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Faced with rapid population growth and the increasing difficulty of obtaining new sources of water, many western states now condition the approval of residential development on the adequacy of long-term water supplies. Although planners have generally supported these laws as means of linking water and land use decisions, their implementation is proving challenging. Drawing on the experiences in five western states, we evaluate whether water adequacy laws effectively meet the dual objectives of protecting the resource base and encouraging the development of supplies to support growth. [PUBLICATION ABSTRACT]

Finding water to support growth has become a key resource management challenge for the semi-arid western U.S., where water supply systems have come under increasing stress in the past 25 years. The favored past practice of building dams and conveying water long distances has been challenged on environmental and financial grounds. A prolonged, severe drought in the Colorado River Basin, which some analysts see as a precursor to supply problems linked to global warming, has thrust water and growth issues to the forefront in this region. In many places, supplies for human consumption have been curtailed to support endangered species (Doremus, 2001). Many groundwater basins are seriously overdrafted (Glennon, 2002). Meanwhile, the West has been experiencing a population boom, with no end in sight. Nevada's population grew at a remarkable 4.5% per year between 1980 and 2005 and has added over 80,000 new residents per year between 2000 and 2005. Arizona added 3.2% per year for the same period and over 160,000 residents per year since 2000. California, the most populous state, has added approximately 450,000 persons per year since 2000 (U.S. Census Bureau, 2006). Each new household brings additional demands for residential water.

To meet this demand, water planners are shifting toward recommending a portfolio of solutions, combining surface storage with nontraditional options, including storing excess surface water underground ("groundwater banking"), recycling, desalination, as well as conservation and the market-based reallocation of water rights to encourage more efficient use of existing supplies. Using markets (allowing the purchase and sale, or "transfer," of water rights) accommodates the shift in demand for water from agriculture to other sectors (National Research Council, 1992). Although agriculture's share in western economies has been falling, irrigation still accounts for well over half of all western water use (Hutson et al., 2004), thanks in part to federal water and crop subsidies (Wahl, 1989).

Residential land-use policies have also come into the spotlight. Many states and local authorities have instituted regulations conditioning the approval of development on the adequacy of long-term water supplies.1 This represents a significant shift in assumptions about resource management in a growing economy. Whereas it was once presumed that new supplies would become available as needed to accommodate new homes, water supply adequacy policies require that this be validated in advance.

We assess the experience of five southwestern states (Arizona, California, Colorado, Nevada, and New Mexico), beginning with background on the rationale for regulation and a description of state policies. We then describe compliance options, evaluate the strengths and weaknesses of various approaches, and highlight implications for planning and policymaking. Our comparative information on state and local policies, compliance options, and implementation experiences comes mainly from primary sources, including a review of official documents and roughly 70 semistructured interviews, conducted mainly in 2003 and early 2004, with state and local water and land use officials, planning and legal experts, developers, environmental groups, and affordable housing advocates. We cite key documents and interviews. We also illustrate possible effects of regulation on the housing market using secondary data. A concluding section summarizes our main findings.

The Link between Water and Land Use: Making a case for Regulation

The justification for public policy that conditions development permission on evidence of future water availability is that water is connected to land use. This connection results from housing's effect on water demand, the nature of water supplies in the west, how water rights are apportioned among potential users, and state and local governments' water and land use authority and decision-making structures.

Housing affects the demand for both indoor and outdoor water. Indoor demand for water varies with household income (wealthier households buy more water-using appliances), and the age of the housing unit. New homes generally have low-flow toilets and showerheads thanks to changes in plumbing codes, increasing their water-use efficiency (Michelsen, McGuckin, & Stumpf, 1999). Lot size largely explains outdoor demand, as homes with smaller yards use less water, and multifamily residences have the lowest per capita water use. In hotter, drier regions, landscape irrigation accounts for over half of residential water use (Mayer et al., 1999). Thus zoning and landscaping rules that shape lot sizes and the development footprint help determine new housing's effect on community water needs.

Water supply characteristics are also important. Although the relative shares vary across states and regions, western water systems have historically relied on a combination of surface water and groundwater. Surface water depends on rainfall, and hence is more variable from year to year. The key concern for groundwater is long-term depletion, because users can extract it much faster than it recharges naturally (a practice sometimes called "groundwater mining"). Basins with very low natural recharge rates are often considered "nonrenewable."

Throughout the west, the predominant system of water rights is prior appropriation, which allocates use rights by seniority of claims (Getches, 1997). All states in our sample govern surface water permitting by this doctrine. Except for California, where groundwater regulation is a local prerogative, all states also govern groundwater permitting according to the same seniority principle, although coverage is spottier. The prior appropriation system poses some challenges to growing economies. To expand supplies, municipalities must often purchase rights from agricultural users. These negotiations can be complex, because transfers can harm the environment by changing stream flows and can reduce economic activity in the source region (Hanak, 2003; National Research Council, 1992). In communities with secure water rights, prior appropriation also insulates existing residents somewhat from increasing statewide water scarcity. As long as they are putting water to "beneficial use" (a notion that generally includes few restrictions), residents can continue using water amply (and at low cost) unless there are local shortages. In this sense, water is quite different from fuel, for which all users face higher prices when the resource is in short supply.

Decisions to subdivide, zone, and issue construction permits fall under the jurisdiction of city and county governments. Responsibility for water supply management, however, falls to local water suppliers, typically referred to as utilities. Although some local governments operate their own water departments, these utilities are often set up as distinct public or private institutions, whose physical boundaries only partly overlap with city and county boundaries. Many exurban areas depend on very small utilities, known as community water systems, or on domestic wells. Even in cities with in-house water departments, land use planners and water engineers do not always coordinate.

Given the linkages between water demand and decisions about the housing stock, planning and legal experts have long considered the institutional split between land use and water supply planning problematic.2 But there are also other arguments for water adequacy requirements, such as protecting new homebuyers against overpaying for "dry lots" that would ultimately lose value, a scenario most likely in outlying areas, where new homes depend on individual or community wells. Water adequacy requirements also protect the resource base for existing users in two situations. First, when water rights are not fully defined, adequacy reviews ensure that new development does not reduce the water available to existing users. This is particularly important for development relying on groundwater, to guard against overdraft. Second, reviews can assess the room for growth within a community's current water rights, providing existing users some protection from shortages or higher water costs.

If an adequacy review finds existing supplies insufficient, it implies that the area should defer additional development until a greater water supply is online. However, adequacy reviews can be used to limit growth even if the water supply is sufficient. This possibility arises because there are no objective standards for water adequacy. In most places, there are also no requirements that communities conserve to accommodate growth.

State Water Adequacy Laws

Although the water supply adequacy movement has gained ground since the mid 19905, the earliest laws have been on the books for three decades (see Table i). Colorado, Nevada, and Arizona all passed laws in the early 19705. Since then, Arizona has adopted more stringent policies, and California and New Mexico have introduced statewide regulations.

Despite some common aims, the laws vary. Some states exempt large categories of new housing, either as a result of legislative compromises or because they leave oversight to local governments. States also intervene directly to differing degrees. Finally, the stringency of review standards varies, notably the time horizon for defining "adequacy" and the extent to which the reviews are intended to protect groundwater basins.

Colorado and New Mexico

Colorado and New Mexico introduced water adequacy requirements in legislation requiring counties to adopt subdivision regulations, to prevent the sale of new homes lacking basic services (T. Grimshaw, interview, October 29, 2003; L. Lucero, interview, July 10, 2003). The laws apply only to unincorporated areas, and counties have some leeway in establishing standards. In Colorado's fast-growing Front Range region, the state's standards for groundwater-based development require water supply availability for 100 years into the future, and some counties have extended this horizon out to 300 years. Counties in New Mexico use time horizons ranging from 20 to 100 years. In both states state officials review water supply assessments, but county officials have the final word on subdivision authorization. Cities in both states are free to adopt their own screening procedures, and most do so.

Nevada

Rapid growth in the Reno area with the rise of casinos in the early 19705 prompted the Nevada state legislature to add a mandatory water adequacy review to its subdivision law (S. Canfield, interview, August 28, 2003). Outside of the Las Vegas area, where the local water utility conducts the review, state officials screen proposals and have final authority to block new subdivisions. As a condition of approval, the state requires the local utility to acquire permanent water rights adequate to serve the development. Groundwater basins are implicitly protected by state regulation of this resource.

Arizona

A1973 Arizona law required that sellers of new lots disclose water supply conditions. In 1980, to obtain federal support for the Central Arizona Project (CAP, providing Arizona access to its Colorado River entitlement) Arizona adopted its Groundwater Management Act (Glennon, 1991). This committed the state to address groundwater overdraft in five "Active Management Areas" (AMAs) by limiting pumping and encouraging users to substitute CAP or other surface water supplies for groundwater and making water adequacy a mandatory precondition for new development within the AMAs. Following lengthy negotiation with development interests, the rules for implementing this 100-year "Assured Water Supply" program were released in 1995. Development in the Phoenix, Tucson, and (since 1998) Prescott areas must now be based on "renewable" (i.e., surface) supplies (Arizona Department of Water Resources [ADWR], 2001a). The state shares responsibility for conducting assessments with designated utilities.

California

California's laws were introduced to protect existing communities from unintended consequences of growth after some land use agencies approved large developments without conferring with the utilities expected to extend water service (R. Kanouse, interview, February, 2003). California laws require local governments to assess water adequacy for a 20-year time horizon as part of the required environmental review (see Table 1) and, since 2001, prior to final subdivision map approval (Association of California Water Agencies [ACWA], 2002; California Department of Water Resources [CDWR], 2003). Although the laws shown in Table 1 apply to all cities and counties, the review threshold is high, generally covering only subdivisions with over 500 units. Local governments retain authority to review the adequacy of the water supply for smaller development proposals, and a recent survey suggests that a majority does so (Hanak & Simeti, 2004).

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Options for Development within Municipal Service Areas

When development is slated to occur within (or within annexation range of) municipal utility service area boundaries, compliance methods are typically left to the utility's discretion. At issue is whether the developer must "bring water to the table" (enable the overall expansion of local supply) or whether the utility itself will vouch for new supplies.

Water Rights and Fees

The principal means of bringing in new water are by purchasing water rights from nonmunicipal users or contributing to the costs of supply development. These contributions are distinct from the payment of connection or system fees to fund local system expansion, a common practice since the 1970s (Altschuler & Gomez, 1993). For cities in Nevada and Colorado's Front Range, such a requirement is now standard. Homebuilders in the Reno area have paid to acquire water rights since the early 19705. In the Las Vegas Valley, where the potential for water marketing is more limited, developers have been contributing since the early 19905 to the costs of regional water supply projects. Municipal utilities in the Front Range have systematically collected fees used to purchase agricultural water rights since at least the early 1990s (T. Grimshaw, interview, October 29, 2003; Nichols, Murphy, & Kenney, 2001; Rhodes, Miller, & MacDonnell, 1992).

Some utilities in Arizona, New Mexico, and California have launched similar policies or have them under consideration.3 The unit cost of this new water varies widely, reflecting regional water rights and conveyance costs and different assumptions about household water use (see Table 2). Fees usually vary by home type (single-family or multifamily structure) and sometimes by lot size.

Conservation

To minimize the amount of new water needed, developers and utilities look to conservation solutions for new homes. Turf restrictions are now commonplace in Arizona and the Las Vegas Valley. Although landscape ordinances are far less common in Colorado and California, recent drought conditions have led utilities to become more proactive. Aurora uses price incentives: buy-in fees for a typical home are over $2,000 higher with turf than with low-water plants (Table 2). In California, moral suasion is still the norm. Under its new campaign to encourage water-efficient landscaping, the Metropolitan Water District of Southern California has asked builders to take the lead by planting water-smart communal landscaping in new neighborhoods.

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When other new sources are limited, existing users are asked to conserve. Under "conservation offset" programs, developers fund the required investments. In 2002, the City of Santa Fe, in an arid region with few opportunities for new surface supplies, adopted a "Water Budget Ordinance," enabling builders to get water credits by retrofitting homes and businesses with low-flow toilets. Similar measures are used in some of California's water-short coastal areas.

In a recent innovation, the Southern Nevada Water Authority (the main Las Vegas-area utility) now pays residents to convert turf to landscaping requiring less water. Landowners "sold" the Authority over 1,400 acres of turf between 2003 and 2005, at a price of $1 per square foot, generating net water savings of over 10,000 acre-feet (K. Sovocool, interview, January 24, 2006). Participants must replace the turf with mulch and at least 50% plant cover and maintain a low-water landscape for at least 10 years (see http://www.snwa.corn/html/cons_wsl.html). According to the Authority, the program is changing attitudes about what looks good in a desert climate; reduced lawn maintenance during the hot Las Vegas summers is also a big draw.4

Moratoria

Finally, some water-short communities operate with explicit quantity restrictions on new meter hook-ups (or "meter caps"). Full or partial moratoria have been common-place along California's Central Coast for decades, and have been used at some point in 14% of the state's localities (Hanak & Simeti, 2004).

Options for Development outside Municipal Service Areas

Density Caps and Rationing

Outside municipal service areas, groundwater is usually the only ready source of supply. Where groundwater reserves are limited, regulations sometimes include density caps. Since 1980, San Diego and Santa Fe Counties have used large minimum lot sizes to curb groundwater mining, and many Front Range counties now limit density as a way of enforcing their aquifer life rules.5 Higher densities are permitted if developers can demonstrate that they have access to alternative sources, such as surface water transfers.

Water rationing for new homes is another tool. Santa Fe County expects households on domestic wells to use as little as 0.25 acre-feet per year (J. McGowan, interview, July 17, 2003). Napa County's "fair share" allotment limits households to 0.3 acre-feet per acre of land (C. secheli, interview, September 10, 2002). Generally, such amounts will be sufficient only to cover indoor uses. In Colorado regions overlying fully allocated groundwater basins, the restriction on outdoor uses is explicit: For parcels under 35 acres, the state issues domestic well permits for indoor use only (Colorado Division of Water Resources, 2002). Enforcement methods vary. Santa Fe still depends largely on trust; Napa's well users submit annual use reports and must allow property inspections.

The Central Arizona Groundwater Replenishment District (CAGRD)

Only Arizona has a policy to facilitate development in groundwater-dependent areas. In the greater Phoenix and Tucson regions, which have access to CAP surface supplies, developers building outside the service areas of designated utilities have two options: (1) purchase a 100-year supply of "extinguishment credits" by retiring agricultural land using groundwater; or (2) subscribe the new homes to the CAGRD (ADWR, 2001a). Over the required 100-year period, the CAGRD agrees to artificially recharge groundwater used by subscribed homes with CAP supplies (see http://www .cagrd.com). Homebuyers pay for this service through their annual property taxes.

Although developers lobbied strongly for the creation of the CAGRD, its use has surpassed all expectations (K. Jacobs, interview, August 8, 2003; C. Neal, interview, October 7, 2003). From 1996 to 2002, the program issued certificates for 99,472 new homes, corresponding to 24% of residential construction permits statewide and 27% within the CAGRD region.6

Interest in the extinguishment credit program, meanwhile, has not been great. Only one Phoenix-area development (roughly 1,500 homes) was approved based entirely on this method. Several utilities have purchased a modest number of credits (enough for 18,500 homes) to support their overall water portfolios.7 The extinguishment program is somewhat unattractive to farmers because they can only sell rights to a portion of the groundwater that they are permitted to use in farming. It also imposes up-front costs on developers of at least $1,200, more than 10 times the cost of subscribing a home in the CAGRD (see Table 3). In present-value terms, the CAGRD's projected lifetime costs to homebuyers (just under $800) also appear more attractive, at least at current prices of replenishment water. However, homebuyers may be unaware of these future costs because disclosure is not required at the time of sale (Neal, 2003).

There has been some debate about whether the CAGRD can meet its long-run basin replenishment obligations. The CAGRD was established without its own longterm surface supplies and has relied on annual purchases of surplus CAP water. As CAP's municipal clients' demands grow, these surpluses will diminish. There is also a risk that land may subside within some subbasins, because many of the new homes that will withdraw groundwater are built far from the CAGRD's recharge areas. (Governor's Water Management Commission, 2001). Recent reforms, requiring a larger up-front subscription fee, are intended to give CAGRD management some financial flexibility to develop its recharge programs (C. Neal, interview, October 7, 2003).

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Evaluating Success

Water adequacy laws should not block development of new housing, but should encourage long-term planning so that water supplies are available to support growth. We consider policies to be successful if they protect the resource base while encouraging the development of new supplies. What does the record suggest about the various tools and approaches reviewed here?

Use Water Resource Fees to Fund New Supplies

We expect water adequacy rules to increase housing prices. Requiring developers to bring water to the table adds directly to their costs, which they are likely to pass on to homebuyers. Policies that limit supply, such as density restrictions and meter caps, may increase prices of the remaining housing stock. Because rising home prices may have negative economic and social consequences, it is important to consider which types of policies are least likely to reduce affordability while serving the intended purpose.

Water resource fees, which are in effect a type of impact fee, appear preferable to several alternatives. The theoretical literature on housing markets predicts that developers will largely pass along impact fees in home prices, and most empirical studies confirm this result (for a recent review, see Ihlanfeldt & Shaughnessy, 2004). Nevertheless, the evidence suggests that water is not yet raising home prices by much (see Table 4). Water resource charges fall well below 1% of median home prices in all Arizona cities within the CAP service area, and are projected to be no more than 1.3% in Prescott, which faces significantly higher water development costs. In Colorado, where fees are highest, they do not exceed 4% of home prices. By comparison, impact fees are often significantly higher for other services, including the basic water and sewer connection fees charged to build local infrastructure.8

Scale economies mean charging fees and making utilities responsible is generally preferable to asking developers to find their own water. Because fees are more flexible (and legally limited to the incremental costs imposed by new homes) they are also less likely to drive up housing prices than quantity limits (Altschuler & Gomez, 1993). As long as homebuyers are willing to pay the incremental cost of new water, fees do not limit new housing, whereas quantity restrictions operate like a form of exclusionary zoning, limiting new housing and keeping the prices of existing homes high.

Equity arguments against impact fees are also relevant to water resource fees. For example, they usually account for a higher share of costs for lower-priced housing (Levine, 1994; Nicholas, 1992). In response, many communities waive fees for low-income housing. For instance, the City of Santa Fe purchased retrofit credits for this purpose following the introduction of its Water Budget Ordinance.

Some Quantity Controls May Be Unavoidable

Quantity limits may nevertheless be a better tool for ensuring water supply adequacy in some places. An effective fee-based system requires sound information on long-term supply options and costs and a local entity able to undertake the necessary investments. In exurban areas where these conditions are lacking, density restrictions may be a practical alternative. Likewise, if utilities are not confident in their ability to mobilize new water at any reasonable price, meter caps enable them to ensure they do not overcommit their resources. To guard against communities using caps to limit growth, programs should require relaxing these restrictions if developers can mobilize new supplies.

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Santa Fe County's experience with density restrictions illustrates the dilemma facing some water-short areas. After nearly two decades, the land use department conceded that its large-lot zoning policy had worked well to limit overall water consumption, but had also unintentionally limited land for housing and caused low-density sprawl (J. McGowan, interview, July 17, 2003). The county's new Growth Management Plan aims to allow denser development in designated village centers (Santa Fe County, 1999) although finding the requisite water supply has proved daunting.

Regional Approaches Can Expand Supply Options

The best way to limit recourse to quantity controls is to develop regional approaches for expanding supplies. Joint projects allow utilities to pool resources and to capitalize on the scale economies associated with most new supply technologies. Such collaborations require utilities to put aside their traditional rivalries and relinquish some independence. Joint projects are on the rise in California and Colorado. Arizona's CAGRD is an example of the state creating a centralized management system for groundwater replenishment, and it significantly lowered the costs of water supply in areas without large utilities.

Loopholes Attract Development

Most water adequacy laws have loopholes, most notably in their treatment of development on domestic wells. "Wildcat" subdivisions (those with fewer than five or six units) are not subject to state adequacy laws in Arizona, Colorado, and New Mexico. Thus builders can avoid water fees or other requirements by developing at a small scale. Households may drill wells for their own use without going through the water rights application process (Glennon & Maddock, 1997). Such wells are permitted even in fully appropriated basins, where the only way for larger developments to obtain access to groundwater is to purchase someone else's water rights.

People we interviewed in Arizona, Colorado, and particularly New Mexico expressed concern over this (see also Belin, Bokum, & Titus, 2002; New Mexico Office of the State Engineer, 2000). The evidence suggests that these concerns are warranted. Table 5 shows the share of homes constructed between 1995 and 2002 that rely on domestic wells, compared to the share of all homes on domestic wells in 1990 (the last Census that recorded this information). The difference is our rough estimate of the "loophole effect." In all three states, new homes have been moving off the grid.

The increase is greatest in New Mexico, where a larger share of the population already relied on domestic wells. Wells are particularly attractive in New Mexico because backlogs in adjudication have made it very difficult to purchase water rights (Turney, 2001). In Colorado, the share of new homes on wells is nearly twice the 1990 level. In Arizona, the relatively small difference probably understates the loophole effect, because domestic wells there may pump 10 acre-feet annually, enough for several homes. However, the loophole effect may actually be lower in the Phoenix and Tucson areas of Arizona, where the CAGRD has reduced the pressure to circumvent water charges and restrictions. In the Prescott area, however, state officials estimate that domestic wells account for one third of all water use.

For different reasons, this loophole does not exist in Nevada or California. Nevada encourages local authorities to submit all subdivisions for review (K. Suchsland, interview, August 26, 2003) and requires domestic wells in overdrafted basins to retire the amount of groundwater rights for which they apply. In California, local control of well permitting has prevented using wells to skirt regulations. New homes in these two states have been moving onto, rather than off, the grid.

Use Water Adequacy Law to Encourage Conservation

Utilities and local governments can use water adequacy requirements to prod developers to adopt water-saving technologies they might otherwise choose to avoid. In the first 2 years under California's new state adequacy laws, for instance, a third of all projects reviewed were required to introduce recycled water or additional conservation measures as a condition of approval (Hanak, 2005). These technologies are easiest to introduce for new construction, and they can generate long-term water savings.

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Conservation by Existing Users: An Untapped Resource

Whereas conservation in new homes reduces water demand growth, conservation by existing users can free up supplies. Per capita water use is still high in many western communities, and the potential for savings is great. For instance, a recent California study (Gleick et al., 2003) estimated that nearly one third of urban water use, enough for 4 million new homes, could be saved cost-effectively with existing technology. Although some utilities have started tapping this resource to make room for growth, they face significant challenges in getting the public to go along. The issues are somewhat different for indoor and outdoor conservation.

Retrofitting older homes and businesses with more efficient indoor plumbing has few adverse effects for existing residents, so the key question is what incentive will produce the needed results. Many utilities partially rebate the cost of the improvements; the more aggressive "conservation offset" programs described above cover costs in full.

There is greater potential for savings in outdoor water use, however. Existing neighborhoods were generally grandfathered when cities adopted landscaping ordinances, allowing them to maintain their outdoor watering. Many homeowners' associations have restrictive covenants requiring well-watered lawns. As the cost of new water continues to rise, the question of whether outdoor water use is an entitlement for existing homeowners or a resource to be shared will become more pressing.

Increasing block rates (IBRs), which charge a higher price for higher levels of use, are one way to encourage conversion to low-water landscapes. They also have equity benefits, because lower-income households tend to use less water. Although western states are ahead of other regions in adopting IBRs, they are still not widespread (see Table 6). Moreover, IBR rates are often too low to induce landscaping changes (Michelsen et al., 1999; D. Rule, interview, August 25, 2.003). Political opposition is a potential obstacle to rate reform, because unhappy ratepayers can vote utility boards out of office.9

Another strategy is to offer incentives for conservation like the Southern Nevada Water Authority's turf rebate program, noted above. But conservation may be unpopular among those who support water adequacy laws in order to limit growth and protect the quality of life for existing residents. Placards at a recent demonstration in Las Vegas summed up the sentiment nicely: "If we can't water our lawns, why build more yards to water?" (Goldman, 2003). In fact, some residents resist conservation precisely because the saved water could be used for growth. An anti-growth citizen's group in Folsom, California, near Sacramento, successfully campaigned against the introduction of meters (Hanak, 2005). But the problem is widespread: among California jurisdictions which screen for water adequacy, only 44% use IBRs, and 10% do not meter water use. Under western water rights law, communities are largely free to determine what constitutes appropriate use. This system gives an advantage to communities with access to ample, low-cost supplies compared to those where water is scarcer.

Implications for Planning

Sound water planning explores the full portfolio of options to ensure that long-term supply will be adequate. Although the main responsibility lies with water utilities, they cannot work in isolation. If they wish to consider using recycled water, they must coordinate with wastewater utilities. Many supply options will be more viable as joint ventures, which state and federal financial incentives could encourage. Water and land use planners should interact because land use decisions affect water demand. All of these entities need effective public outreach to implement successful conservation and recycled water programs.

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The most comprehensive water planning law is California's 1983 Urban Water Management Plan Act, under which utilities must submit long-term plans every 5 years. Although compliance is not perfect, the law has clearly strengthened local planning (Hanak, 2005). Local ordinances requiring water-wise landscaping or "retrofit on resale" can encourage conservation, as can water rate reform. When communities cannot arrive at consensus on the need for conservation, states may need to step in. So far, Arizona is the only state that explicitly incorporates conservation obligations in its water adequacy requirements.10 California's legislature recently moved in this direction by requiring all water utilities to phase in meters. However, loopholes that undermine resource protection can be difficult to close, as repeated, unsuccessful efforts to curb domestic wells in both New Mexico and Arizona demonstrate.

Conclusion

Reviewing water availability before approving new subdivisions can help protect communities from unforeseen water shortages, but if it is too restrictive, it can drive up home prices. If it is too lax, it won't prevent resource depletion. The challenge is to strike a balance, to protect the resource base while keeping housing affordable.

To limit effects on affordability, policies should encourage the development of new water supplies where these are necessary. A fee-based system may be the best way to streamline this process while taking advantage of scale economies. Making developers find their own water is likely to be more costly and time-consuming. Density limits and meter caps pose the greatest threats to affordability, by restricting housing supply.

The biggest threats to the resource base arise from low-cost loopholes. In several states, domestic well exemptions appear to be driving development off the grid. Closing these loopholes is essential, not only for basin protection, but also to avoid other unintended consequences of exurban sprawl.

Conservation targets housing affordability and resource protection goals simultaneously. To date, most conservation efforts have focused on reducing water use in new homes, particularly through low-water landscaping. Water rate reforms could provide existing users, who remain largely unaffected, with incentives to conserve. Many western communities have not yet adopted increasing block rates, and those that do often set rates too low to be effective. Given the political resistance to rate increases, compensating residents for conservation investments (funded by impact fees) may be a practical alternative. States may need to prod communities slow to take up the conservation challenge.

Success in meeting these goals requires conscientious long-term planning and effective interactions between water and land use planners. The prolonged southwestern drought highlights the necessity of planning for climatic risks and responding flexibly when droughts occur. If, as some models predict, the west is entering a period of greater climatic instability, these skills will only grow in importance.

Acknowledgements

We wish to thank the many people who gave their time for interviews and who provided data during the course of this research, and Michael Teitz, Caitlin Dyckman, Rob Valletta, Rita Maguire, four anonymous reviewers, and the editor for helpful comments on earlier drafts. Responsibility for any remaining errors is our own.

[Reference]  »  View reference page with links

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