporated communities of Wenden and Salome.

Residents are particularly worried about the possible transfer of groundwater rights to urban centers, especially since a 1991 state law permits such transactions from the McMullen Basin to developing areas nearby. This has been a contentious issue, particularly given instances of heavy, unregulated groundwater pumping by foreign companies, such as Al Dahra and Fondomonte.

Gary Saiter, head of a local public water district, described Water Asset Management’s expansion as “terrifying.” For many in La Paz County, the prospect of an out-of-state company taking control of the already struggling water supply is alarming. “$100 million is a lot for an area that isn’t wealthy,” Irwin commented.

In response to the deal, Mayes’ office has begun investigating over-pumping in the region and hosted a town hall to discuss residents’ concerns. She is exploring legal strategies to counter potential adverse impacts, suggesting that excessive groundwater extraction could constitute a public nuisance.

While critics highlight the danger of prioritizing urban growth over local needs, Glennon argues that Water Asset Management might be capable of fostering improved agricultural efficiencies while addressing urban water challenges. He advocates for the potential benefits of modernizing irrigation practices under corporate stewardship.

Details on the company’s management plans for its new properties remain unclear, with attempts to reach Water Asset Management officials yielding no response. According to their website, they aim to enhance water quality and supply through their investments, focusing on sustainability and community needs.

The groundwater basin itself has experienced significant strain, with declining water levels and increasing land subsidence over the years. The Arizona Department of Water Resources has reported a concerning imbalance in the groundwater system, warning that without substantial changes, many local wells could dry up by 2075.

Given these pressing issues, the lack of stringent regulations on groundwater pumping places local communities in a precarious position. Mayes has asserted that existing state laws fail to protect rural water resources, terming this inaction a “magnet for exploiters.”

Efforts to enact robust groundwater management legislation have stalled in the Arizona Legislature, leaving communities vulnerable to further exploitation. This has led to an ongoing debate about the future of water rights and resource management in the state.

As water challenges continue to escalate, the impact of Water Asset Management’s investment on the McMullen Valley’s agricultural and residential landscape remains to be seen. For residents, the potential for increased corporate influence over essential water resources is a growing concern.