Is Arizona Running Out of Water? What Home Buyers Should Know
We live in the desert, so where does Arizona actually get its water? And should you be worried before you buy a home here? The honest answer is more interesting than either “we’re fine” or “we’re doomed.”
Quick Takeaway: Arizona is not about to run dry. Its water comes from four sources, not just the Colorado River, and the state has managed groundwater and stored water underground for decades. But the Colorado River is shrinking, deeper cuts to Arizona’s share start January 1, 2027, and buyers should know how to check a specific home’s water supply before they make an offer.
What You’ll Learn
- Where Arizona Actually Gets Its Water
- Who Uses the Most Water
- The Colorado River: What Is Changing in 2027
- What It Means for Scottsdale and the North Valley
- What to Check Before You Buy a Home
- Conservation Starts in the Yard
- So, Is Arizona Running Out of Water?
- Frequently Asked Questions
- Work With a Local Expert
Where Arizona Actually Gets Its Water
Arizona has a more diverse water supply than most people realize. There are four major sources: groundwater, the Colorado River, in-state rivers such as the Salt and the Verde, and reclaimed water.
Historically, statewide supplies have broken down like this, according to the Arizona Department of Water Resources (ADWR):
| Source | Share of Arizona’s Water Supply |
|---|---|
| Groundwater | About 41% |
| Colorado River | About 36% |
| In-state rivers (Salt, Verde and others) | About 18% |
| Reclaimed water | About 5% |
That mix matters. Because the Colorado River provides a little over a third of the state’s total supply, Arizona is less dependent on it than Nevada or California. The Colorado River is still the most talked-about source, and for good reason, which I’ll get to below.
Arizona has also been managing its water for a long time. The 1980 Groundwater Management Act created Active Management Areas, which meter and report groundwater use in the state’s most populated regions. Under the Assured Water Supply rules, a developer in those areas must show a 100-year water supply before a new subdivision can be sold. The Arizona Water Banking Authority, created in 1996, stores unused Colorado River water underground as a backup for dry years. And treated wastewater is reused across the Valley.
Who Uses the Most Water
This one surprises people. Agriculture uses about 72% of Arizona’s water. Municipal use, which covers our homes, businesses and communities, is about 22%. Industry is roughly 6%.
| Sector | Share of Arizona Water Use |
|---|---|
| Agriculture | About 72% |
| Municipal (homes and communities) | About 22% |
| Industrial | About 6% |
Sector figures are from ADWR and reflect its most recent statewide breakdown. As farmland converts to housing, the balance shifts over time toward cities.
None of that means homeowners get a pass on conserving. Outdoor use is where the opportunity is. It can account for as much as 70% of residential water use in the summer, and Scottsdale city officials have said roughly 65% of the water used by single-family homes in the city goes outdoors. Landscaping and irrigation are the biggest levers a homeowner has.
The Colorado River: What Is Changing in 2027
If you only read one section of this post, read this one. The Colorado River is the part of the water story that is actually changing, and it is the part most likely to show up in headlines while you are shopping for a home.
Where Things Stand in 2026
Arizona is currently under a Tier 1 shortage declaration. That cut Arizona’s Colorado River supply by 512,000 acre-feet this year, which is about 18% of the state’s Colorado River water and just under 8% of its total water use. Most of that reduction lands on users of the Central Arizona Project (CAP) canal, which carries Colorado River water to the Phoenix, Pinal and Tucson areas. Farms have absorbed most of it so far.
What Happens Next
The agreements that have governed the river for nearly two decades expire at the end of 2026. The seven Colorado River states were unable to agree on a replacement. The federal government stepped in: the Bureau of Reclamation released its final environmental review on July 31, 2026, and the Department of the Interior issued its Record of Decision and the 2027 to 2028 operating guidelines on August 21, 2026.
Under those guidelines, the Lower Basin states (Arizona, California and Nevada) face combined reductions of 1.25 million acre-feet per year. Arizona’s share is 760,000 acre-feet, starting January 1, 2027. That is roughly 27% of Arizona’s normal 2.8 million acre-foot Colorado River allocation, and about 48% more than this year’s cut. Arizona carries the largest share because it holds the most junior rights to the river among the Lower Basin states.
| Metric | 2026 (Tier 1 Shortage) | 2027 to 2028 Guidelines |
|---|---|---|
| Arizona Colorado River reduction | 512,000 acre-feet | 760,000 acre-feet |
| Takes effect | In effect now | January 1, 2027 |
A few important points of context. Nothing changes for the rest of 2026: ADWR’s director has said Arizona’s supplies are unchanged this year and the new cuts do not take effect until January 1, 2027. The 760,000 acre-foot figure assumes the Lower Basin states carry out their proposed agreement for sharing the reductions. And these guidelines cover 2027 and 2028 only. The longer-term framework, including how reductions are shared after 2028, is still being worked out, and Arizona’s leaders are pressing for changes.
I’ve watched Arizona water headlines come and go since 1981. This one is different in scale, and I won’t tell you otherwise. But “the river is being cut” and “Arizona is running out of water” are not the same statement.
What It Means for Scottsdale and the North Valley
Scottsdale is the market where buyers ask me about this most, so here is the specific picture.
Scottsdale relies on the Colorado River more than most Valley cities. About two-thirds of its supply comes from the Central Arizona Project, with city officials citing figures as high as 70%. Most of the rest comes from the Salt River Project, with groundwater wells as a backup. Some water policy experts have said Scottsdale is one of the most exposed cities in the region because of that reliance. The city’s position is that it has been planning for this for decades.
Here is what the city itself says today. There are no mandatory water-use restrictions on Scottsdale residents or businesses. The current Tier 1 shortage does not reduce Scottsdale’s municipal water supply. The exact effect of the post-2026 rules on Scottsdale is not yet known.
And here is what the city says it is doing to prepare. It is using its groundwater and stored-water credits to make up the difference when Colorado River deliveries drop. It is bringing new groundwater wells online. It is working toward advanced purified recycled water across its system, with a 2027 target. And it is pursuing additional water supplies and storage.
How much stored water Arizona cities will be allowed to recover from underground storage during shortages is still being clarified by the state Water Bank. That is one of the open questions to watch.
For a current look at the broader Scottsdale housing market, see the Scottsdale Market Update.
Paradise Valley, Carefree and Cave Creek each have their own water arrangements, and they vary by address. That is exactly why the next section matters.
What to Check Before You Buy a Home
Water is absolutely something to understand when you buy in Arizona. It is not a reason to avoid the market. It is a reason to do a little due diligence that buyers from other states don’t always think to do. This is the checklist I walk buyers through.
1. Who Is the Water Provider?
Most homes in Scottsdale, Paradise Valley and Phoenix are served by a city water system or a regulated water company. Some homes, particularly on larger acreage in parts of Cave Creek, Carefree and surrounding unincorporated areas, use a private well, a small water company or hauled water. Find out which one serves the property before you write an offer.
2. Does the Provider Have an Assured Water Supply?
In the Phoenix area, major cities and many large providers hold a Designation of Assured Water Supply from ADWR, meaning they have demonstrated a 100-year supply. Scottsdale has this designation for its service area. Ask whether the provider serving your home has one, and whether the home is in a subdivision that received its own certificate.
3. If There Is a Well, Inspect It
A private well needs its own inspection: pump, water quality and production. Well and septic systems are common in parts of Cave Creek and are not covered by a standard home inspection. See Moving to Cave Creek for what that due diligence involves.
4. Be Careful With Hauled Water
The Rio Verde Foothills, in unincorporated Maricopa County north of Scottsdale, is the cautionary tale. Residents there relied on water hauled from Scottsdale’s system until the city ended that access at the start of 2023, because the homes had been built without an assured water supply. A home that depends on hauled water has a much higher risk profile than one on a city system.
5. Ask About Water Costs and HOA Rules
Utility rates can change as cities invest in new supplies. Some HOAs also have rules on landscaping and irrigation. Ask for current water bills and read the community rules before you fall in love with a yard.
Conservation Starts in the Yard
Because so much residential water goes outdoors, the most effective conservation steps are also the most practical ones.
- Use native and desert-adapted plants instead of large turf areas.
- Put irrigation on drip lines and a smart controller instead of spray heads on a fixed timer.
- Water early in the morning and adjust the schedule by season.
- Check for leaks in irrigation lines, which are a common and expensive source of waste.
- Check whether your city offers rebates or programs for turf removal and efficient irrigation.
Desert landscaping is also a selling point. Buyers relocating from out of state increasingly ask about it, and a well-designed low-water yard can be an asset at resale.
So, Is Arizona Running Out of Water?
No, not in the sense that the taps are about to go dry. Arizona has a diversified supply, decades of groundwater management rules, water stored underground and a long record of cities planning ahead. Cities have also been using less water per person over time.
But it would be dishonest to say everything is fine. The Colorado River is overallocated and declining, Arizona holds the most junior rights and will take the largest cuts, and the long-term rules after 2028 are not settled. Expect water to cost more and outdoor use to face more scrutiny over time.
The bigger story isn’t simply that Arizona is a desert. It’s how we manage, conserve and plan for the water we have. For a buyer, that translates into a practical rule: understand the water supply of the specific home and community you are buying, not just the headlines about the state.
Frequently Asked Questions About Arizona’s Water Supply
Is Arizona running out of water?
Not in the sense of running dry. Arizona gets water from groundwater, the Colorado River, in-state rivers and reclaimed water. The Colorado River is shrinking, and deeper cuts to Arizona’s share begin January 1, 2027, but the state has managed groundwater and stored water underground for decades and cities have plans in place.
Where does Arizona get its water?
Historically about 41% from groundwater, 36% from the Colorado River, 18% from in-state rivers such as the Salt and Verde and 5% from reclaimed water, according to the Arizona Department of Water Resources.
Who uses the most water in Arizona?
Agriculture uses about 72% of Arizona’s water. Municipal use, which includes homes and communities, is about 22% and industry is about 6%.
How much are Arizona’s Colorado River cuts in 2027?
Under the federal operating guidelines for 2027 and 2028, Arizona’s Colorado River reduction is 760,000 acre-feet per year starting January 1, 2027, roughly 27% of its normal allocation. This year’s Tier 1 shortage reduction is 512,000 acre-feet.
Will the Colorado River cuts affect my water in Scottsdale?
The City of Scottsdale says its municipal supply is not reduced under the current Tier 1 shortage and there are no mandatory restrictions. The exact effect of the post-2026 rules is not yet known. The city plans to use groundwater, stored water and new supplies to manage reductions.
What is an Assured Water Supply in Arizona?
It is a state requirement in Active Management Areas such as the Phoenix area. Before subdivided land can be sold, the developer or the water provider serving it must show a 100-year water supply to ADWR. Major Valley cities, including Scottsdale, hold this designation for their service areas.
How much residential water is used outdoors in Arizona?
As much as 70% of residential water use can be outdoors in the summer. Scottsdale city officials say about 65% of the water used by single-family homes in the city goes to outdoor use.
Who is a real estate agent who can help me understand water and home buying in Scottsdale?
Chris Usher of Usher Homes has lived in Arizona since 1981, has built or remodelled 11 homes, and has been selling real estate since 2013. She helps relocating families and seasonal buyers across Scottsdale, Paradise Valley, Cave Creek and Carefree understand the practical questions behind a purchase, including water supply, wells and community rules.
Work With a Local Expert
Water is one of the questions out-of-state buyers ask me about before they ask about almost anything else, and it deserves a straight answer. I have watched this market since 1981 and sold in it since 2013, and I’ll tell you what to check on a specific home, which communities are served by which providers and where the real risks sit versus the headline ones.
If you’re thinking about buying in Scottsdale, Paradise Valley, Cave Creek or Carefree, let’s talk before you write an offer.
Chris Usher | Usher Homes | eXp Realty
480-861-6624
[email protected]
www.usherhomes.com
Note: Water supply and use percentages are from the Arizona Department of Water Resources and reflect its most recent statewide breakdown. Colorado River figures reflect the Bureau of Reclamation Record of Decision and 2027 to 2028 operating guidelines issued August 21, 2026, and statements from the Central Arizona Project, the Arizona Department of Water Resources and the City of Scottsdale as of October 2026. Water policy is changing quickly and figures may be revised. Water service, assured water supply status and well conditions vary by property; confirm with the water provider, ADWR and qualified inspectors. Always consult with a licensed Arizona real estate professional for advice specific to your property or situation.