In arid Arizona, a watershed deal on water

This Indian reservation south of Phoenix, its barren landscape littered with broken-down cars, is seemingly the last place you'd expect to find a deal involving big bucks.

Yet thanks to its plentiful supply of water – a prized resource in this region – the Gila River Indian Community may soon be flush with $200 million in federal funds.

Indeed, this tribe has just driven a hard bargain with Phoenix officials, water utilities, and agricultural interests over water rights. According to this key deal, whose funding still needs congressional approval, almost 500 billion gallons of the Salt and Gila Rivers will be diverted yearly to farms and thirsty, rapidly growing cities like Phoenix.

In recent years, native Americans across the nation have been pressing for better compensation for the use – or destruction – of their resources. California's Torres Martinez Desert Cahuilla Indians, for example, have finalized a deal awarding them $14.2 million and a large addition to their reservation. South Dakota's Oglala and Rosebud Sioux tribes are also pressing the federal government to settle claims.

But the Gila River agreement could become the largest in the nation's history. In fact, it may serve as a model for other settlements, showing how water-dependent urban areas and chronically impoverished reservations can both benefit from negotiation.

"It's a time in history where I think everyone would like to see some stability in the allocation of water," says Rod Lewis, general counsel for the tribe. "The cities would like to see it. We'd like to see it. We'd all like to plan for the future."

Tribal water rights were originally set forth in the Winters Doctrine, which came out of 1908 Supreme Court decision. In ruling against Montana farmers who wanted to use Indian water, the justices of the high court said that tribes must be allocated water sufficient to meet the needs of the reservations. The Supreme Court reinforced this decision in a landmark 1963 case involving the Colorado River.

But since many tribal communities lack the canals and pipelines necessary for delivering water to their reservations, they often have only "paper rights," says Joseph Feller, a water-policy expert at the Arizona State University College of Law in Tempe. This, in turn, has meant that a significant amount of tribal water has been used by other people, often without just compensation.

As tribes demand that their rights be recognized, however, those de facto arrangements are under fire. For example, Paiute tribal groups are threatening litigation against Los Angeles for municipal pumping from their water table. In northern Arizona, Navajo activists are demanding new negotiations over water settlements with the federal government that they consider unfair.

For non-tribal water users, from cities to industry to agriculture, these moves could mean higher costs. Water leased from the tribes can be priced as much as $1,500 per acre-foot (which is equal to about 325,000 gallons). In comparison, water sold to cities from the Central Arizona Project (CAP), a 336-mile canal carrying water from the Colorado River to Phoenix and Tucson, has a $105 base cost per acre-foot.

Yet for the extra money, water-buyers often gain one crucial asset: security.

"These tribes have very large claims against the water supplies in the state, and when you settle those claims, it provides certainty to all parties, to the tribes as well as non-Indian parties," says Bill Chase, water adviser for the city of Phoenix. "It allows you to move forward in your water planning, without the possibility that one day in the future, a court is going to award one of the tribal governments a whole bunch of water you thought was yours."

Tribal-water purchases have already helped metropolitan planners. For instance, Phoenix and Scottsdale currently lease water from the Salt River Pima-Maricopa Indian Community, and the small Ak-Chin Indian Community provides all the water for Del Webb's Anthem development north of Phoenix.

And a settlement with the Gila River Community "will be a big step forward," says Dave Roberts, water-rights manager for the Salt River Project, a Phoenix-area water utility.

As part of the Gila River deal, the tribe will still have the rights to about 210 billion gallons of water annually – enough to serve more than 3 million people.

Perhaps even more important, it will receive federal funds – of an amount yet to be determined – to build irrigation systems for its own farms. The tribe's Mr. Lewis says they're planning on turning much of their 327,000-acre reservation into farmland.

The changes could measurably improve the tribe's quality of life. The deal, Lewis says, is "necessary to our future, to our economic growth, to establish a modern standard of living for the reservation."

Still, complex and contentious water negotiations in the West rarely satisfy all parties. Attorney Paul Orme, who represents cotton and hay growers in two central Arizona irrigation districts, says many of the region's 300 farmers "aren't all that crazy about the proposed [Gila River] deal." The growers feel that they're losing some guarantees they had under a CAP deal.

The Gila River tribe, meanwhile, isn't entirely happy with what Lewis calls "a bundle of compromises." For one thing, the tribe will surrender nearly three-quarters of its water allocation. "In some ways, it's a tough pill to swallow for all of us," he says.

But he adds, "It's something that's ultimately going to benefit both sides."