Bill Gates’ Cascade Investment recently purchased an $80 million stake in desert land west of Phoenix. Unless Gates plans to turn the land into a preserve, he might want to know a few things that the locals didn’t tell him.

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The big news this week in metropolitan Phoenix is that Bill Gates’ Cascade Investment purchased an $80 million stake in desert land to the west of town. Boosters are excited because powerful development interests hope to turn this 24,000 acres into 80,000 houses, pushing sprawl farther into the pristine and threatened Sonoran Desert.

Unless BillG plans to turn the land into a preserve, he might want to know a few things that the locals didn’t tell him. (And to put my cards on the table, I am a fourth-generation Arizonan, former columnist for the Phoenix newspaper, and continue to write, pro bono, a blog on Arizona history and issues).

First, Arizona doesn’t have enough water to continue these kind of developments, no matter what the mouthpieces of the Real Estate Industrial Complex say. At nearly 7 million people, the state is way past population overshoot. Colorado River water is oversubscribed — too many straws in the river — and climate change is affecting the mountain snow that replenishes it. The same is true of other renewable sources such as the Salt River Project. Groundwater pumping continues despite decades-long efforts to reduce it, depleting limited and stressed aquifers. The water situation is complex, but also deliberately opaque.

Second, climate change poses a clear and present danger to Arizona now. Summers are significantly hotter and lasting longer than a few decades ago. Massive wildfires are common, another new phenomenon. Whether Phoenix will even be inhabitable by mid-century is an open question. Already, it is a man-made environment totally dependent on electricity to power air conditioning and gasoline delivered by vulnerable pipelines. Environmental challenges are enormous beyond global warming. Phoenix has some of the dirtiest air in the country.

All of which make it questionable whether all the dreamed developments ever get built, much less last long.

Arizona has a long history of land fraud, especially with the notorious Ned Warren, whose scams cost naive Americans an estimated $500 million. That mostly ended in the 1970s — and went legit, first boosted by the savings-and-loan bubble, then massive freeway construction to make worthless desert and farmland valuable for sprawl development, and finally with the subprime and housing bubble of the 2000s. Unlike other peer metros, real estate in Phoenix isn’t driven by a diverse economy — it is the most powerful driver of the economy.

In addition to destroying precious wilderness, rural areas and farmland, sprawl is terribly inefficient and costly. It requires expensive infrastructure and Arizona requires few impact fees. It adds to greenhouse gas emissions and long commutes because of car-dependency. It hurts civic cohesion. All these and more are externalities never priced into these plays. Sprawl is one of the worst social-engineering mistakes in American history. But as a short-term proposition, it can be very profitable for developers and investors.

Somehow I think BillG wouldn’t want this kind of mess wrecking Washington state. Or maybe we don’t know him like we thought we did. But to be fair, wealthy people who were clever in one area — especially tech — often think they know a lot about everything. If this is the case here, he might want to study up.


Today’s Econ Haiku:

I saw a headline

Pirates in the Amazon!

Oh, tunnel vision