Standing beside a ribbon of blue canal in north Phoenix, Max Wilson watches the water that keeps 1.7 million people supplied. The Central Arizona Project (CAP) canal — a 336-mile system that pumps Colorado River water across the desert — will carry less starting Jan. 1 under a new federal plan to manage the Colorado River. But Wilson and other water managers say faucets won’t go dry. What will change is how much it costs to keep water flowing.
After more than 26 years of drought and a warming climate left Lake Powell and Lake Mead at record lows, the federal government stepped in when the seven Colorado River states could not reach a deal. The plan forces mandatory cuts — roughly 27% of Arizona’s Colorado River supplies through 2028, with the option for steeper reductions afterward. Central Arizona, served heavily by CAP, will feel the brunt of those cuts: Colorado River water supplies about 40% of what Phoenix distributes to customers.
Cities across the Valley say they can absorb the immediate reductions because they don’t rely on one source. Phoenix and its neighbors lean on a diversified portfolio: the Salt and Verde rivers, groundwater, stored underground water, interconnections between treatment plants, tribal lease arrangements and, increasingly, big infrastructure investments. The Salt and Verde system now supplies about 58% of Phoenix’s delivered water, backed by a century of dams and reservoirs such as Roosevelt Dam.
Decades of planning have produced contingency tools. Phoenix’s 12-mile “drought pipeline,” completed in 2023 at roughly $300 million, transfers Salt River supplies to parts of the city that formerly depended on Colorado River water. Utilities like EPCOR built interconnecting pipe networks and secured leased rights to more protected tribal water pools — for example, access leased from the Ak-Chin Indian Community — so some plants remain insulated from near-term cuts.
But those safety nets come with heavy price tags. Water managers say meeting reduced river allocations will require more costly projects — groundwater wells, pipelines, new treatment plants and reuse facilities — and those costs will largely fall to ratepayers. Phoenix is constructing a major potable reuse project at the Cave Creek Water Reclamation Plant to purify treated wastewater into safe drinking water; officials expect it to begin supplying city pipes as early as 2029 and to cost hundreds of millions to build plus millions annually to operate. A larger regional reuse facility with Mesa, Glendale and EPCOR is planned by the early 2030s.
Some smaller or poorer communities face steeper challenges. Gilbert, which gets about 41% of its water from the Colorado River and will lose roughly 20% of that allocation, accelerated well construction and plant upgrades. Because the town delayed rate increases in previous years and pushed projects forward quickly, Gilbert has seen water bills roughly double since 2024 — a stark example of how the cost of preparedness can hit residents.
Cave Creek illustrates vulnerabilities at the other extreme. The small town relies on Colorado River water for about 95% of its supply and has limited alternatives. Officials estimate only several years’ worth of contingency options before they’ll need long-term, expensive solutions or exchange agreements with nearby cities.
Policy choices matter. Some experts argue that pricing can reduce demand more effectively than sporadic mandatory restrictions. Kathryn Sorensen of Arizona State University notes Phoenix’s tiered summer rates helped cut peak summertime use by roughly 40% since the 1980s, and higher prices have encouraged a dramatic decline in grass landscaping inside city limits.
Other tools include the Arizona Water Banking Authority, which for decades has stored extra Colorado River water underground for future use. That program became contentious when cities asked that their underground stores be made available to replace water lost under the federal cuts. After negotiations, the Water Bank agreed to make cities whole for one year — a stopgap that provides short-term relief but leaves long-term access uncertain.
Beyond local planning, the broader hydrology remains daunting. Climate science and recent dry years make refilling the giant reservoirs unlikely in the near future. The federal plan also gives authorities the power to cut allocations up to 40% for Arizona, California and Nevada beginning in 2028, and it schedules frequent two-year review cycles through 2036. Those short cycles are challenging for utilities, because large infrastructure projects take years to finance, permit and build.
Water managers call for federal help to spread costs. “The federal government made a choice to place this burden entirely on Arizona, California and Nevada,” Wilson says; he argues federal funding will be needed to offset the expense of the projects that make cities more drought-proof.
In short, Arizona’s taps are likely to keep running in the near term because of long-standing reservoirs, rivers, groundwater, storage programs and planned reuse projects. But delivering that continuity will require billions in new spending, accelerated construction, and difficult decisions about who pays. Residents across the Valley can expect higher water bills and more visible investments in pipelines, wells and recycling plants as cities brace for a permanently drier Colorado River future.