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Why America’s Hottest City is Still Booming

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Phoenix has evolved from a small town to a major city with population growth driven by low taxes, a booming economy, and abundant job opportunities. However, the city faces water scarcity issues due to inefficient water usage, leading to concerns about future water supply. Arizona's historical reliance on water-intensive agriculture and outdated laws exacerbate the problem. The region's semiconductor industry, particularly Intel and TSMC, invest heavily in Phoenix, boosting the economy but raising worries about water consumption. Proposals for desalination projects and water conservation are being considered to address the looming water crisis and sustain the city's growth in semiconductor manufacturing.

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Transformation of Phoenix from small town to fifth largest city in US.
Phoenix's rapid growth is attributed to low taxes, low cost of living, booming economy, and plentiful jobs.
The city's development highlights American suburban sprawl with endless rows of single-family homes in the desert landscape.
Despite its unlikely location, Phoenix remains one of the fastest-growing metropolitan areas in the country.
Development in Phoenix is occurring at a rapid pace, showcasing its evolution into a sprawling metropolis.
Water scarcity in Phoenix
Phoenix consumes double the water of New York City, raising concerns about future water supply and habitability.
Record-breaking temperatures in 2023 emphasize the strain on water resources and increasing heat.
Cuts in water sources and a freeze on new building permits show the urgency of the situation.
Rapid suburban growth in Phoenix is threatened by diminishing water supply, leading to fears of a drastic shift in the city's future.
History of Phoenix and Arizona
Indigenous people inhabited the area before European arrival, followed by Spanish and Mexican control before becoming part of the United States.
Arizona and New Mexico were admitted as states in 1912 with similar sizes and climates.
Arizona's current population is estimated at 7.5 million, far surpassing New Mexico's 2.1 million.
New Mexico initially had a larger population when it entered as a state in 1912.
The Homestead Acts and the Reclamation Act of 1902 in the American West.
The Homestead Acts incentivized settlers to move west by offering free land in exchange for cultivation and residency.
Farming in areas like Southern California and Arizona was challenging due to scarce water resources.
The Reclamation Act of 1902 funded irrigation projects that dammed major rivers like the Colorado River, creating large reservoirs such as the Hoover Dam and Glen Canyon Dam.
These projects provided abundant water supplies to western settlers, enabling agriculture to thrive in arid regions.
Arizona's Agriculture and Water Usage.
Early farmers in Arizona and the Southwest focused on crops and livestock needing warm climates and high water consumption.
72% of Arizona's water is still used for agriculture.
The Colorado River Compact of 1922 allocated 16.4 million acre feet of water annually, with California receiving the largest share at 58.7% and Arizona at 37.3%.
Overestimation of Colorado River flows in the 1922 compact led to continued overuse by the seven compact states.
Legal water rights in the western US are based on the prior appropriation Doctrine, granting rights based on seniority.
Settlers and farmers in the late 19th and early 20th centuries acquired most senior water rights, leading to continued water usage even when not needed.
Laws regarding water rights were created with imperfect data and lacked foresight for the rise of large metropolitan areas in the Southwest.
Water scarcity in Phoenix due to climate change and decreased flow of the Colorado River.
Outdated information and legal doctrines contribute to inefficient water usage in the region.
Population growth in Phoenix post-WWII driven by invention of portable air conditioners.
Cheap air conditioning made living in the hot region tolerable, leading to rapid land development around Phoenix.
Development fueled by water from aquifers and the Colorado River.
Phoenix's population experienced rapid growth in the 1950s, with a 74% increase in population within 10 years.
Major companies were attracted to Phoenix due to low taxes and business-friendly laws.
Motorola's establishment of an R&D center in 1948 contributed to the city's growth.
Phoenix's close proximity to Southern California played a key role in attracting businesses and residents away from California.
Intel's establishment in 1979 marked a significant investment in semiconductor manufacturing, further boosting Phoenix's growth.
Intel's semiconductor manufacturing site in Phoenix is the largest in the US, with over 13,000 employees.
The company has an annual economic impact on Arizona of over $8.6 billion.
Semiconductor manufacturing is water-intensive, using millions of gallons of water daily.
Intel built a water reclamation facility that treats over 9 million gallons of water daily for reuse.
Industrial practices of companies like Intel contribute to approximately 6% of Phoenix's water supply being used for industrial purposes, leading to population growth and economic development in the city.
Arizona has decreased water consumption every decade since 1980, despite population and economic growth.
Serious water conservation efforts began in 1980, leading to the creation of the Arizona Department of Water Resources.
Phoenix implemented measures like charging more for water in summer, resulting in a decrease in water-thirsty lawns.
The city now uses treated wastewater for golf courses and parks, with plans to treat more wastewater for drinking water by 2030.
Developers in Arizona must prove a stable 100-year water supply for new residential developments, relying on groundwater and the Colorado River.
Challenges facing Arizona's water supply due to historical drought, decreased snowpack, and overuse.
Southwest reservoirs like Lake Mead are at record low levels, impacting hydroelectric power production.
Decreased flow of the Colorado River raises concerns about water availability for millions of homes and businesses.
The Biden Administration considered imposing federally mandated water cuts on states to address the crisis, a first in American history.
Options included enforcing senior water rights in California to manage water distribution in the Colorado River basin.
Water conservation agreement reached in 2023 between Arizona, California, and Nevada.
California agreed to make the majority of cuts to conserve an additional 3 million acre-feet of water until 2026.
Measures are in place to prevent a water crisis until 2027, but a long-term plan is needed for the diminishing water supply in the Colorado River.
Arizona is experiencing strain on both its groundwater and Colorado River water sources.
The Phoenix metropolitan area is projected to have only 96% of its groundwater demands met by 2121.
Maricopa County, Arizona has frozen approvals for new residential developments without a 100-year water supply designation.
The freeze affects suburban real estate growth around Phoenix, which depends on groundwater.
Arizona plans to address the 4% groundwater deficit by implementing water conservation strategies like reducing consumption and discouraging lawns.
The state may also need to reduce water-thirsty crops such as alfalfa, similar to Saudi Arabia's ban on alfalfa cultivation due to water scarcity.
Arizona cancels Saudis' lease to farm alfalfa, indicating potential future farming restrictions.
Phoenix has become a major city thanks to semiconductor manufacturing.
Taiwan is a key producer of semiconductors, with TSMC facing geopolitical risks from China's claim on Taiwan.
The threat of a Chinese invasion of Taiwan poses a growing risk to TSMC's operations on the island.
TSMC and Intel investing heavily in semiconductor manufacturing in Phoenix.
TSMC increasing investment to $40 billion and Intel doubling investment to $2 billion.
Plans for two new semiconductor fabs with first campus operational by 2025.
Largest foreign direct investment in US history, bringing $60 billion into new semiconductor facilities.
Boost in Phoenix area's economy and creation of thousands of jobs.
Phoenix emerging as semiconductor manufacturing hub in the US.
TSMC and Intel establishing new facilities in Phoenix, creating high-paying tech jobs.
Phoenix seen as strategic backup center for semiconductor production in case of Chinese invasion of Taiwan.
Washington views Phoenix as crucial asset in geopolitics for potential conflict response.
Concerns raised about water consumption in Arizona's industrial sector due to semiconductor expansion.
TSMC plans to use 9 million gallons of water per day for a new Fab facility in Phoenix, sparking criticism over water usage in an already stressed area.
IDE Technologies proposed a $5 billion plan for a massive desalination facility in Mexico to supply water to Arizona.
The proposal involves a 200m water pipeline connecting the plant to Phoenix and Tucson.
This plan aims to address water scarcity concerns in the region.
IDE Technologies proposes building pipelines to deliver 1 million acre feet of water to Arizona annually, potentially increasing water supply by 14%.
Concerns raised about the cost, environmental impact, and necessity of the project.
Alternative proposal suggests building a desalination plant in Mexico on the sea of Cortez, exchanging water rights on the Colorado River with Arizona.
Arizona currently focuses on cutting down water consumption rather than increasing supply.
Concerns about shifting environmental burden to Mexico if the project proceeds.
Arizona faces a water crisis and may need geoengineering projects to address water supply issues.
The semiconductor industry in Arizona is growing, with companies like TSMC and Intel investing in new facilities in Phoenix.
The demand for skilled semiconductor workers is rising, with a projected shortage of 70,000 workers by 2030.
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