Banking on Water: The Importance of Municipal Access to Stored Credits

Over the years, you, along with family and friends, have put money in a bank to save for emergencies or retirement. You know you will need to start using your savings in six months, but the bank is not telling you for certain whether you will be able to make that withdrawal, how withdrawals will work, how much of your funds the bank will let you withdraw, and even questioning whether you need the money at all. It’s safe to say you would be frustrated and confused, at the very least.  

This is the situation facing municipal water providers who receive Colorado River water through the Central Arizona Project (CAP). In less than six months, reductions in Colorado River supplies are coming. While the exact amount of these reductions remains uncertain, the ten AMWUA cities, Tucson, and other water providers do not know whether the Arizona Water Banking Authority will distribute their water “savings” necessary to offset cuts to their Colorado River water next year. 

So, what is the Arizona Water Banking Authority (AWBA)? The AWBA was created in 1996 to store excess Colorado River water underground that was not being used at the time by Central Arizona cities and industries, also known as municipal and industrial (M&I) providers. This allowed Arizona to fully use its Colorado River apportionment and save that water for a not-so-rainy day. The cost of storing this water was paid for by the residents served by these M&I providers and is intended to benefit those taxpayers when shortages like the one we now face occur. Much like withdrawing your savings from your bank account when an unexpected large expense or loss of income occurs, M&I water providers planned to be able to recover (pump) their stored water (credits), which would “firm” or offset the Colorado River cuts those water providers would experience in a given year. 

Over the past three decades, while the AWBA stored water, it did not explain how those credits would be distributed and recovered by M&I providers. Over the years, efforts to discuss and clarify how the withdrawal of the credits would be carried out failed to provide certainty. If the five-member commission that oversees the AWBA envisioned an alternative to fully firming M&I subcontractors, that discussion should have occurred with its customers and been resolved well before now. As a result, the AMWUA cities and other water providers are not certain they will have access to their crucial water savings when they are needed.

With a Colorado River shortage imminent and planning time short, the AMWUA cities expect the AWBA to fully firm all M&I subcontractors as required by law. The Arizona Revised Statutes unambiguously state that the Water Bank “shall distribute” credits generated using the money of taxpayers served by M&I subcontractors impacted by Colorado River shortages. The use of the word “shall” removes any discretion from the AWBA.  [A.R.S. § 45-2457(B)(7)]

State law also requires distribution “to the extent necessary to meet the demands of CAP’s municipal and industrial subcontractors,” meaning the credits must be provided in the amount required to fulfill M&I CAP water requirements during shortage. If the Legislature had intended proportional reductions or prioritization among uses or users, it would have said so. No other entities in the state are better positioned to know what is needed than the cities (M&I providers), which are on the front lines of delivering water to their communities during times of shortage. They will need to utilize many tools to effectively deal with Colorado River cuts, including having access to their Bank credits.   

The Lower Basin States – Arizona, California, and Nevada – have proposed a two-year plan to address Colorado River shortages that would involve large cuts to Arizona’s Colorado River supplies and additional efforts to preserve storage in Lake Mead. The AMWUA cities and other water providers are being asked to support the Lower Basin States’ proposal by contributing water to be left in Lake Mead in addition to Colorado River cuts next year. To make such critical decisions, they need to know now that they will have access to the Water Bank’s resources, which their residents invested in for this exact moment.  

The AWBA should clearly state, as soon as possible, that the Bank will distribute credits to firm CAP municipal and industrial users in 2027 — as required by statute — so that water providers and industrial users can prepare and make decisions to best meet the needs of their communities and to work with their neighbors.

For 57 years, the Arizona Municipal Water Users Association has worked to protect our member cities' ability to provide assured, safe, and sustainable water supplies to their communities — Avondale, Chandler, Gilbert, Glendale, Goodyear, Mesa, Peoria, Phoenix, Scottsdale, and Tempe. For more information, visit amwua.org.