On today’s show we’re talking about something we take for granted. Water is ubiquitous. There is so much abundant water that it only becomes conspicuous by its absence.
Right now, drought is afflicting 88% of the American West, up from 40% a year ago, according to the U.S. Drought Monitor. In California, the mountain snowpack is at 58% of normal, largely as the result of one of the lowest statewide precipitation totals on record and an unusual spring warm-up. Most of the big reservoirs in California have sunk below half of their capacities.
This is profoundly affecting agriculture, and now real estate. We will feel the impact later this year as yields for many major crops including tomatoes, rice, lettuce, wine, almonds, and garlic all rely on water from this region.
Reservoir levels across the Southwest have been falling. The biggest of those reservoirs, Lake Mead, is 41% full after years of declining flow from the Colorado River. Federal officials are warning it is on track to slip below a threshold of 1,075 feet over the next two years, which would trigger government-mandated water cuts to millions of users. The Colorado River also supplies water to Mexico. Sadly, the river has been so taxed for agriculture and human consumption along its path, that the river no longer even reaches the Pacific Ocean.
Complicating matters is the Southwest’s explosive population growth. There seems to be a willingness to build cities where one of the essentials for living is missing. Why would you build a city like Las Vegas with a population of 2.7M in the middle of a desert. Why would you build a city of 4.6 million people in the middle of a desert. Of course I’m speaking of Phoenix Arizona.
Even coastal cities like Los Angeles are experiencing water shortages. But at least if you’re next to an ocean, you can get fresh water through desalinization. It’s expensive and consumes energy to produce fresh water from the sea, but at least it’s possible.
The Colorado river supplies much of the irrigation to California, the water supply to Phoenix Arizona and the surrounding area through the Central Arizona project which is a diversion of the river through central Phoenix.
There is another aspect to the drought in an area that has traditionally produced food in the US than any other region. 80% of the world’s production of almonds comes from the central valley in California. This crop is a huge consumer of water accounting for three times the water consumption of the city of Los Angeles. About 2/3 of those nuts are exported outside the state.
When we talk about real estate, we rarely worry about access to water. It’s almost taken for granted.