Where our water comes from today
Arizona runs on groundwater and the Colorado River, and farms use nearly three quarters of it.
Phoenix and Scottsdale sit at the end of the Central Arizona Project canal, a 336-mile ditch from the river. Scottsdale draws about 70% of its supply from the Colorado River.
In August 2026 the federal government finalized new river rules because the seven states could not agree. Arizona's share drops by 760,000 acre-feet a year in 2027 and 2028, about 27% of its allocation. The cut starts January 1, 2027.
Where the next water can come from, cheapest first
| Source | Cost | Per 1,000 gallons | How fast |
|---|---|---|---|
| Pay farmers not to farm | $250-400 per AF per year | $0.77-1.23 | 1-2 years |
| Water already in the bank (storage credits) | $550-640 per AF, one time | $1.69-1.96 | now, but limited |
| Brackish desalination | $1,100-2,200 per AF | $3.38-6.75 | 3-7 years |
| Recycled to drinking standard | $1,700-1,900 per AF | $5.22-5.83 | 5-10 years |
| Seawater, delivered to Phoenix | $3,500-5,000 per AF | $10.74-15.34 | 15+ years |
Farm water costs 3 to 6 times less than brackish desalination and 10 to 20 times less than seawater delivered to Phoenix. Water in Arizona trades today at about $500 to $640 per acre-foot, and your utility sells it to you for $590 to $2,940 depending on how much you use.
Why we are not already buying the farm water
- The cheap farm water is mostly gone. CAP's farm pool is dry, so central Arizona growers are on groundwater and fallowed fields. What is left to lease is river water in Yuma, which is senior, protected, and grows most of the country's winter lettuce.
- The big programs are in California. IID and Palo Verde run the real fallowing programs, and their water goes to San Diego and Los Angeles.
- Farm water is a one-year deal. A farmer who fallows takes a payment, keeps the land and the right, and can plant again next year.
What this means for a household bill
| Monthly use | Today | 2030 | 2040 |
|---|---|---|---|
| 4,000 gallons | $8-24 | $10-30 | $17-50 |
| 8,000 gallons | $28-43 | $35-55 | $59-92 |
| 15,000 gallons (pool, big lawn) | $64-102 | $78-129 | $136-216 |
Water only, before sewer and taxes. The band shows the Phoenix-to-Scottsdale range.
The 2030 number is mostly already decided: Scottsdale adopted a 4.5% increase for November 2026 and Phoenix raised rates 26% across 2023-2025. The 2040 number is a projection at about 5.5% a year. If the Valley has to buy its way out of the shortage at $1,500 to $3,000 per acre-foot, add another 20% to 40%.
A large share of a residential bill is fixed charges for pipes, plants and debt, so using less water does not cut your bill in proportion. And the low tiers are subsidized by the high tiers: a careful household in Scottsdale pays $1.80 per 1,000 gallons while the water costs the city roughly $1.15 to $1.95 to acquire.
What this looks like in one real town
Queen Creek, southeast of Phoenix, is the cleanest example in the state because it is doing the thing every other suburb will have to do, and sending itself the bill.
| Water accounts | 46,000, using 28,500 acre-feet a year, 67% of it outdoors |
| Where its water comes from today | 90% groundwater, 8% effluent, 2% Colorado River |
| What it bought | 1.7 million acre-feet of Harquahala groundwater for $285 million, a 100-year supply of 17,000 acre-feet a year |
| How it collects the money | A new water resource fee of $3.07 per 1,000 gallons, phased in over five years |
| What that is per acre-foot | $1,000 |
| When it starts | Council vote November 18, 2026; effective January 27, 2027; first bills March 9, 2027 |
A household using 10,000 gallons a month pays $30.70 in year one, minus a $12.28 credit for the water it returns through the sewer system, plus a $39.44 delivery fee: about $58 a month. A water-only customer with no sewer account pays about $70. One resident told the Washington Post his bill goes from $130 to more than $500 a month as the fee phases in.
Two things make this honest rather than alarming. First, 89% of Queen Creek customers currently pay a groundwater replenishment charge through CAGRD on their property tax bill, and this fee replaces it, so part of the shift is from the tax bill to the water bill. Second, the town is buying a 100-year asset, not paying an annual lease.
But the number to remember is $1,000 per acre-foot. That is 2.5 times what farm water costs and right in the middle of the brackish desalination band. This is what finding new water actually looks like on a bill.
What this means for a business
| Today | 2030 | 2040 | |
|---|---|---|---|
| Top-tier commercial rate, per 1,000 gallons | $6.55 | ~$8.00 | ~$13.85 |
| Small shop, 10,000 gallons/month | ~$108 | ~$130 | ~$225 |
| Restaurant, 40,000 gallons/month | ~$286 | ~$350 | ~$600 |
| Car wash, 120,000 gallons/month | ~$810 | ~$985 | ~$1,715 |
| Hotel, 250,000 gallons/month | ~$1,660 | ~$2,025 | ~$3,520 |
Water only, before sewer. Scottsdale's commercial schedule with a 2-inch meter base fee.
The businesses most exposed use water as an input, not a convenience: car washes, laundromats, restaurants, hotels, landscape and pool contractors, and anything cooling with evaporative systems. Recycling is already standard in the car wash industry because it cuts both the water bill and the sewer bill.
What would push bills higher or lower
Higher
- A dry winter in 2027 or 2028. The new rules allow cuts of up to 3 million acre-feet a year in bad conditions, against 1.25 million today.
- A court loss for Arizona. Both Arizona and Nevada are suing over the federal plan.
- Storage credits running out. Those credits are a bridge, not a well: they are single use, new deposits have nearly stopped, and CAP's model has the region drawing down 3.6 to 4.2 million acre-feet of them in a serious shortage.
Lower
- Wet years and a full Lake Mead. Prices would flatten, not fall, because the rate increases are already adopted.
- Arizona starting its own fallowing program. At $400 per acre-foot, 500,000 acre-feet costs $200 million a year, about $105 per household per year, versus $1 billion for the same water as desalination.
- Cheaper recycling at scale.
Sources
- Interior Department, 2027-2028 Operating Guidelines and Record of Decision (Aug 21, 2026)
- CAP Arizona Reconsultation Committee Meeting #14 (Aug 24, 2026) — priority pools and the 760,000 AF split
- ABC15: Arizona enters new water year ahead of historic Colorado River cuts (Sept 30, 2026)
- ABC15: How priorities and tribal leases shape who gets cut (July 31, 2026) — the 36/41/18/5 supply split and 72% farm share
- Cronkite News: Colorado River cuts haven't hit Arizona farmers yet, but that might be coming (Sept 10, 2026)
- Central Arizona Project, 2027-2032 Water Rate Schedule (board approved)
- City of Scottsdale, Water and Sewer Rate Report FY2026/27 (April 3, 2026)
- City of Scottsdale Council report: 15,000 acre-foot long-term storage credit purchase at $550/AF (June 23, 2026)
- City of Phoenix, Water and Wastewater Utility Bill Comparisons (April 2026) — rate card, units and raw water charge
- City of Phoenix Water System continuing disclosure (Feb 2026) — the 2023-2025 rate increases
- Imperial Irrigation District, 2026 Deficit Irrigation Program — $334/AF
- Reclamation, Coachella Valley conservation agreement — $400/AF fallowing
- Metropolitan Water District, audit of the Palo Verde fallowing program (April 2025) — $1,002.65 per fallowed acre
- City of San Diego, Pure Water FAQ — $1,700-1,900/AF for purified recycled water
- WestWater Research for CAP, Economic Impacts of Reductions in CAP Deliveries (Feb 24, 2026) — market prices, desalination and delivered seawater costs
- Town of Queen Creek, Water Self-Sufficiency Update (Fall 2026) — accounts, demand, supply mix and fee timeline
- Queen Creek Independent: New and increased water rates, fees being proposed (Sept 13, 2026) — the $3.07 fee and worked bill examples
- Washington Post: "Cheap water is over," a $500 bill shows a Southwest suburb's dilemma (Oct 25, 2026; archived copy, accessed Oct 26, 2026)
Prices are nominal dollars of the year shown; no inflation adjustment was applied across sources. 2030 and 2040 figures are projections, not adopted rates. Charts are drawn from the same figures.