A total of 2,166.74 AF of Type 2 non-irrigation grandfathered groundwater rights changed hands within four of the five Active Management Areas (“AMAs”) in 2016. There were no transfers in the Santa Cruz AMA. Prices ranged from $1,200/AF to $7,250/AF, depending on the AMA. (See table below for breakdown of volume and price by AMA).
Sales of Type 2 Non-Irrigation Rights by AMA (2016)
|AMA||Number of Sales||Volume Sold (AF)||Price*|
|Phoenix||6||1,056.5||$1,200/AF – $1,500/AF|
|Tucson||4||24||$1,800/AF – $2,200/AF|
*Because transactions are usually completed between private entities, some prices are estimated based on information provided by a local water broker.
The variation in prices appears to be driven by water supply constraints. The lowest prices are found in the Phoenix AMA, which has the largest number of Type 2 rights and access to multiple renewable sources, like surface water from the Central Arizona Project and local rivers. The highest prices are found in the Prescott AMA, which has the lowest number of Type 2 rights and no access to renewable sources.
The Phoenix, Prescott, and Tucson AMAs all face overdraft conditions and were created under the 1980 Arizona Groundwater Management Code with a management goal to attain safe-yield by 2025. The Pinal AMA, which was also created under the 1980 code, was established to “preserve existing agricultural economies for as long as feasible, while preserving future water supplies for non-irrigation uses.” The Santa Cruz AMA was created from a portion of the Tucson AMA in 1994 and has a management goal to maintain safe-yield and prevent water table decline in the area.
Type 2 rights were established under the 1980 code as a means to cap and manage groundwater use. The rights are based on the maximum annual volume pumped for non-irrigation use between 1975 and 1980. They can be used for municipal, industrial, or domestic purposes, and frequently are acquired by golf courses, dairy operators, and industrial users. Type 2 rights are not sought for development and are only occasionally acquired by water suppliers because of the state’s Assured and Adequate Water Supply Programs. The programs, which call for demonstration of a 100-year water supply when a subdivision is developed, require the use of renewable water supplies and allow use of only limited groundwater.
Written by Marta L. Weismann