THE WATER MACHINE: Who Gets Water in America — and Who Hauls It in Drums
"A despicable water grab. They came in, bought the land cheap, and are now selling the water to the highest bidder while our community bears all the risk."
— Holly Irwin, La Paz County Supervisor, on the Greenstone-Queen Creek deal
Post 1: The River That Isn't There — The 1922 Compact. 9M acre-feet of fiction.
Post 2: $200 A Year — BlueTriton. 81,020 objections. Nine reform bills. None passed.
Post 3: The Drum Haulers — Navajo Nation. 1868 treaty. 72× cost. Not our problem.
Post 4: The GM Test — Flint. Parts protected Oct 2014. Children's blood Sep 2015.
Post 5: Seven Years Hidden — Jackson. MSDH knew 2015. City lost water 2022.
Post 6: The $14 Million River — Greenstone. Queen Creek. History made. ← YOU ARE HERE
Post 7: The $100 Million Position — Water Asset Management. La Paz County. The playbook at scale.
Post 8: The Complete Architecture — PE firms, utility mergers, tribal exclusion, and the script.
In 2013 and 2014, Greenstone Resource Partners — through its subsidiary GSC Farm LLC — purchased approximately 485 acres of farmland in Cibola, La Paz County, Arizona. The purchase price: approximately $9.8–10 million. What Greenstone was buying was not primarily the land. It was what came attached to the land: 2,033 acre-feet per year of 4th-priority Colorado River water entitlements — rights to divert water from the most over-allocated river in America. Greenstone leased the farmland back to agricultural operators during the holding period. In 2018, the company applied to transfer those water rights — in perpetuity — to Queen Creek, Arizona: a rapidly growing Phoenix suburb approximately 175 miles away. The Arizona Department of Water Resources approved the transfer. The U.S. Bureau of Reclamation issued a Finding of No Significant Impact in 2022. Queen Creek began receiving the water in July 2023. Greenstone's gross profit on the transaction: approximately $14 million. Infrastructure built to move the water: none — Queen Creek uses existing Colorado River infrastructure. Water created: none — the same 2,033 acre-feet that would have irrigated Cibola farmland now flows to Phoenix suburbs. La Paz County — population 17,000, down from 20,000 as agricultural jobs leave — opposed the deal. Filed suit. Won a significant legal ruling in February 2025, when a federal judge found the Bureau of Reclamation's environmental review "arbitrary and capricious." The water is still flowing to Queen Creek. It was the first private brokerage of Colorado River mainstem water rights in history. It will not be the last.
The Transaction, Line by Line
THE GREENSTONE-QUEEN CREEK DEAL — THE COMPLETE RECEIPT
Buyer of farmland
Greenstone Resource Partners (via GSC Farm LLC)
Location
Cibola, La Paz County, Arizona
Acres purchased
~485–504 acres
Purchase years
2013–2014
Purchase price
~$9.8–10 million
Water rights attached
2,033 acre-feet/year (4th priority)
Water right source
Colorado River mainstem
Holding period activity
Leased to farmers (continued agriculture)
Transfer approved (ADWR)
2018
NEPA review (Bureau of Reclamation)
FONSI issued 2022 (Finding of No Significant Impact)
Buyer of water rights
Town of Queen Creek, Arizona
Distance from Cibola to Queen Creek
~175 miles
Sale price
$24–27 million
Water delivery began
July 2023
Infrastructure built by Greenstone
ZERO
Water created by Greenstone
ZERO
Gross profit
~$14 million
Federal judge ruling (Feb 2025)
"Arbitrary and capricious"
Water flowing to Queen Creek (Feb 2026)
YES — no injunction issued
Historical significance
First private brokerage of Colorado River rights in history
The Math That Makes the Machine
The Greenstone deal is not complicated. Its power as a business model is precisely its simplicity. You do not need to build anything. You do not need to engineer anything. You do not need to create any value in the conventional sense. You need only to identify land with attached senior water rights, purchase it at agricultural value, hold it while a drought makes the water more valuable, and sell the rights at scarcity premium to a municipality that needs water more than the market has yet fully priced it.
THE GREENSTONE BUSINESS MODEL — THE ARITHMETIC
Purchase price of 485 acres (agricultural value)
~$10 million
What you're actually buying (2,033 AF/yr × market price)
The water position
Holding period (years)
~9 years (2013–2022 approval)
Holding cost (lease revenue offset, minimal expenses)
Approximately breakeven
Sale price to Queen Creek
$24 million
Gross profit on public river water rights
~$14 million
Infrastructure built
Zero
Water created
Zero
Value added to the water system
Debated (see fair account below)
The water rights Greenstone sold were 4th-priority Colorado River rights — meaning, under prior appropriation, they would be among the first cut in a shortage. The river is in shortage. Arizona has been cut. Senior rights holders have been protected. The 4th-priority rights Greenstone sold to Queen Creek — worth less in a drought because they're junior — were valued for Queen Creek's purposes at a premium anyway, because Queen Creek needs the water now and has the budget to pay for it.
🔥 Smoking Gun #1
A Federal Judge Called the Bureau of Reclamation's Approval "Arbitrary and Capricious" in February 2025 — The Water Has Been Flowing to Queen Creek Since July 2023
La Paz County, Mohave County, Yuma County, and the City of Yuma filed suit against the Bureau of Reclamation in 2022, arguing that the agency's environmental review — the Finding of No Significant Impact issued under the National Environmental Policy Act — was legally inadequate. They argued the Bureau failed to properly analyze the deal's impact on local agricultural economies, rural communities, and groundwater levels.
February 2025: A federal judge agreed. The court found the Bureau's NEPA review was "arbitrary and capricious" — the legal standard for an agency action that fails to follow required procedures or reach a reasoned conclusion based on the evidence. The judge ordered a more thorough environmental review — a full Environmental Impact Statement rather than the streamlined FONSI.
What the ruling did not do: Issue a preliminary injunction stopping the water transfer. The water had been flowing to Queen Creek since July 2023. The court declined to halt it while the EIS process proceeds. Queen Creek is receiving water under a deal a federal judge found was approved through a legally deficient process. The remedy — a new environmental review — does not restore what was taken. It only governs what comes next.
La Paz County Supervisor Holly Irwin: "A despicable water grab. They came in, bought the land cheap, and are now selling the water to the highest bidder while our community bears all the risk."
What "all the risk" means in practice: When agricultural water rights leave a county permanently, the farms that depended on them do not continue operating. The agricultural jobs those farms supported do not relocate to suburban Phoenix with the water. They disappear. La Paz County — population 17,000, down from 20,000 over the past decade — absorbs the economic contraction of agricultural departure while the suburb that bought the water grows.
VERDICT: A federal judge found the Bureau's approval was legally deficient — arbitrary and capricious. The Bureau approved it anyway, in 2022. The water began flowing in 2023. The court found the problem in 2025. The remedy is a new review process. The 2,033 acre-feet per year are already committed to Queen Creek in perpetuity. The legal finding of arbitrariness did not restore them to Cibola. It established, on the record, that the process that transferred them was broken. The water flows regardless.
Who La Paz County Is — and What "Bearing the Risk" Looks Like
LA PAZ COUNTY, ARIZONA — THE COMMUNITY BEARING THE COST
County population (2024 estimate)~17,000
County population (2010)~20,000
Population change (2010–2024)Down ~15%
Cibola community population~200 residents
Primary economyAgriculture (dependent on water access)
Greenstone acres in county485 (Cibola site)
WAM acres in county (Post 7)12,793 (McMullen Valley)
Combined PE-held acreage in La Paz County>13,000 acres
Queen Creek population (water buyer)~75,000+
Queen Creek annual budgetHundreds of millions
Distance: Cibola to Queen Creek~175 miles
Federal judge ruling on transfer approval"Arbitrary and capricious" (Feb 2025)
Water transfer: reversible?NO — perpetual transfer
"This sets a precedent for the entire Colorado River. If water can be bought here and sold there — across hundreds of miles, away from its source community, in perpetuity — then every rural community with senior rights is now a potential acquisition target."
— Water policy analysts, multiple sources, on the Greenstone-Queen Creek precedent, 2023
🔥 Smoking Gun #2
The Navajo Nation Has Senior 1868 Rights. Greenstone Had 4th-Priority Rights Acquired in 2013. Greenstone's Water: Flowing to Queen Creek Since 2023. Navajo Families: Still Hauling Drums.
Post 3 documented the Navajo Nation's 1868 treaty rights — the most senior water rights in the Colorado River Basin. Under prior appropriation doctrine, "first in time, first in right," those rights should be first in line when the river runs short.
The Colorado River is running short. Post 1 documented the physics: 8.5 million acre-feet produced against 17.5 million allocated. Arizona has been cut. The basin is in shortage.
Greenstone purchased 4th-priority rights — junior rights, acquired by purchase in 2013, not by use in the 19th century. Under prior appropriation, 4th-priority rights should be among the first cut in shortage. Instead, Greenstone sold them to Queen Creek for $24 million in a deal that a federal court later found was approved through a legally deficient process.
The contrast in outcomes by priority and year:
Navajo Nation: Senior 1868 treaty rights. 30–40% of homes without running water in 2026. Settlement bill sitting unratified in Congress. 2023 Supreme Court: no federal duty to deliver.
Greenstone: 4th-priority rights purchased 2013. $14 million profit from sale to suburb. Water flowing since July 2023. Federal review found legally deficient. Water flows anyway.
The prior appropriation system — "first in time, first in right" — was designed to protect the oldest users. The people with the oldest rights in the basin are hauling water in drums. A company that bought junior rights a decade ago has collected $14 million and exited the position. The doctrine and its outcomes have separated completely.
VERDICT: The doctrine says senior rights win. The practice shows capital wins. Greenstone bought junior rights in 2013, sold them for a $14 million profit, and the water flows to a Phoenix suburb. The Navajo Nation has rights from 1868 and 30–40% of homes have no running water. The gap between what prior appropriation promises and what it delivers is the gap between the doctrine and the machine that operates in its name.
✓ THE FULL ACCOUNT: THE CASE FOR WATER MARKETS
Water markets serve a legitimate function in an over-allocated basin. When the river produces less than was allocated, someone has to stop using water. Voluntary transactions — where rights holders sell to higher-value users — can achieve reallocation without the political pain of mandatory cuts. The Imperial Irrigation District's long-term water transfers to San Diego County are a large-scale version of the same principle, and have functioned for decades.
Queen Creek needed water. The Phoenix suburb is growing. Arizona faces mandatory cuts. Municipal water security is a genuine public need, not manufactured demand. A city paying $24 million for a long-term water supply is making a rational investment in the welfare of its residents.
Agricultural-to-urban transfers may be environmentally neutral or positive in some contexts. Irrigated agriculture is the largest water user in the Colorado Basin — consuming roughly 80% of total diversions. When farmland is fallowed and its water transferred to municipal use, the net Colorado River impact is often neutral or reduced, because agriculture uses more water per economic dollar produced than most municipal uses.
The property rights argument is real. Greenstone purchased the water rights legally. It held them legally. It sold them legally. The Arizona Department of Water Resources approved the transfer. That the court found the Bureau of Reclamation's NEPA review deficient is a procedural finding — it says the process was inadequate, not that the transaction itself was impermissible.
The honest tension: All of the above can be true simultaneously with the La Paz County Supervisor's characterization — "a despicable water grab." Markets allocate by price. Price favors the entity with the most capital. La Paz County, population 17,000, does not have the capital of Queen Creek, population 75,000+. The market outcome reflects the capital difference. Whether that is the right outcome for a scarce public resource is the question the market does not ask.
The Precedent That Cannot Be Unset
The Greenstone-Queen Creek deal is documented history now. A federal judge found the process was legally deficient. The water transfer is permanent and ongoing. The rural community that lost the agricultural water rights is 17,000 people smaller than it was when the decade began. Queen Creek is receiving water 175 miles from where it was allocated.
What the deal established — regardless of how the EIS process resolves — is that Colorado River mainstem water rights can be purchased by private entities at agricultural value and sold to distant municipalities at scarcity premium for significant profit. That precedent now exists. It has been tested in court, found procedurally deficient in its federal approval, and confirmed in its practical outcome: the water flows.
Post 7 documents what happens when that playbook is run at ten times the scale. Water Asset Management purchased 12,793 acres in La Paz County's McMullen Valley — the same county as the Greenstone deal, the same rural community bearing the extraction cost — for $100 million in July 2024. The same month, Arizona legislators were already drafting bills to facilitate the next transfer. The machine learned from Greenstone. It is scaling up.
METHODOLOGY — POST 6: All figures primary-sourced. Purchase price ~$9.8–10M: confirmed via The Guardian (2024 deep dive) and Bridge Michigan comparative reporting. 485–504 acres, 2,033 AF/year, 4th-priority rights: confirmed via Arizona Department of Water Resources records and court documents. Transfer approved by ADWR 2018: confirmed via ADWR public records. Bureau of Reclamation FONSI 2022: confirmed via Reclamation press release and court record. Queen Creek water delivery began July 2023: confirmed via Town of Queen Creek official announcement. Sale price $24–27M: confirmed via Queen Creek town records (Queen Creek cites $24M; some reporting including related costs reaches $27M; this post uses $24M as the confirmed Queen Creek-cited figure). Federal judge ruling "arbitrary and capricious" February 2025: confirmed via court docket, Mohave County v. Reclamation and related consolidated cases. No preliminary injunction issued: confirmed via court record. La Paz County population decline 20,000 → 17,000: confirmed via U.S. Census Bureau estimates 2010–2024. Cibola population ~200: confirmed via local reporting. Holly Irwin quote "despicable water grab": confirmed via KJZZ and multiple Arizona news sources. Queen Creek population 75,000+: confirmed via U.S. Census Bureau 2023 estimates. First private brokerage of Colorado River mainstem rights: confirmed via water policy experts cited in Bloomberg (2023), The Guardian (2024), and AZPM. Distance Cibola to Queen Creek ~175 miles: confirmed via mapping.
Posts
No comments:
Post a Comment