The Indicator from Planet Money

Episode•January 6, 2025•9 min

The water mystery unfolding in the western U.S.

There's a rural area in Arizona with massive groundwater basins underneath the earth. Water should be plentiful there, but wells are running dry. Today on the show, what's behind the water issues in rural Arizona? Related episodes: Why Midwest crop farmers are having a logistics problem (Apple (https://podcasts.apple.com/us/podcast/the-indicator-from-planet-money/id1320118593?i=1000675829534) / Spotify (https://open.spotify.com/episode/7nbLrIBXZxVx8DjMhoCWSA?si=4cf4133e8ad44010)) Why the US government is buying more apples than ever (Apple (https://podcasts.apple.com/us/podcast/the-indicator-from-planet-money/id1320118593?i=1000675643138) / Spotify (https://open.spotify.com/episode/1wxeAPD6ZKD7HelOWcl8lR?si=5081ef9cdeef4c21)) For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org (http://plus.npr.org/). Music by Drop Electric (https://dropelectric.bandcamp.com/). Find us: TikTok (https://www.tiktok.com/@planetmoney), Instagram (https://www.instagram.com/planetmoney/), Facebook (https://www.facebook.com/planetmoney), Newsletter (https://www.npr.org/newsletter/money). To manage podcast ad preferences, review the links below: See pcm.adswizz.com (https://pcm.adswizz.com) for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences. Learn more about sponsor message choices: podcastchoices.com/adchoices (https://podcastchoices.com/adchoices) NPR Privacy Policy (https://www.npr.org/about-npr/179878450/privacy-policy)

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Transcript

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Npr. This is the Indicator from Planet Money. I'm Darren Woods. In December, Arizona's attorney General, Chris Mays held a press conference announcing a lawsuit against Fondimonte, a company that grows alfalfa in the state. She called its pumping of underground water excessive.

0:28

Excessive is dewatering nearby wells. Excessive is causing subsidence in a way that potentially damages infrastructure. Excessive is pumping so much water that it damages the quality of the water that remains.

0:49

And where this lawsuit may stand out is Fondomonte's ties to the royal family of Saudi Arabia. Zach Ziegler has been following the story for NPR member station AZPM in Tucson and water in general in the Southwest for the podcast Tapped. Welcome, Zach.

1:07

Hey, thanks for having me, Darian. As you know, this is all playing out in La Paz County. It's a rural area, like fewer than five people per square mile rural, with massive groundwater basins underneath it.

1:19

Right. So given that, you'd think the community would be flush with water. But residents there have been complaining about their wells going dry for some time now. That is leaving them with the choice to spend tens of thousands to dig deeper for their water or find a new home.

1:36

Yeah, and the issue goes deeper than alfalfa farming. A New York based private equity firm may also be part of it.

1:43

So today on the Indicator, what is behind these water tensions in rural Arizona? We've got foreign farms. We have New York private equity firms. Or could the problem be something else? That's after the break.

2:04

Holly Irwin is the longest tenured member of the La Paz County Board of Supervisors, and she's been worried about water for almost a decade. It's around that time that a news article tied Saudi Arabia to her community.

2:17

There was a reporter down and he broke the story about the foreign companies and, you know, coming and purchasing land for water resources and stuff.

2:26

That reporter Holly's talking about was from the center for Investigative Reporting. That outlet was the first to tell the story of Fondomonte, a company with major ties to the Saudi royal family.

2:37

Fondomonte has been growing a kind of hay called alfalfa in this area for years. And most of what it grows gets shipped back to Saudi Arabia to feed its dairy cows.

2:46

The company started farming in the Arizona desert because the kingdom was burning through its own underground water supply at an unsustainable rate.

2:55

They're growing hay because they can do it all year long here. They can ship it. You know, they're shipping it back to their country. And not only were they doing it on the land that they owned, but they were Also doing it on land that was leased by the state land department, for crying out loud.

3:10

Yeah. Until late 2023, Fondomonte was leasing around 6,500 acres from the state. More than half of those leases have gone away, either because they expired or were cancelled by the state's governor, Katie Hobbs.

3:25

But the bigger concern is what's going on on the 45,000 acres Fondamante owns. Arizona's water laws get really lax when you get outside of the big cities and a few other areas. Sharon Megdahl is the director of the Water Resources Research center at the University of Arizona.

3:41

There's basically no regulation on how much you can pump, provided that it's being put to reasonable use. And most of it is. I mean, agriculture is a reasonable use. Industry is a reasonable use. Municipalities are reasonable use.

3:58

But while farming alfalfa meets that reasonable use standard, as regulators see it, many locals would disagree. They take issue with a foreign owned company using their water to grow a crop that's mainly for export. Enfondamonte has about 30 wells. The biggest can pump about 3,000 gallons of water a minute.

4:19

And Holly says pumping all of that water is causing issues for plenty of people who rely on their own wells because there's no water utility in their area.

4:28

I started getting phone calls from residents that were having issues with their wells, and one specifically was right up the road from where Fonda Monte's at a little church. They've been out of water now for about four or five years.

4:41

Saudi Arabia is not the only country that's doing this either. Local water utility managers told me that a United Arab Emirates company leases land to the northeast of Fondamante to grow alfalfa as well.

4:54

Interestingly, though, Zach, when you were reporting this story, you were told by the local water district manager that those operations have been slowing lately, and you might have found out why.

5:04

Yeah, it's a twist. That could be the future of water issues in La Paz County. In early July, that farmland leased by the UAE was sold to a New York based private equity firm called Water Asset Management. The firm paid about $100 million for 13,000 acres of farmland.

5:22

Okay, this is a twist. And what are the locals making of this development?

5:27

Well, they're saying it as a sign that nearby big cities in Arizona are thirsty for water, too. They fear the private equity firm plans to pump their underground water, then sell it to growing cities like Phoenix and Tucson. Sharon says that's not a new idea. Back in the 1980s, Arizona's big cities were trying to do Something similar.

5:48

Cities were buying what some would call water farms. They were buying land in rural Arizona with the intention or expectation at some time in the future they would pump groundwater from those areas and pump that water into the cities.

6:05

State lawmakers did outlaw that practice, though, before it happened. But they left some loopholes in the law that exempted certain rural basins, including much of La Paz County.

6:16

Either way, all of this minutiae about water regulation and basins being set aside for transfer in rural Arizona has left Holly Irwin's head spinning.

6:26

It's definitely been an eye opener. I wasn't aware of it, but, you know, like this job, you learn something new every day. And once I found that out, it made me sick. I really thought, who on earth would ever. What were the lawmakers thinking at that time?

6:41

Holly and other lawmakers have pushed for new laws, but a bill they backed in last year's legislature didn't make it out of committee.

6:49

And by the way, we reached out to Fondamante and Water Asset Management several times over the span of four months of reporting on this for an interview or comment, and we didn't receive a reply from either until the lawsuit we heard about.

7:03

At the start of the show, Fondomonte issued a statement through a spokesperson saying Fondimonte remains committed to progressive, efficient agricultural practices on all its operations. It added that Fondimonte is not in violation of any state law. It it then ended with we find the allegations of the Attorney General totally unfounded and we will defend any potential action against Fondomonte and our rights vigorously before the competent authorities.

7:28

That note about not violating state law is something that bothers Hawley, who was the other speaker at the Arizona Attorney General's press conference. She says the fact that the state's water laws haven't been updated in more than 40 years is a big part of the issue.

7:43

You know, the laws that were created in 1980 just frankly don't work anymore and we need an alternative, but we need the legislature to work with us and allow us to create something for the betterment of the people that we all serve.

7:59

If you want a deeper dive into this topic, Check out tapped AZPM's podcast about water in the Southwest. They did four episodes on this, going all the way back to before the US Civil War. Thank you, Zach.

8:11

Hey, thanks for having me, Darian. This episode was produced by Cooper Katz McKim with engineering by Gilly Moon and Neil Tiefoldt. It was fact checked by Sierra Wattis. Kate Kincannon edits the show and the indicator is a production of NPR.

The water mystery unfolding in the western U.S.

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