By Lauren Rosin, Founder of The Rosin Team at eXp Realty | Real Estate Strategy for Executives Read time: 4 minutes
On August 21, 2026, the Department of the Interior signed the Record of Decision and the 2027-2028 Operating Guidelines for the Colorado River, cutting Lower Basin deliveries by 1.25 million acre-feet in each of the next two years and establishing a 10-year framework that runs through 2036.[1] Arizona absorbs 760,000 acre-feet of that reduction, California 440,000, and Nevada 50,000.[2]
For a buyer looking at Cave Creek, Carefree, or the North Phoenix corridor around Halo Vista, the question is no longer whether cuts are coming. It is which water provider serves the parcel, and what that provider's supply mix looks like once the Central Arizona Project canal carries half as much.
The numbers behind the headline
The 760,000 acre-foot figure is roughly a 31 percent reduction in Arizona's Colorado River allocation, and it replaced a federal alternative that stakeholders had described as a 77 percent cut.[3] The Lower Basin states will also be expected to conserve and store at least 700,000 additional acre-feet across the two-year period.[2]
The Central Arizona Project, which moves Colorado River water to Maricopa, Pinal, and Pima counties, takes the deepest reduction, roughly 50 percent of its supply.[4] That is not arbitrary. The 1968 legislation that authorized the CAP canal made its deliveries junior to California's, so CAP users are cut first by design.[5]
The reservoirs explain the urgency. Reclamation's August 24-Month Study projects Lake Powell will start the October 1 water year between 3,510 and 3,540 feet, inside what the guidelines call the Low Elevation Infrastructure Protection Range, with releases held between 6.0 and 7.0 million acre-feet.[1]
Combined storage in Powell and Mead has not been this low since Lake Powell began filling in 1963.[1]
Why Phoenix and Cave Creek are different markets in this decision
The city of Phoenix says the federal action does not interrupt service or trigger mandatory restrictions, and it explains why: approximately 40 percent of the city's drinking water comes from the Colorado River through CAP, about 58 percent comes from the Salt and Verde rivers, and roughly 2 percent is groundwater.[2]
The city plans to lean on stored underground water, groundwater recovery infrastructure, and the Drought Pipeline that moves Salt and Verde water to north Phoenix.[2] A North Phoenix address inside Phoenix city limits sits on a diversified portfolio.
Cave Creek does not. The town is preparing for CAP reductions in the 20 to 25 percent range and is approving water exchange agreements it describes as bridge supplies of roughly seven years, while staff develops what officials call the expensive long-term solutions.[4]
That is the sentence buyers should underline. A seven-year bridge is a carrying-cost trajectory, and the cost of the permanent fix will land on ratepayers whose parcels are already priced for desert privacy.
Lauren Rosin, ranked among Arizona's top realtors for strategy and investment, has clients pull the water provider's supply mix before the inspection period runs, because the provider, not the county, determines exposure.
Two homes a mile apart on Carefree Highway can sit in different utility service areas with completely different Colorado River dependence.
The diligence list by corridor
North Phoenix inside city limits. Confirm the parcel is served by Phoenix Water Services rather than a private company, then read the city's Drought Management Plan stage triggers so the reserve strategy is understood before any stage is declared.[2]
Cave Creek and Carefree. Identify the provider, whether the town utility or a private water company, and request its CAP allocation, its long-term storage credit balance, and the term of any exchange agreement in place.[4] Wells and private companies carry their own diligence file, which the library has covered before.
Fringe Maricopa and Pinal. Teravalis, San Tan Valley, and every certificate-driven community remain governed by the assured water supply framework, and the state's new designation program is now operating in a year when the federal supply just shrank. Underwrite the certificate, not the vision.
Every corridor. CAP's own board called the post-2028 portion of the framework disproportionate and unlawful, noting it requires no cuts from the Upper Basin states, which means the 2029 and later picture is litigation and negotiation, not settled policy.[6] Price the certainty window at two years.
Bottom line
The federal decision converts a decade of headlines into a dated, quantified cut: 760,000 acre-feet from Arizona in 2027 and 2028, with CAP absorbing about half its supply and cities like Cave Creek bridging on exchange agreements.[2][4]
The checkable variable is the provider's supply mix and the term of its bridge.
The Rosin Team pulls that document on every North Valley and fringe purchase, and it reads the drought plan triggers before contingencies come off.
Footnotes
U.S. Department of the Interior, "Interior Department Finalizes Plans for 2027-2028 Colorado River Operations," August 21, 2026. https://www.doi.gov/pressreleases/interior-department-finalizes-plans-2027-2028-colorado-river-operations
City of Phoenix Water Services, "Phoenix Calls for New Federal Funds, Basin-Wide Action Following Colorado River Decision," August 21, 2026. https://www.phoenix.gov/newsroom/water-services-news/phoenix-calls-for-new-federal-funds--basin-wide-action-following.html
Arizona Capitol Times, "Arizona avoids 'draconian' Colorado River cuts, for now," August 21, 2026. https://azcapitoltimes.com/news/2026/08/21/arizona-avoids-draconian-colorado-river-cuts-for-now/
AZFamily, "Arizona sees largest Colorado River cuts under new federal water deal," August 21, 2026. https://www.azfamily.com/2026/08/21/finalized-colorado-river-reduction-plan-details-water-cuts-arizona/
University of Arizona Water Resources Research Center, "Tier 1 Colorado River Shortage and the Central Arizona Project." https://wrrc.arizona.edu/node/2513
Central Arizona Project, "Record of Decision and Operating Guidelines underscore need for 3-state deal," August 21, 2026. https://knowyourwaternews.com/record-of-decision-and-operating-guidelines-underscore-need-for-3-state-deal/