...The prospect of a continued drought or a permanent shift in weather patterns in the southwest U.S. could have implications for development activity and growth for the major population centers of Arizona and Nevada. Declining water levels in Lake Mead are approaching the point at which amounts distributed to both Arizona and Nevada would be reduced, pursuant to long- standing contractual provisions. However, Fitch believes the combination of water supply diversification, conservation investments, lowered population projections, and banked and alternative water sources suggest that growth in the three major metropolitan areas in Arizona and Nevada would not be curtailed due to water supply issues for at least the next 10-15 years. Role of Colorado River Water: The prolonged drought in the southwest U.S. has focused attention on water supplies -- most notably, the Colorado River and the cities, industries, and agricultural concerns that draw on this source. Recent media reports have highlighted...
