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Company Behind Proposed Tech City Already Owns Water Rights

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A futuristic tech metropolis in the desert, companies that operate their own governments – and blockchains, the complicated technology that lies behind Bitcoin.

It sounds like science fiction, but a proposal to let Blockchains LLC start its own city in Nevada made national headlines, even though it hasn’t officially been introduced in the Legislature yet.

If lawmakers approve the plan, it would allow developers to create so-called “innovation zones” as long as they own at least 50,000 acres of land. But in Nevada, the limiting factor for new development isn’t land – it’s water.

Daniel Rothberg is an environment reporter with the Nevada Independent. He just published an article looking at water rights purchased by Blockchains LLC, the tech company pushing for the new law.

The water rights it purchased are from the northern part of Washoe County near Gerlach, best known for hosting the Burning Man Festival in the nearby Black Rock playa. 

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“What struck me was how far away it was from the land that they owned,” Rothberg said.

The land where Blockchains plans on building its own city is about 100 miles south near the Tahoe Reno Industrial Complex. 

The company bought 7,000 acre-feet of water from two different groundwater basins. 

Water rights in the West are complicated, Rothberg said. 

“Basically, what’s important here is that the industrial center is on the Truckee River and in the Truckee River Watershed, which is where Reno and Sparks and Washoe County get its water," he said.

Which means, that Blockchains can't access the water it needs for its city because it is already been allotted.

“It’s a classic case in the West where water is scarce in this area,” he said.

Add to that, the Truckee River flows into Pyramid Lake, which is within the boundaries of the Pyramid Lake Paiutes land. The lake saw significant water loss when water was diverted to Fallon for agriculture.

That water loss threatened fish species in the lake. Rothberg said decades of work on every level of government, including from former Senator Harry Reid, led to the lake's recovery.

“As a result of that, there is a lot of rules and operating agreements and regulations that govern the Truckee River and that watershed. So, any new development on this scale that all comes into play,” he said.

There is another layer to Blockchains plans. Pumping water from a rural area to feed an urban development often comes with pushback from the rural area, Rothberg said. 

“Oftentimes when water is taken out of a rural area and transferred to a city, it impacts the economy of that rural area. It impacts, potentially, the future growth and the future uses of that water and that’s a basis for why some of these rural areas often protest,” he said.

To add to that, environmentalists point out there is environmental damage that comes with pumping water out of the ground for consumptive use in a city.

Pumping and moving water is expensive and difficult because water is very heavy, Rothberg said, which is why it will always be a stumbling block to developing large swaths of land in Nevada.

“If you’re not getting your water from a Southern Nevada Water Authority or a Truckee Meadows Water Authority and sort of going off on your own, it can be very difficult to develop,” he said.

What could be in it for the state are jobs outside of the tourism industry, which took an enormous hit during the coronavirus pandemic.

“Blockchains has promised to invest a significant amount of money and create jobs over time in this new city,” Rothberg said.

But the company wants to manage its own affairs because of how local governments operate.

“Blockchains argues that they cannot undertake this sort of master-planned development within the confines of current local government. That local government moves too slowly, doesn’t adopt technology quite as much,” he said.

Rothberg said Gov. Sisolak's mention of Blockchains and its innovation zone plans in his State of State address is notable. He also pointed out that Blockchains has contributed money to Sisolak's campaign and to the political action committee connected to the governor.

If the Legislature does pass the innovation zone bill, Rothberg has a lot of questions about how it would operate besides just the water issue. For instance, how will it deal with services like sewer and waste collection? He pointed out that local governments struggle with these problems - so how will a new government, run by a corporation, do it?

Guests

Daniel Rothberg, environment reporter, The Nevada Independent

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