Across the Western United States, one of the most fundamental assumptions in real estate development —that water will be available —can no longer be taken for granted. From Arizona to California, water scarcity is increasingly dictating what projects can move forward, when, and at what scale.
Arizona’s Restrictions on Groundwater-Dependent Permits
In 2023, Arizona regulators announced that new Certificates of Assured Water Supply will not be issued for developments in parts of the Phoenix metropolitan area that rely solely on groundwater. This policy has sent ripples through the development community, as many projects planned in growth corridors suddenly faced uncertainty.
Developers now must demonstrate clear, sustainable water sources, whether through surface water rights, utility service agreements, or innovative water reuse systems, before entitlements will be granted.
Parallel Pressures in Nevada, Utah, and California
Arizona is not alone.
– Nevada is closely monitoring aquifer depletion around Las Vegas and Reno, pushing for tighter controls on groundwater pumping.
– Utah has begun reevaluating development approvals in fast-growing counties where drought and consumption outpace supply.
– California continues to enforce strict groundwater sustainability plans under the Sustainable Groundwater Management Act (SGMA), slowing new projects in water-stressed regions.
The trend is clear: water scarcity is no longer a background risk, it’s a frontline development issue.
Why Water Rights and Documentation Are Critical
For developers, water rights documentation and off-site utility confirmations are now just as important as zoning and land use approvals. Without them, projects risk:
– Re-entitlement requirements if initial approvals are challenged.
– Delays tied to environmental or utility reviews.
– Reduced density if water cannot support the planned number of units.
Proactively engaging in water-efficient site design, such as xeriscaping, graywater reuse, and high-efficiency plumbing, can also help projects secure approvals and community support.
How Moran Consultants Helps Lenders, Syndicators, & Investors Mitigate Risk
At Moran Consultants, we monitor these regulatory and environmental shifts to ensure our clients’ projects remain viable. Our Construction Loan Monitoring (CLM) division is at the forefront of this effort, giving lenders and investors clear visibility into project feasibility, funding risk, and compliance with local water requirements. By integrating water availability and utility documentation into our monitoring, we help protect capital from delays and unexpected costs.