The Colorado River, Lake Powell, Lake Mead Problem Finally Hits Crisis Level
There are more water rights than there is water. Higher prices will result.
Efforts to Save Lakes Powell and Mead Are Underway
This water problem has been understood for over a decade, but water levels are now so low there may be no water or electricity unless drastic measures are taken.
States refused to address the problem so the Federal Government took over. For once, that’s a good thing.
The Wall Street Journal reports The Colorado River Is Shrinking. See How Authorities Are Trying to Save It.
That’s a free link for those who want more than the excerpts below.
After years of impasse between states, the federal government has stepped in to try to save the beleaguered Colorado River.
The plans include a short-term fix for an ailing reservoir and longer-term efforts to keep the river flowing. It is unclear how effective these measures will be.
The Colorado River provides water for 40 million people and more than 5 million acres of farmland. But drought and overuse have drained its reservoirs.
The Bureau of Reclamation announced in April moves to boost water levels of Lake Powell, which straddles the border of Arizona and Utah. The massive reservoir was at risk of falling below levels needed to generate hydropower. Its dam helps provide electricity for hundreds of thousands of homes across seven Western states.
Officials channeled water into Powell from an upstream reservoir and cut planned releases from the lake by 20%. So far, the efforts seem to be working. Projections now show levels staying just above “minimum power pool” through next March, when the reservoir is expected to be its lowest.
Minimum Pool
Minimum pool is the level at which no power is produced. Dead pool is the level at which no water flows to downstream homes, businesses, and farms.
Perpetual can kicking by states, all insisting on their rights to water finally brought this crisis to a head.
A legitimate role for the federal government is to handle disputes between states. The federal government should have acted sooner.
Powell’s problems have been exacerbated by exceptionally dry conditions this year. Record-low snowpack in many parts of the Rockies last winter deprived the river of needed replenishment. Runoff into Powell is now far below historic averages.
The dry conditions follow a “megadrought” that has gripped the region since 2000. Reduced river flows have made it harder to meet the needs of states downstream of Powell, leading to more frequent deficits over the last 25 years.
Last month marked a grim milestone: the combined volume of both reservoirs hit their lowest level since 1957, when Glen Canyon Dam was still under construction.
While the recent federal actions offered a lifeline for Powell, they shifted water around rather than addressing systemwide deficits. Jack Schmidt, director of the Center for Colorado River Studies at Utah State University, likened the measures to rearranging deck chairs on a sinking ship. “The ship continues to sink,” he said.
New proposals by the Bureau of Reclamation may do more.
The bureau is weighing in now because the seven Western states that rely on the river couldn’t agree on a plan of their own. Upper basin states of Colorado, Utah, Wyoming and New Mexico have been aligned against lower basin states of Arizona, California and Nevada. As water supplies have shrunk, each side has insisted that the other cut consumption.
On average, lower basin states have consumed about twice as much as the upper basin over the last 25 years. And while they have used less in recent years, it hasn’t been enough to steady the system.
Under the new federal plan, the lower basin could have to cut consumption by up to 40% from allotted levels.
Lower basin states have objected, including Arizona, which would be hardest hit because of its lower rights to the river. “Such reductions would devastate Arizona’s water users and its economy,” state officials warned.
More Rights than Water
Arizona complains about its rights. Idiocy abounds because there is not enought water to meet its alleged rights.
If the federal government did not act, power to Arizona users from Lake Powell would be shut off.
Arizona bureaucrats would still be moaning about their rights.
The federal plan also calls for potential reductions in releases from Powell and voluntary conservation measures by upper basin states.
Agriculture accounts for more than two-thirds of Colorado River consumption and potentially offers significant savings.
Options include “more efficient irrigation, less water-intensive crops and short-term fallowing of fields,” according to Michael Cohen, a senior fellow at the Pacific Institute.
Lower basin states now await details on how much they may have to cut.
Watering the Desert to Grow Alfalfa
According to comprehensive water accounting studies by Sustainable Waters and Northern Arizona University, roughly two-thirds of the Colorado River water allocated to Arizona agriculture goes toward growing food for animals, not humans. In fact, nearly 80 percent of the state’s agricultural water is swallowed up by livestock feed crops.
1. Livestock Feed Crops (The Largest Share)
- Alfalfa: This is by far the single largest water-consuming crop in the region. Arizona’s hot climate allows farmers to harvest alfalfa up to 8 to 10 times a year. This highly lucrative but incredibly water-intensive crop is grown to support the domestic dairy and beef industries, and a portion is compressed and exported globally.
- Other Hay & Forage: Sudan grass, grain hay, and corn silage are also heavily cultivated to feed cattle.
2. Winter Vegetables & Fruits
- Specific Produce: Crops include massive yields of lettuce, broccoli, cauliflower, tomatoes, onions, and carrots.
- Winter Greens: The lower Colorado River basin (specifically around Yuma, Arizona) uses this water to produce roughly 90% of the United States’ winter vegetables.
3. Industrial and Grain Crops
- Cotton: Arizona has a long history of growing upland and Pima cotton. Cotton is exceptionally thirsty, consuming significantly more water per acre than winter vegetables. [1, 2, 3, 4, 5]
- Grains: Cultivation includes durum wheat and barley, often rotated with winter vegetables or alfalfa to keep fields productive year-round. [1, 2]
With Lake Powell hitting severe historic lows, the federal government and basin states have forced steep reductions in water deliveries to these farms. This pressure has forced many Arizona farmers—especially in central counties like Pinal—to fallow their fields or switch back to pumping finite groundwater.
How Farmers Responded
Instead of adapting, many farmers—particularly in central counties like Pinal—have simply pivoted. Forced off the Colorado River supply, they have switched right back to pumping finite, unpriced groundwater. Because of archaic state water laws, rural groundwater pumping remains largely unregulated, creating a classic “tragedy of the commons” scenario where aquifers are drained to protect short-term agricultural profits.
Allegedly it’s their right to destroy the state. Water rights are truly messed up.
Crop Prices (Alfalfa & Hay)
Water restrictions, multi-decade-low alfalfa acreage, and poor winter snowpack have severely tightened forage supplies across the West.
- Western Price Gains: New-crop hay prices have strengthened across the West, climbing by roughly $20 per ton in multiple markets as ranchers scramble to secure winter feed.
- Current Trading Ranges: In drought-affected Western states, hay is currently trading between $220 and $300 per ton. Large squares of premium alfalfa are pulling in $230 to $250 per ton.
- The Looming Spike: Agricultural economists warn that if water allocations continue to shrink and dry conditions persist, hay prices could spike to as high as $400 per ton.
Cattle Inventory (The Structural Supply Shock)
Years of accumulated drought (2021–2025) across major grazing states triggered an aggressive, multi-year liquidation of the domestic cattle herd.
- 75-Year Lows: By the start of 2026, the total U.S. cattle inventory contracted to its lowest level since 1951.
- The Hard Metrics: According to the USDA’s inventory data, the U.S. beef cow herd dropped to 27.6 million head, down 1% from 27.9 million head the previous year. This marks the seventh consecutive year of cyclical liquidation. The national beef cow herd has shrunk by roughly 4 million head (a 12.8% decline) since its peak of 31.64 million head in 2019.
- Drought Headwinds: Rebuilding the herd has stalled out. Roughly 46% of the current U.S. cattle inventory is located in drought-affected areas, a steep increase from the 16% reported at the same time last year.
Cattle and Beef Prices (Record Highs vs. Margin Arbitrage)
Because cattle supplies are historically tight, prices for live animals have blown past all-time historical highs.
- All-Time Highs: In May 2026, the weighted-average price for feeder steers (750–800 lbs) hit an all-time record high of $388.06 per hundredweight (cwt).
- USDA Forecasts: The USDA’s livestock outlook updated its 2026 annual projections higher: annual feeder steers are forecast at $377.22 per cwt (up 17% from 2025), and slaughter steers are tracking at $249.66 per cwt (an 11% increase over 2025).
This environment creates a fascinating economic paradox. While retail beef prices and live cattle prices are setting records, ranchers aren’t aggressively restocking. The soaring cost of subsidized water and desert feed (like $300+/ton hay) makes it entirely unprofitable to expand herds.
Economic Distortion at Its Finest
This is what happens when you subsidize a scarce resource. When water is handed out based on 100-year-old political compacts rather than real-time market pricing, you get the economic absurdity of exporting water-intensive hay from a parched desert to the other side of the world.
If water were priced at its true market value, alfalfa farming in the Arizona desert would vanish overnight, the aquifers would stabilize, and the structural deficit of the Colorado River would fix itself.
Instead, central planners continue to manage the decline, ensuring that the mismatch between supply and demand only worsens.