In the midst of Arizona’s historic drought, a Saudi company is tapping into its groundwater

Along with its arid neighbors, Arizona is 23 years into a megadrought. Some say it might be the worst drought since 800 A.D.



Yet, despite that, a Saudi company has been pumping the groundwater out of Arizona soil for nine years, which it uses to grow crops to feed its cattle 8,000 miles away. That’s just one example Arizona’s glaringly nonrestrictive water management even in the face of unprecedented water shortage.



The historic drought has brought Arizona’s unique laissez-faire water system to light. The state allows unregulated groundwater pumping in its rural areas, benefitting ordinary farmers in the short run, but also allowing out-of-state and foreign corporations to take advantage of the resource. As the drought worsens, ordinary Arizonans see the need for more regulation, and the new Democratic governor is trying to usher in new legislation before it’s too late.



Forty percent of Arizona’s water supply is from groundwater—that is, water accumulated in cracks and crevices between soil and sand, which collects in aquifers, underground layers of permeable rock. Water is extracted by drilling into the aquifers and pumping it out through wells.



But Arizona has one of the most lax systems for pumping, which Natalie Koch, a political geographer and a professor at Germany’s Heidelberg University, calls a “wild west” approach. “You can pump as much water as you want, and nobody is checking,” she says. It stands out from the six other states in the Colorado River basin—California, Nevada, New Mexico, Colorado, Utah, and Wyoming—which all regulate their pumping.



Before 1980, groundwater access was a complete free-for-all. But that year—only after federal pressure—the state passed the Arizona Groundwater Management Act, which somewhat limited and regulated pumping in the most populous and fast-growing areas, including Phoenix and Tucson. Still, that leaves the rest of the state with an unregulated system, one that Haley Paul, policy director for Water for Arizona, calls a “help-yourself” system.



And entities have certainly helped themselves. Most notably, in 2014, Fondomonte, the parent corporation of Saudi company Almarai, the largest dairy company in the Middle East, purchased 3,500 acres of land in Butler Valley in Western Arizona. It was one of many land acquisition deals that the Saudis made after depleting most of their own groundwater, explains Koch, who has written a book about the “entangled fates” of Arizona and Saudi Arabia.



Fondomonte leased the land from the state for well below market value (the new Democratic Attorney General has called for an investigation of the previous administration as to why the price was so low). Then, they built more wells and drilled deeper than before, in order to produce eight or nine harvests of water-intensive alfalfa each year to send to feed their cattle at home. That amount of water is roughly the equivalent of what 54,000 homes would use every year.



While the Saudi deal is notable in highlighting the broader problem, the water it pumps is only 2% of the basin. Domestic companies have similarly capitalized across the state, including a Minnesota dairy corporation and various California farms facing stronger regulation in their state. “Who’s the bad guy here?” Paul asks. “I would like to posit that it’s ourselves. We are allowing . . . outside interests to come in and suck the aquifers dry for their own benefit.”



The wider impact is clear: A 2019 study of statewide wells by The Arizona Republic found water levels in one in four wells had dropped by more than 100 feet since they were first drilled. Some communities have even been left with no water at all, where homes were built without considering residents’ future water needs, and where wells have dried up.



One reason the status quo has endured since 1980 is that there was confidence in other reserves. The next water major source, after the groundwater, is the Colorado River, which supplies 36% of Arizona’s water—but also supplies the six other basin states.



If the groundwater supply has a “help-yourself” system, water from the river is “first-come-first-served.” Arizona has “junior rights,” meaning it came to the table later and has less of a claim than senior states like California. The six smaller states are in discussions with California to agree on a system going forward, but they’re currently in a stalemate.



Conservative attitudes in deep-red rural areas have also allowed the laissez-faire structure to remain, where people have favored less government oversight. But in the face of the mega-drought—exacerbated by climate change, with hotter temperatures causing less runoff—many are changing their minds. “I think that attitude is coming to an end in Arizona, whereas it had prevailed for a long time before,” Koch says.



Some change is bubbling up on local levels. In November 2022, the rural Douglas Basin voted to bring regulation to its community, marking the first time since 1980 that a region’s groundwater has become regulated in the same way as the state’s urban areas. But that approach failed right next door: Willcox Basin, in the same county, voted no.



That’s why change on the statewide level will be important. There’s hope: Democratic Governor Katie Hobbs, who made the Saudi deal a talking point in the 2022 election, focuses on the issue. Hobbs signed an executive order to establish a Water Policy Council to “modernize” the 1980 bill and to close “groundwater poaching loopholes.” The council setup is still underway.



Paul suggests a compromise that isn’t all or nothing. She says each community could choose for themselves from a menu of options, which may not cover all the policies that the regulated parts of the states have instituted but which would at least put a stop to some of the “most egregious things.” For instance, policies could include only permitting new housing developments if builders can prove new homes would have water access for the next 100 years. She was part of a coalition to propose a legislative bill with this approach—which is now stalled in the GOP-led statehouse.



In the meantime, the drought rages on. A rare good winter, with the highest snowpack in 30 years, was a boon to refilling reservoirs—but only temporarily so. “We all know that one wet year does not get us out of a 20-plus-year drought,” Paul says. “We’ve got to manage water resources wisely, because we don’t know how long the next dry spell is going to be.”