The short version
Arizona has three kinds of water and a different set of rules for each.
Surface water, the Salt and Verde rivers above all, follows prior appropriation: first in time, first in right. Whoever put the water to use first holds the senior claim, and seniors are served before juniors in a dry year. In the Valley those rights trace to the farmers who formed the Salt River Valley Water Users’ Association on February 9, 1903 and to Roosevelt Dam, dedicated on March 18, 1911. Their association is today’s Salt River Project, which still delivers river water through canals like the one along the Arizona Canal Path.
Groundwater in the Phoenix area is governed by the Groundwater Management Act, which Governor Bruce Babbitt signed on June 12, 1980. It created the Arizona Department of Water Resources (ADWR) and Active Management Areas, including the Phoenix AMA that covers Scottsdale, and its most famous rule: a new subdivision must prove a 100-year assured water supply.
Colorado River water arrives through the Central Arizona Project (CAP), the 336-mile canal that reached the Phoenix area in 1985. Arizona’s share of the river is junior to California’s, so it is the first to be cut.
Why it matters in Scottsdale
Scottsdale draws on all three, plus recycled water, and each constrains the city differently. The CAP is why Scottsdale felt the Colorado River shortages that began in 2022 and why it wrote a Drought Management Plan in advance. The 100-year rule is why the city can approve new homes at all: Scottsdale holds a state designation of assured water supply that covers growth inside its service area. And the gaps in the state rules explain Rio Verde Foothills, the unincorporated community next door that grew without ever having to prove its water. The Scottsdale Water guide covers how the city manages its supplies day to day.
How the 100-year rule works
Inside an AMA, anyone creating a subdivision of six or more lots must show ADWR water that is physically, legally and continuously available for a century. A developer can get a certificate for one project, or build in the service area of a water provider, like Scottsdale, that holds a designation covering its whole territory. Without one, the county cannot approve the plat and the state real estate department won’t let the lots be sold.
The rule has a well-known gap. Splitting land into five or fewer lots is not a subdivision, so the test never applies. Repeat that across a desert valley and you get Rio Verde Foothills, hundreds of homes on “wildcat” lot splits in unincorporated Maricopa County, relying on wells or hauled water. When Scottsdale ended hauled-water sales on January 1, 2023, during David Ortega’s term, the fix came from the Legislature: a law signed June 19, 2023 created a standpipe district to buy water through Scottsdale’s system.
The 2023 model
On June 1, 2023, ADWR released a new groundwater model for the Phoenix AMA showing 4.86 million acre-feet of unmet demand over 100 years. The state stopped approving new assured-supply determinations based on groundwater. Scottsdale’s existing designation was unaffected; the pinch fell mainly on fast-growing edge cities that had counted on pumping.
Why 1980
By the 1970s the Valley was pumping far more groundwater than nature replaced, and the federal government was losing patience. Arizona needed the CAP finished, and federal officials pressed the state to control its overdraft before the canal was built. A state study commission and months of hard bargaining among farmers, mines and cities, brokered by Babbitt, produced an act that gave the state something it had never had: authority over who could pump, how much, and for what. The Phoenix AMA was given a goal of safe yield by 2025, a long-term balance between pumping and recharge, and ADWR has issued a series of management plans since to push toward it.
A junior place in line
The CAP was the price of Arizona’s long fight with California. The Colorado River Basin Project Act, signed on September 30, 1968, authorized the canal but made its water junior to California’s 4.4 million acre-feet. Construction began in 1973, the first water flowed in May 1985 and it reached the Phoenix area that November. Scottsdale’s CAP treatment plant came online in 1987, and the city built its later growth in the north, from the Airpark to North Scottsdale, largely on that supply.
The junior priority came due in the 2020s. The Bureau of Reclamation declared the first-ever Tier 1 shortage for 2022, a deeper Tier 2a for 2023, and Tier 1 again for 2024, 2025 and 2026. Cuts fell hardest on Pinal County farms that had relied on the lowest-priority CAP water; cities such as Scottsdale, with higher-priority municipal contracts, have seen their deliveries largely protected so far. The federal guidelines that set those tiers expire at the end of 2026, and the seven basin states have been negotiating what comes next.
Adjusting the rules
The state keeps tuning the system rather than replacing it. After the 2023 model, lawmakers and Governor Katie Hobbs agreed on the Ag-to-Urban law, signed June 30, 2025, which lets developers in the Phoenix and Pinal AMAs earn assured-supply credit by retiring farmland pumping rights. The long-running argument is the same one Scottsdale has with itself: how much growth a desert can responsibly carry, and who decides.