Some Cities Are Dying of Thirst

On today’s show we are looking at what is looming as a water crisis in parts of the United States.

It should not be a surprise to anyone that building a city in a desert is a bad idea.

We all need water to live and water shortages will forever alter the usefulness and value of real estate.

Many cities and towns in Arizona rely on groundwater for their primary drinking water. Some private wells compete with municipal water companies for the same resource.

In a rural area North of Scottsdale Arizona, residents in the area are being told that they will run out of water this December. Some developers have built new homes in the area and the municipal water district has refused new connections to the water supply. Some area residents have wells that are over 700 feet deep. Those wells are now dry. The Community of Rio Verde is facing an existential threat. Part of the problem is that the city’s infrastructure is 60 years old. It has leaks that result in the loss of about 33 million gallons of water annually. It will cost $130M in repairs just to stop the leaks. The city is looking for $130M in grant money because the city has exhausted their borrowing capacity.

Recent projections from water conservation engineers are suggesting that the Phoenix area will be uninhabitable by 2060.

The thing to remember, is that if water levels continue on their current trajectory, problems will arise long before 2060. We are already seeing water being cut off in the Community of Rio Verde Arizona in this year 2022. This will become increasingly common which will result ultimately in shrinking population. We have seen what shrinking population does to a city. You only need to look at Detroit to understand the impact.

As you look at investment opportunities, pay very close attention to the sustainability of city services.