JUANA SUMMERS, HOST:
If you were trying to grow a water-intensive crop like hay for cattle, for instance, you probably wouldn't go to the middle of the desert in Arizona, a state experiencing a water crisis so bad, it's planning to limit development around the city of Phoenix. But there's a lot of alfalfa being produced for hay in a county west of Phoenix using local groundwater. And it's being grown by agricultural companies from the Middle East, all for export outside the U.S. New investigative reporting has found that the state of Arizona's own retirement fund has invested $175 million in the land deal that makes this arrangement possible, at least in one case.
Nate Halverson of Reveal from the Center for Investigative Reporting is here to explain what his team has found. Nate, welcome.
NATE HALVERSON: Hey.
SUMMERS: So Nate, just to get us started, I want to get an idea of how this all works. Are the people who are managing Arizona's pension fund actually investing directly into these foreign companies?
HALVERSON: No, they gave money to an investment company from the East Coast that buys up large tracts of farmland and then leases it out, and in this case, leased it out to a company from the United Arab Emirates.
SUMMERS: OK, can you just help me understand the scale of this? How much hay and how much water are we actually talking about?
HALVERSON: Well, this trend has actually grown significantly within just the last 10 years. In fact, a recent report from the University of Arizona found that it's grown a hundred times the original size from just 10 years ago. We're now talking about so much water being used to grow hay just for export that it's the equivalent of about what a million people in the state use for water every year.
SUMMERS: Wow. I mean, hearing you talk about the scope of this and describing what's been going on there, I have to wonder, is it endangering the water supply for local residents?
HALVERSON: Well, I think that's the real threat of harm here. So I went to the areas around the farms and I spoke to the residents that live there. And these are folks that rely entirely on the groundwater for everything they do in their homes. And folks are running out of water. They're watching the groundwater underneath them sink lower and lower every year. As these big mega-farms continue to pump water up, they're seeing their own water depleted. And some folks have had to spend tens of thousands of dollars to drill deeper wells. Other folks can't afford it, and so they're having to have water trucked in. And some folks have just left the area. And I think that's what a lot of people worry about, is that these areas, without groundwater or as the groundwater gets lower and lower, are going to become, eventually, unlivable.
SUMMERS: I know that Reveal has previously broken a story about a Saudi-owned hay farm operating in the Arizona desert. How'd your team learn about this?
HALVERSON: Well, essentially, I began looking into what countries were running into problems with water, what countries didn't have enough water. And that led me to Saudi Arabia, which had effectively, in about 30 years, drained down its aquifers. And so I thought, well, if the Saudis did that, where are they going? And to my surprise, in 2015, I found that they had bought nine square miles in the Arizona desert and were pumping up water from the aquifer to grow hay that they would then ship back to Saudi Arabia.
SUMMERS: So why do agribusinesses in Saudi Arabia or the United Arab Emirates want to grow stuff in another country's desert in the first place?
HALVERSON: Well, it might seem counterintuitive, but the desert is actually a surprisingly good place to grow something like hay if you have the water. And the reason for that is because unlike growing in Nebraska or Minnesota, where you have long winters where the fields are idle, in the desert, you can essentially grow all year long.
SUMMERS: And, Nate, how did state officials react when you told them that their own retirement funds were investing in the same businesses that have helped cause the water crisis that they're presently trying to solve?
HALVERSON: Yeah, shock, anger, because a lot of politicians have recognized that this might not be the best use of Arizona's water. And so they have been rallying to figure out how they can prevent Arizona's limited water supply from being shipped overseas. And so to understand that while they're putting in all of this effort to try to stop this growing trend that their retirement fund has actually been helping fund one of these deals, yeah, people were shocked and angered.
SUMMERS: I understand that your investigation focuses on what's been going on in the state of Arizona. But, I mean, if this is something that's happening in Arizona, do we see it happening elsewhere across the country? Do you know?
HALVERSON: Yeah, I think that's the really interesting thing here, is that, you know, initially when I reported on the Saudi Arabian farm in the Arizona desert in 2015, it was to show that one area had run out of water and it was now going to another area that could run out of water. But this story - this new story really focuses on something new, and it's that people's pension fund, their retirement money, is going into deals that are taking water out of water-scarce areas and exporting it. And it's not isolated to just Arizona. We're seeing it in Southern California. We're seeing it, really, across the West, where retirement funds, institutional investors are putting in huge sums of money - I mean, hundreds of millions of dollars - into deals that are effectively shipping the United States' water overseas.
SUMMERS: And, Nate, I want to end by asking you, in this fight over water in Arizona, what comes next?
HALVERSON: Well, you know, it doesn't appear that any of the companies are breaking the law. They're just operating within the guidelines of Arizona's state laws. So there is a growing push, a bipartisan push, to update and change Arizona's laws to say that you can't just use water for any use anymore, that the state really needs to say, OK, we have a limited amount of water. What is the best use for that water? But, you know, agricultural companies have a lot of pull in the state legislature. And so whether or not lawmakers are able to come together and actually pass new laws, well, it remains to be seen.
SUMMERS: That was Nathan Halverson. He's a reporter and producer with Reveal from the Center for Investigative Reporting. Nate, thank you.
HALVERSON: Thank you so much.
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