In Nevada, water privatization is fueling real estate fever

Beneath a parched Nevada lake bed, not far from where the annual Burning Man festival is held, an ambitious and mysterious water project is reshaping this desert corner of the American West.

For several years now, the Vidler company has been pumping water from the region through an extensive underground pipeline.

It is supplied by groundwater buried under volcanic mountains, which contains enough water to sustainably supply 25,000 homes. The liquid is then transported to the northern suburbs of Reno, nearly 50 kilometers away.

A daring bet, which cost 100 million dollars and transformed this company into the cornerstone of real estate development in the region.

“Everyone had to start sourcing from Vidler,” promoter Robert Lissner told AFP. “Everyone who builds.”

Entirely private, this project recalls to what extent the war over water, inherent in the development of Los Angeles at the beginning of the 20th century and chronicled in the film “Chinatown” (1974), is more topical than ever in the American West.

In the Reno area, the authorities could not afford to finance a pipeline.

“If Vidler hadn’t built this project, it wouldn’t have seen the light of day,” notes John Enloe, one of the managers of the local agency responsible for water management.

– Bargain –

Nevada may be the driest state in the United States, but it is also one of the regions experiencing the strongest real estate expansion.

Many Californians, discouraged by the explosion of prices in the “Golden State”, take refuge there.

But to feed this fever, developers must prove that they have secured a sustainable water supply for any new housing. Enough to raise the stakes with local farmers, who have most of the licenses to exploit the available water.

“Without water, the land has no value in our region,” says David Stix, a rancher whose farm is surrounded by brand new houses.

Making new water sources exploitable, as Vidler does, is therefore a godsend.

Other companies are developing pipeline projects in the nearby Lower Smoke Creek and Red Rock Valley areas. And the construction of a gigantic industrial zone, which must notably house Tesla and Panasonic factories, is based on the laying of pipes to transport “recycled” water from a Reno wastewater treatment plant.

Controversial projects, while the American West has suffered for two decades from one of the worst droughts in its history, aggravated by global warming.

In the event of excessive pumping, groundwater “could very well be depleted”, worries Kyle Roerink.

This environmental activist also fears that this pumping will have negative repercussions in the neighboring valleys.

Asked by AFP, Vidler refused to answer.

According to impact studies by federal authorities, the amount of water the company is allowed to withdraw is far below the annual capacity of the groundwater table, which depends on rainwater and snowmelt to recharge.

Environmentalists in the region, however, fear that Vidler’s project could inspire other similar projects.

“There are other places like this, where developers are eager (…) to build their next housing estate and their next shopping center from groundwater drawn from 80 or 100 kilometers away”, alarms Mr. Roerink.

– Risky bet –

Embarking on such underground infrastructure projects remains a risky bet.

“Every year or two someone calls us to say they want to do a water import project,” says David Rigdon, a water lawyer. “But it’s very, very difficult to get them approved. They’re very expensive to build. And a lot of times there’s no market.”

Vidler thus had to wait almost ten years after the completion of its pipeline in 2008 to be able to exploit it, the time that the real estate sector recovers after the recession caused by the subprime crisis.

To cushion its costs, the company sells its blue gold for three times what it would cost in downtown Reno. It is up to developers to calculate whether their new homes will still be profitable.

Still, the sector whets the appetites: last year, Vidler was bought by the American construction giant DR Horton for almost 300 million dollars.