June 5, 2023: Arizona will not allow new housing building in the Phoenix area that depends on groundwater. This decision comes as the state grapples with a multi-decade drought and diminishing water supplies.

During a news briefing on Thursday, Arizona Gov. Katie Hobbs announced the restrictions that could impact the quickly expanding suburbs around Phoenix. The decision by the Arizona Department of Water Resources applies only to groundwater supplies and would not affect current homeowners who already have an assured water source.

A megadrought has generated the driest from 20 years in the West in at least 1,200 years, and human-caused climate change supporting to fuel the conditions. Water sources are declining across the U.S. West, and restrictions on the Colorado River are impacting all sectors of the economy, including construction.

Earlier this year, Arizona projected that developers who plan to build houses in the desert west of Phoenix need more groundwater supplies to execute those plans.

A more recent analysis found that roughly 4% of the area’s demand for groundwater, nearly 4.9 million acre-feet, would not be met over the next 100 years. An acre-foot of water is about what dual average households consume per year.

The decision would allow developers to continue to build in the affected areas but would require them to find alternatives to groundwater supplies. During a nationwide housing shortage, developers hope to construct homes in growing metropolitan regions such as Phoenix despite water shortages.

Arizona developers have said they can work around dwindling water supplies, pointing to low-flow fixtures, drip irrigation, and desert landscaping technology. The state’s restriction could also prompt developers to seek out other water sources, such as purchasing access to river water from farmers.

Despite the restriction, the governor said Arizona isn’t running out of water and is equipped to manage the situation.

“My message to Arizonans is this: we are not out of the water, and we will not be running out of water because, as we have done several times before, we will tackle the water challenges we face with integrity and transparency,” Hobbs said.

The announcement comes as Arizona experiences disappearing groundwater and diminishing levels from the drought-stricken Colorado River, which provides water to 40 million people in the U.S. The state receives roughly 2.8 million acre-feet annually from the Colorado River, or about 18% of the total allocation.

Last month, Arizona struck a deal with California and Nevada to voluntarily reduce their water usage from the river in exchange for federal funding. Arizona has endured two rounds of mandatory water cuts from the river over the past two years.