Here’s how questions about water impact business attraction to Arizona
After the Great Recession, leaders in Arizona made a concerted effort to diversify the state’s economy — one that had previously relied heavily on homebuilding and tourism. That initiative has resulted in a deluge of new businesses coming to the Grand Canyon State, from semiconductor manufacturers to electric vehicle (EV) factories, along with their suppliers. But how does Arizona’s need for smart water management intersect with that status of Arizona as an ideal place to live and conduct business?
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Chris Camacho, president and CEO of Greater Phoenix Economic Council (GPEC), says that his discussions with organizations regarding locating in the region has shifted in recent years.
“The priority related to water has evolved,” he says. “If you go back 20 years, the conversation was about the tax and regulatory environment. Five years ago, it was all about talent. Today, water is one of the — if not THE top — priorities that companies want to talk about.”
As Arizona’s economy has become more dynamic, companies that the economic development community are speaking with are more capital intensive — such as Taiwan Semiconductor Manufacturing Company’s (TSMC’s) $40 billion investment in North Phoenix — and are more sensitive to risk, meaning questions about water supplies are as crucial as they are consequential to the state’s sustainable growth.
Talking Arizona, water and business
Headlines in national media outlets concerning the U.S. Department of Interior’s declaration of a Tier 2a shortage for the Colorado River has prompted companies outside of Arizona to ask more questions about the availability of water, Camacho says.
“I explain that [Colorado River water] is 36% of our state’s [water] portfolio, and a significant portion of our state’s utilization is still in agriculture use because we’ve historically had an agrarian economy,” he continues. “The shift to municipal, energy or industrial uses still is a small percentage of our water consumption.”
Arizona’s history of long-range water planning, such as the Groundwater Management Act of 1980’s requirements for housing developments in active management areas to have 100 years of water supplies, helps assure businesses that the tap won’t suddenly run dry.
“There’s no question there’s much more confidence once the company comes, evaluates the market and meets with the water experts at the municipal level and [the Salt River Project],” Camacho says. “I would argue that, if we weren’t doing our job well, we wouldn’t have TSMC, Intel’s expansion or the multitude of advanced industries that have continued to come [to Greater Phoenix].”
Many of the businesses also want to understand how municipalities are adopting more progressive water utilization plans. All 22 cities in the Valley have their own water strategy, and Camacho notes that over the past few years, municipalities have started weighing how a business would use and reuse water as part of their evaluation rubric, along with the type of industry, acreage needed, jobs created and zoning requirements.
“Water utilization and reuse is now a measurement of value, much like tax collections or the quality of jobs created,” Camacho says. “That’s a healthy thing. We’ve always been great stewards of water, but I think this is a whole other level of intensity in how we ensure that Arizona will have water for the next 100 years or longer.”
Grady Gammage Jr., founding member of Gammage and Burnham, agrees that cities in Greater Phoenix have become more interested in comparing water utilization between different kinds of land uses. A golf course and a water park both require a lot of water, but the latter serves more people per year, meaning the water use per capita is lower than a pristine 18-hole course.
“How does a chip manufacturing plant compare to a call center?” Gammage asks. “Those plants are intense water users, but they’re efficient, reuse a lot of water and they’re high value add [to the community], so you’re getting a lot of bang for your buck [regarding] water. A call center doesn’t use a lot of water per capita, but the wages are low.”
When asked about case studies of how industries have worked with cities on water reuse, Camacho points to Intel’s partnership with the City of Chandler. According to Intel’s 2020-2021 Corporate Responsibility Report, the company has a goal to “achieve net positive water use by conserving 60 billion gallons of water and funding water projects that restore more fresh water than we consume to our local watersheds” by 2030.
“It’s not well known that Intel has been shoring up a number of our watersheds here in the state, and the reuse of water is over 90%,” Camacho says. “The water that gets recharged and recirculated often goes to the aquifer or public uses.”
Arizona has a long history of farming, with the Valley itself being an agricultural powerhouse in its modern incarnation as Phoenix and practiced by the Hohokam people before that. Growing crops requires a considerable amount of water — approximately 50%-70% more than if a field is converted into another use. A field turned into residential development will use less water than if a manufacturing facility is built in its place, but either change will utilize much less water than conventional agriculture.
Unlike California and Colorado, where agriculture has typically been practiced outside the major population centers, much of the farmland in the Valley has been easily urbanized as the metro area sprawled in all directions.
“We’ve hit the end of that,” Gammage says. “To continue growing an urban area [in Greater Phoenix], we’re going to have to talk about what happens to farming [on the Colorado River].”
Camacho adds that economic developers and policymakers aren’t trying to wage a war on farmers. He spent four years in Yuma, where approximately 90% of the nation’s winter lettuce is grown, and says he understands the importance of agriculture to the state’s economy.
“You can’t just say that we’re going to take out agriculture as a strategy. Not only would that cripple the economy, but do we want to be importing food? Look how that’s manifested around the world — that’s not a good position to be in either,” he says. “But we also need to think about the selection of field crops. What are we growing that can be farmed in other areas of the country?
“This is not an us versus them issue,” Camacho concludes. “My hope is that we’ll tackle the problem collectively by looking at highest and best use [of land], and through investments that the state and federal government can make to help shore up farming capacity in Arizona.”