JUANA SUMMERS, HOST:
Where should new housing be built as the climate gets hotter? That is a question Arizona has been grappling with. A two-decade drought is straining water supplies there, and there is a big demand for housing. The state has one of the strongest laws in the country to limit growth where water is scarce. But as Lauren Sommer reports from NPR's Climate Desk, there's a loophole.
LAUREN SOMMER, BYLINE: If you want to build housing in Pinal County, Ariz., south of Phoenix, there's one topic that always comes up in public meetings.
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UNIDENTIFIED PERSON #1: I think we all get these questions, but is there water for it?
UNIDENTIFIED PERSON #2: Lack of water assurances should be warning enough.
UNIDENTIFIED PERSON #3: We need to get the water...
UNIDENTIFIED PERSON #4: Yes. We need new sources of water.
UNIDENTIFIED PERSON #3: And we need...
SOMMER: The area is a desert, after all. And a hotter climate is straining the water supply like never before.
CRAIG MCFARLAND: It's hard. Yeah. Water is hard.
SOMMER: Craig McFarland is mayor of Casa Grande, a city in Pinal County. It's the fastest-growing county in Arizona. New jobs are opening up nearby at electric car and battery manufacturing plants.
MCFARLAND: As the industry is really rushing in to the community, we have a huge need for housing.
SOMMER: But where to put the housing? That's the issue.
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SOMMER: McFarland unrolls a map of the city, which looks like a patchwork quilt. Some land is white, and some is blue. The blue parcels mean there's water.
MCFARLAND: So these are all areas that single-family homes can be built in.
SOMMER: But the white parcels are out of luck. To build a subdivision here, builders have to show the project has a water supply for a hundred years.
MCFARLAND: It's part of a consumer protection law that says that in Arizona, if you're a consumer, we're going to guarantee you have a hundred years' worth of water.
SOMMER: Four years ago, state water regulators found the demand had grown so much, water is going to run short. Most of it is pumped from underground aquifers. So they stopped issuing water guarantees for new subdivisions, which is what they'd need to get built. But McFarland isn't discouraged.
MCFARLAND: Casa Grande will continue to grow. It's just we have to manage it, have to be frugal with the water we have.
SOMMER: And because building in town hasn't actually stopped.
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SOMMER: At a new development, construction workers are putting siding on single-story homes. It'll be more than 300 units.
GREG HANCOCK: This is a great product to rent.
SOMMER: Greg Hancock is president of Hancock Builders. He's been building homes in Arizona for more than four decades. Even with the water situation, Hancock didn't have to worry about a water supply for this project.
HANCOCK: We don't need to assure water supply because it's one lot. Although it is 331 units, it's one lot.
SOMMER: These homes will be rented, not sold, to homeowners. And Arizona's water rules only apply to subdivisions where the land is broken up to build homes for sale. As a result, these build-to-rent projects have been booming in Arizona.
HANCOCK: We have finished 3,000. We have 3,000 more under construction and 5,000 more in predevelopment.
SOMMER: And concerns are growing that that unaccounted growth could strain the water supply even more.
KATHLEEN FERRIS: It's really a pivotal moment for Arizona.
SOMMER: Kathleen Ferris is a senior research fellow at the Kyle Center for Water Policy at Arizona State University. She helped write Arizona's groundwater rules four decades ago. Back then, building big rental projects wasn't really a thing. But now, she says all of the state's water use needs to be examined. Arizona's other major water source, the Colorado River, is also shrinking as temperatures rise.
FERRIS: Climate change and aridification have come on so much faster than most people thought.
SOMMER: Earlier this year, state legislators tried to pass several bills that would have closed the loophole, requiring build-to-rent projects to have a water supply.
FERRIS: Different interest groups - the realtors, the home builders, the Department of Water Resources - they all had different ways they wanted to structure the bills, and it just never came together.
SOMMER: Policymakers may try again, and the governor has set up a task force on the issue. Ferris says the strength of Arizona's water law is that it links building decisions with water decisions. No other Western state requires cities to look a hundred years into the future.
FERRIS: Yes, there is still opportunity for growth, but there needs to be a understanding of the limits.
SOMMER: That means cities are having to look at solutions, like water recycling, to boost their supplies in order to keep growing. The lesson of climate change, Ferris says, is that you always have to be planning ahead. Lauren Sommer, NPR News.
(SOUNDBITE OF JUSTIN CASEY AND HENRY ARCHER'S "SLAKE MOTH") Transcript provided by NPR, Copyright NPR.
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