The real estate industry, meaning sales, commercial development and property management, relies on land and its native resources. Among those resources that create value in a piece of property is water. California has struggled with water shortages and droughts for quite some time, and they have not had a tangible effect on decreasing the value of real estate. But that does not mean that future, more extreme shortages won’t create issues.
Water rationing’s far-reaching effects
The recent fires and droughts in California have brought on concerning headlines around water theft. The water situation has already reached what many consider a far-fetched reality, with revelations from the article revealing that water is being stolen from:
· Fire hydrants
These water diversions have forced municipalities to limit sprinkler systems for crops and lawns severely. In the future, should the water shortage get to such a level, water rationing might eventually reach into human consumption.
In the long term, a significant water shortage affecting human consumption will affect the habitability and usability of land. If the land is unusable as farmland or as housing, the worth will decrease. If trends continue, the viability of real estate investments may eventually become vast liabilities.
Mitigating an uncertain future
However, we are not at the level of a complete collapse of the real estate market, and with forward-thinking, that may never come. California has already taken decisive actions to curb the worst effects, and we’ve written previously on the positive impacts of environmentally conscious design efforts.
The maintenance of future investments will require a collaborative effort between regulators and investors to secure a water-rich future.