As rural Arizonans face the prospect of wells operating dry, international
companies are sucking up huge quantities of the state’s groundwater to develop hay
for Saudi Arabia and different rich nations. Now it seems {that a} key
investor on this water switch scheme is Arizona’s personal worker
retirement fund.

In La Paz County, a rural neighborhood about 100 miles west of Phoenix,
Al Dahra Farms USA has been operating a 3,000-acre farming operation in
the Sonoran desert, draining down the identical groundwater that the county’s
residents depend on to fill their wells. The Emirati-owned farming
firm tapped right into a former public water provide in 2013 to develop hay
that will get shipped to international locations in Asia and the Center East.

The state of Arizona helped fund the land deal that allowed Al Dahra
to faucet into the groundwater in La Paz County, in keeping with data
obtained by Reveal from The Middle for Investigative Reporting. The
state’s retirement system invested $175 million in 2012 into an East
Coast firm that purchased about 20 sq. miles of land that had
beforehand been put aside as a public water supply. The corporate,
Worldwide Farming Corp., then leased among the land to Al Dahra.

Al Dahra is now a key participant within the booming enterprise of tapping into
Arizona’s restricted water to develop hay that will get shipped abroad, which
economists say is the equal of exporting the state’s scarce water. A
Saudi-owned farm, which can also be in La Paz County, has made
worldwide information for rising hay within the parched Sonoran Desert at the same time as
Saudi Arabia has severely restricted its personal hay manufacturing attributable to its
water shortage. However in Arizona, hay exports have elevated almost
100-fold within the final 10 years. The water used to develop the exported hay
final 12 months was equal to the water utilized by about 1 million folks in
the state, in keeping with a latest paper from researchers on the
College of Arizona. 

The state’s funding into exporting its personal water comes because the
area faces ongoing water shortages. Arizona Gov. Katie Hobbs introduced
this 12 months that components of the metro Phoenix space don’t have sufficient water
to proceed constructing new homes amid ongoing groundwater depletion. The
state additionally faces the chance of additional reductions in water equipped
from the dwindling Colorado River.

Because the state-funded funding firm purchased the land in La Paz
County, it has drilled new, deeper wells. Individuals residing close by say they
at the moment are dropping entry to their solely supply of water, their groundwater,
because the water desk drops on account of the intensive farming. As their
wells go dry, they face robust decisions. Some owners spend tens of
hundreds of {dollars} to drill their wells deeper or have water trucked
in. Others simply depart.

“The stakes are our future,” stated Holly Irwin, one in all three elected
supervisors in La Paz County, who has been pushing again towards the
increasing hay farm. “Now we have a proper to be right here, too, and never simply these
with the massive bucks.”

Irwin stated the state-funded challenge is threatening to destroy the
rural lifestyle on this a part of the Sonoran Desert. She was outraged
when introduced with paperwork from the Reveal investigation displaying her
personal retirement cash was invested within the very scheme she was combating to
cease.

“It makes me indignant, you realize. It’s unbelievable that the state can do
that with our retirement fund,” Irwin stated. “I’ve been combating for
years to maintain the water right here, and it’s simply irritating – in all places you
go searching, you realize that this water is being depleted and alfalfa hay
is being shipped abroad.”

Regardless of water influence, state prioritized ‘maximizing returns’

La Paz County is a largely low-income a part of the state, but it surely has a
very useful asset: an aquifer with water that has been focused by
rich cities, billion-dollar funding and farm firms, and the
state’s personal $49 billion retirement fund.

Many communities within the county rely totally on the aquifer to produce
their properties with water for ingesting, showering and all their different
wants. Arizona legislation permits owners, companies and farms to drill
wells on their very own properties and pump up as a lot water as they need.
The unregulated aquifer has attracted traders and farmers from far and
vast.

In 1986, the roughly 20 sq. miles of land in La Paz County was
bought by town of Phoenix to function a backup for its personal
municipal water provide. Town estimated it might use the land to faucet
into the groundwater, pump it to a canal and ship water for as much as
about 150,000 properties. However Phoenix by no means tapped the useful resource and as a substitute
leased the land to a neighborhood Arizona farmer who grew much less water-intensive
crops.

Town assessed the aquifer in 2011 and located that the desert
monsoon rains recharged the aquifer sufficient every year to permit the
present owners in La Paz County to dwell there indefinitely, however that
on account of agricultural use, the water desk was dropping as much as 5
ft per 12 months. Ultimately, it will run out and owners would lose
entry to the important water supply.

In 2012, town determined to promote the land atop this public water
provide for $30 million to the North Carolina-based Worldwide Farming
Corp., which manages about $2.2 billion in agricultural investments.
That very same 12 months, the Arizona State Retirement System invested $175
million with the agency.

Managers on the state retirement system knew that a part of their
funding was going instantly into the land deal in La Paz County. The
retirement system – as a key investor within the deal – was given the primary
proper to make a proposal on the farmland and the underlying water rights
if Worldwide Farming Corp. determined to promote. 

The state’s retirement system has about 600,000 members, akin to
academics and different state and county authorities staff, and is one in all
the most important traders within the La Paz County land deal orchestrated by
Worldwide Farming Corp., or IFC. The state supplied almost half of
the $430 million that the IFC-controlled fund aimed to lift for
investments in farmland and related water rights, in keeping with state
and federal data. 

The state’s $175 million funding was commingled with cash from
different traders right into a restricted partnership fund managed by IFC known as
U.S. Farming Realty Belief II. The fund then bought farmland throughout
the nation, together with the land in La Paz. Retirement cash for the
IFC-controlled fund additionally got here from New York Metropolis academics, union staff
in California and Michigan, and even Carnegie Corridor, the storied live performance
venue in New York Metropolis. All have been invested instantly or not directly within the
Arizona land deal, a part of a rising pattern by retirement funds and
different institutional traders to fund large-scale farm offers that
management water provides at a time when shortage of each meals and water is
anticipated to worsen.

Particularly, traders are more and more focusing on water rights in
arid areas of the USA. In a 2022 prospectus shared with
potential traders, IFC wrote that the water rights related to
land offers are a key part of the worth of any potential funding
and that “water rights in Southern California and Arizona are anticipated
to extend in worth.”

Worldwide Farming Corp. executives declined to be interviewed by
Reveal. In a press release, they wrote that IFC complies with state water
legal guidelines, makes use of superior irrigation techniques and is dedicated to the long-term
success of the native agricultural communities that it’s a part of.

The corporate listed the 14,000-acre property in La Paz County on the market
in 2020 for $100 million, greater than 3 times what it paid for it
lower than a decade earlier. The state-funded funding property stays
on the market in the present day, in keeping with IFC, although it declined to offer the
present listing worth.

State staff’ cash used to worsen disaster

After Reveal broke the story in 2015 concerning the almost 10,000-acre Saudi-owned farm rising and exporting hay in La Paz County,
it turned a central marketing campaign problem in Arizona for each Republican and
Democratic candidates, who criticized the farm and its use of the
state’s scarce water. Now, by the Al Dahra farm, politicians discover
themselves invested in the identical use of water they’ve campaigned
towards.

Legal professional Normal Kris Mayes known as the Saudi land deal “one of many
biggest scandals within the historical past of Arizona” in a latest interview with
Reveal. She now expects Arizonans might be simply as outraged that she and
different public staff’ retirement funds are invested in a deal that
additional drains the state’s treasured water.

“It simply exacerbates an already horrible scenario and exhibits once more
the abject failure of our authorities to guard our folks and to
defend our future,” Mayes stated. “Our very survival as a state relies upon
on our doing higher in terms of water.”

Mayes, who was elected in 2022 and took workplace this 12 months, stated she
deliberate to look into the investments made by the state’s retirement
fund.

Mockingly, in making the funding within the land deal, the state of
Arizona is capitalizing by itself lax water legal guidelines in rural communities,
which permits landowners to pump limitless quantities of groundwater. 

Kathy Ferris is the previous head of the state’s water division and
helped craft the state’s 1980 Groundwater Administration Act that protected
aquifers in city areas akin to Phoenix, however not in rural areas akin to
La Paz County – a compromise between those that noticed the necessity to regulate
water throughout your complete state and those that didn’t need any regulation.
Now with the elevated funding into pumping out Arizona’s rural
water, Ferris stated lawmakers must replace the state legislation to guard the
rural aquifers. 

“I’m disenchanted. I’m disenchanted within the lack of motion,” Ferris
stated. “Individuals will proceed to return right here and sink deep wells in these
unregulated areas and do what they need with that groundwater as a result of
they will. Or till the groundwater runs out. After which they may depart.”

Senior reporter and producer Michael Montgomery contributed to this story.

“This story was produced by Reveal from The Middle for Investigative
Reporting, a nonprofit information group. Study extra at revealnews.org
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