State Pension Fund is Helping a Middle Eastern Firm Export Arizona’s Precious Groundwater

Since the state-funded investment company bought the land in La Paz County, it has drilled new, deeper wells. People living nearby say they are now losing access to their only source of water, their groundwater, as the water table drops as a result of the intensive farming. As their wells go dry, they face tough choices. Some homeowners spend tens of thousands of dollars to drill their wells deeper or have water trucked in. Others just leave.

“The stakes are our future,” said Holly Irwin, one of three elected supervisors in La Paz County, who has been pushing back against the expanding hay farm. “We have a right to be here, too, and not just those with the big bucks.”

Irwin said the state-funded project is threatening to destroy the rural way of life in this part of the Sonoran Desert. She was outraged when presented with documents from the Reveal investigation showing her own retirement money was invested in the very scheme she was fighting to stop.

“It makes me angry, you know. It’s unbelievable that the state can do that with our retirement fund,” Irwin said. “I’ve been fighting for years to keep the water here, and it’s just frustrating – everywhere you look around, you know that this water is being depleted and alfalfa hay is being shipped overseas.”

Despite Water Impact, State Prioritized ‘Maximizing Returns’
La Paz County is a largely low-income part of the state, but it has a very valuable asset: an aquifer with water that has been targeted by wealthy cities, billion-dollar investment and farm companies, and the state’s own $49 billion retirement fund.

Many communities in the county rely entirely on the aquifer to supply their homes with water for drinking, showering and all their other needs. Arizona law allows homeowners, businesses and farms to drill wells on their own properties and pump up as much water as they want. The unregulated aquifer has attracted investors and farmers from far and wide.

In 1986, the roughly 20 square miles of land in La Paz County was purchased by the city of Phoenix to serve as a backup for its own municipal water supply. The city estimated it could use the land to tap into the groundwater, pump it to a canal and deliver water for up to about 150,000 homes. But Phoenix never tapped the resource and instead leased the land to a local Arizona farmer who grew less water-intensive crops.

The city assessed the aquifer in 2011 and found that the desert monsoon rains recharged the aquifer enough each year to allow the current homeowners in La Paz County to live there indefinitely, but that as a result of agricultural use, the water table was dropping up to 5 feet per year. Eventually, it would run out and homeowners would lose access to the vital water source.

In 2012, the city decided to sell the land atop this public water supply for $30 million to the North Carolina-based International Farming Corp., which manages about $2.2 billion in agricultural investments. That same year, the Arizona State Retirement System invested $175 million with the firm.

Managers at the state retirement system knew that part of their investment was going directly into the land deal in La Paz County. The retirement system – as a key investor in the deal – was given the first right to make an offer on the farmland and the underlying water rights if International Farming Corp. decided to sell. 

The state’s retirement system has about 600,000 members, such as teachers and other state and county government employees, and is one of the biggest investors in the La Paz County land deal orchestrated by International Farming Corp., or IFC. The state provided nearly half of the $430 million that the IFC-controlled fund aimed to raise for investments in farmland and associated water rights, according to state and federal records. 

The state’s $175 million investment was commingled with money from other investors into a limited partnership fund controlled by IFC called U.S. Farming Realty Trust II. The fund then purchased farmland across the country, including the land in La Paz. Retirement money for the IFC-controlled fund also came from New York City teachers, union workers in California and Michigan, and even Carnegie Hall, the storied concert venue in New York City. All were invested directly or indirectly in the Arizona land deal, part of a growing trend by retirement funds and other institutional investors to fund large-scale farm deals that control water supplies at a time when scarcity of both food and water is expected to worsen.

In particular, investors are increasingly targeting water rights in arid regions of the United States. In a 2022 prospectus shared with potential investors, IFC wrote that the water rights associated with land deals are a key component of the value of any potential investment and that “water rights in Southern California and Arizona are expected to increase in value.”

International Farming Corp. executives declined to be interviewed by Reveal. In a statement, they wrote that IFC complies with state water laws, uses advanced irrigation systems and is committed to the long-term success of the local agricultural communities that it’s part of.

The company listed the 14,000-acre property in La Paz County for sale in 2020 for $100 million, more than three times what it paid for it less than a decade earlier. The state-funded investment property remains for sale today, according to IFC, though it declined to provide the current list price.

State Employees’ Money Used to Worsen Crisis
After Reveal broke the story in 2015 about the nearly 10,000-acre Saudi-owned farm growing and exporting hay in La Paz County, it became a central campaign issue in Arizona for both Republican and Democratic candidates, who criticized the farm and its use of the state’s scarce water. Now, through the Al Dahra farm, politicians find themselves invested in the same use of water they have campaigned against.

Attorney General Kris Mayes called the Saudi land deal “one of the greatest scandals in the history of Arizona” in a recent interview with Reveal. She now expects Arizonans will be just as outraged that she and other public employees’ retirement funds are invested in a deal that further drains the state’s precious water.

“It just exacerbates an already terrible situation and shows again the abject failure of our government to protect our people and to protect our future,” Mayes said. “Our very survival as a state depends on our doing better when it comes to water.”

Mayes, who was elected in 2022 and took office this year, said she planned to look into the investments made by the state’s retirement fund.

Ironically, in making the investment in the land deal, the state of Arizona is capitalizing on its own lax water laws in rural communities, which allows landowners to pump unlimited amounts of groundwater. 

Kathy Ferris is the former head of the state’s water department and helped craft the state’s 1980 Groundwater Management Act that protected aquifers in urban areas such as Phoenix, but not in rural areas such as La Paz County – a compromise between those who saw the need to regulate water across the entire state and those who didn’t want any regulation. Now with the increased investment into pumping out Arizona’s rural water, Ferris said lawmakers need to update the state law to protect the rural aquifers. 

“I’m disappointed. I’m disappointed in the lack of action,” Ferris said. “People will continue to come here and sink deep wells in these unregulated areas and do what they want with that groundwater because they can. Or until the groundwater runs out. And then they will leave.”

Nathan Halversonis a producer for Reveal, covering business and finance with a current emphasis on the global food system. Senior reporter and producer Michael Montgomery contributed to this story. It was edited by Kate Howard and copy edited by Kim Freda. This story was produced by Reveal from the Center for Investigative Reporting, a nonprofit news organization. Learn more at and subscribe to their weekly newsletter at