New federal regulations will reduce the amount of water Arizona receives from the Colorado River starting Jan. 1, 2027. The mandatory cuts, totaling 27% of the state’s Colorado River supplies each year through 2028, were issued by the federal government after seven states failed to reach a consensus on how to manage the river’s supply. City water managers in the Phoenix metropolitan area stated that while residents will not lose access to running water, the cost of maintaining service will increase.
The federal intervention follows 26 years of drought and climate change that have brought the nation’s two largest reservoirs, Lake Powell and Lake Mead, to record lows. The Colorado River currently provides approximately 40% of the water used by the city of Phoenix. To mitigate the impact of these reductions, municipalities are shifting reliance to groundwater and the Salt and Verde River system, which already accounts for 58% of Phoenix's supply.
Maintaining these water levels requires infrastructure investment. The City of Phoenix recently completed a $300 million "drought pipeline" to move water from the south side of the city to the north, which was previously reliant on the Colorado River. Max Wilson, water resources management advisor for the City of Phoenix, stated that future projects to secure water sources may cost billions of dollars. These expenses are expected to be passed on to residents through higher utility rates.
For a typical household, these changes manifest as a "price signal" intended to discourage high-volume usage. In Phoenix, higher summer rates have already contributed to a reduction in peak summertime water use since the 1980s. Residents may notice that while their taps remain functional, the financial cost of activities like lawn watering will rise as cities recover the costs of infrastructure projects and water leases.
The long-term outlook remains uncertain for Arizona water users. The federal government has the option for steeper cuts starting in 2028. Additionally, local leaders and the Arizona Water Banking Authority have been in negotiations regarding how to distribute emergency underground water reserves. While the Water Bank agreed to replace 100% of lost water for one year, there is no current guarantee for full replacement after that period. The new plan will be subject to biennial adjustments.