New Groundwater Rules Threaten Arizona's Wine Industry

Strict water management in the Willcox basin could stunt the growth of the state's thriving wine industry.

Mar. 23, 2026 at 1:48am

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Arizona's wine industry has seen exponential growth in the past three decades, going from a couple of wine producers in the early 1990s to about 168 today. However, new groundwater rules in southeastern Arizona's Willcox basin, where nearly 80% of the state's wine grapes are grown, could threaten this growth. The region has been designated an 'active management area' by the Arizona Department of Water Resources, meaning no new acres of land can be farmed and farms will be expected to cut their water use in coming years. This has put a freeze on expansion plans for many local vineyards, raising concerns about the future of Arizona's wine industry.

Why it matters

Arizona's wine industry has become an important part of the state's economy, attracting wine tourists who spend millions annually at local businesses. The Willcox basin is considered the heart of the state's wine country due to its ideal growing conditions. The new groundwater regulations threaten to stunt the industry's growth, which could have ripple effects across the state, impacting wineries, tasting rooms, and related businesses that rely on the supply of Willcox-grown grapes.

The details

The Willcox basin has been the center of water controversies, with a Midwest-based mega dairy and other outside investors expanding operations and drilling deeper wells, causing some local wells to lose capacity or go dry. In response, the state designated the region an 'active management area' in 2024, meaning no new acres of land can be farmed and farms will be expected to cut their water use. This has put a freeze on expansion plans for many local vineyards, including Merkin Vineyards, the Arizona Wine Growers Association, and Zarpara Vineyard. Vineyards are among the lowest water users in the area, but they have been grouped with high-use farms, raising concerns about future water cuts.

  • In December 2024, the Willcox groundwater basin was designated an 'active management area' by the Arizona Department of Water Resources.
  • The state water agency will make determinations and begin issuing certificates of water rights sometime in October 2026.

The players

Merkin Vineyards

A vineyard that had planned to grow 40 more acres of wine grapes but has put those expansion plans on hold due to the new groundwater regulations.

Arizona Wine Growers Association

The trade association representing the state's wine industry, which is lobbying for flexibility on the new rules and a path to growth.

Zarpara Vineyard

A vineyard that hoped future owners could plant the remaining 6 acres of their property, but the new regulations have put those plans on hold.

Riverview

One of the biggest dairy companies in the United States, which became the biggest landowner in the Willcox valley.

Arizona Department of Water Resources

The state agency that designated the Willcox groundwater basin an 'active management area' and will be determining water rights certificates.

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What they’re saying

“A freeze in Willcox ripples across the whole state.”

— Lauren King, Lobbyist for the Arizona Wine Growers Association

“We can't expand past that. More importantly, the industry can't.”

— Jesse Noble, Vineyard manager of Merkin Vineyards

“(Arizona) was our best bet to be successful because it was small and growing.”

— Barbara Pierce, Runs the tasting room and handles administration, finances and marketing at Bodega Pierce

What’s next

The Arizona Department of Water Resources will make determinations and begin issuing certificates of water rights to farmers in the Willcox basin in October 2026. This will determine which land can be irrigated going forward.

The takeaway

The new groundwater regulations in the Willcox basin, which supplies nearly 80% of Arizona's wine grapes, threaten to stunt the growth of the state's thriving wine industry. This could have far-reaching economic impacts, as the wine industry attracts millions in tourism spending annually. The Arizona Wine Growers Association is advocating for more flexibility in the regulations to allow the industry to continue expanding.