Texas Hill Country Groundwater: Availability, Regulation & Influence on Land Prices

Posted by on Tuesday, January 28th, 2020 at 9:00am.

Underground water in Texas Hill Country

For a long while, Texas Hill Country real estate was known for its thriving acreages that were rich in water sources like creeks and springs. And just when you thought it couldn’t get any better than this, these plots of land were extremely reasonable in price!

But now, land is more expensive than ever with some properties selling for as much as $75,000 per acre.

Gone are the days of finding Hill Country farmland for a budget of $15,000 per acre. Searching for this type of real estate is looking for a unicorn--you’re not likely to find it.

So, why has the land become so expensive?

Well, the answer has to do with groundwater.

The Diminishing Supply of Water

Just like many other states in the US, Texas has seen its water supply dwindle away over the years. We can see this by comparing statistics from 2002 to 2017.

According to the Texas Environmental Almanac, 61% of the demand for water was fulfilled by surface water in 2002. This number is actually quite high, proving how much the Texas Hill Country relied on surface water supplies.

As time went on, the area experienced extreme growth, so the population skyrocketed, but no new reservoirs were constructed on the rivers of the Texas Hill Country.

And with the extreme population growth and the lack of infrastructure, Hill Country also saw at least one significant drought event between 2002 and 2017.

All of this contributed to a scarcity of water in the form of dried-up creeks and reduced flow rates in rivers.

Properties that were blessed with springs rich in water were becoming a rarity, which ultimately drove up the real estate prices. 

Even though the surface water availability is a major factor for the rising real estate prices, it isn’t even the biggest issue at hand.

Digging for Groundwater

More growth equals more people. More people bring an increased demand for water. Given the static state of surface water supplies, residents of the Texas Hill Country region are forced to go underground for water. Especially those who live beyond the Colorado River/Highland Lakes watershed and the boundaries of the Canyon Lake water supply systems.

And it's this groundwater issue that greatly contributes to the complex dynamic affecting the rise in real estate prices in Texas Hill Country.

The concept of groundwater seems quite simple at face value, but it is, in fact, a contentious, complex, and finite resource.

Why is this?

Well, it all started in 1904 when the Texas Supreme Court established the “Rule of Capture”

The Rule of Capture

The Rule of Capture in the Texas Hill Country states that if water is under your land, you can pump out as much as you wish without any regard for its effect on your neighbor's well. 

Until recently, the rule of capture was untouchable. 

However, in 2001, the Texas State Legislature enabled the GroundWater Conservation Districts (GCDs) to propagate new rules and policies to limit and alter the Rule of Capture.

It’s at this time when land prices in Texas Hill Country began increasing.

This is illustrated by the new real estate laws in Kendall County that were enacted in 2001, following the changes in the Rule of Capture. The county changed its rules for development, now requiring a parcel of land to be a minimum of 6-acres for a well to be drilled.

However, parcels of less than 6-acres whose plats were on record with the county prior to the establishment of this rule were exempted from the 6-acre minimum. 

These pieces of land are the unicorns of Texas--they’re small, relatively affordable, and have unlimited access to water.

But of course, as more and more people moved to Kendall County in search of acreages, the price of these grandfathered parcels of 6-acres or less shot up.

For instance, just down the street from where I live, a 1.58-acre lot that was exempt from the 6-acre minimum recently sold for roughly $120,000. That’s about $75,950 per acre--slightly less than the price paid for our house (which sits on 2.99 acres). This sample sale is a rural lot in a subdivision established in the late 1970s on which homeowners must drill a well (roughly $12,000) and install a septic system (roughly $10,000).

The point being is that the ability to access water--to engage the Rule of Capture--in Kendall County is an expensive privilege.

Since 2001, the Cow Creek GCD was established in the Kendall County area to further effect rules and policies to mitigate potential damage wrought by the Rule of Capture. This enforcement has perpetuated the rise in prices.

We can see this throughout the entirety of the Texas Hill Country thanks to the empowered GCD model. This only adds fuel to the fire when it comes to the supply and demand for Texas Hill Country Land.

But the reason why all of this started has to do with the politics behind the Texas aquifers.

The Texas Aquifers

To understand the GCD’s push against the Rule of Capture, we must illustrate the issue of the Texas aquifers.

Underneath Texas’s earth are astounding networks of aquifers--permeable rocks that contain bodies of water. Their beautiful, natural springs show us the importance of protecting their health.

And in recent years, it became clear that protecting the aquifers is essential.

In Gunnar Brune’s “Springs of Texas” (1981), 281 major and historically significant fresh-water springs were identified in Texas. Four of these springs were designated as “very large” with outflows of 100 cfs. 

Today, only two of the original four maintain the “very large” status: Comal Springs in Comal County and San Marcos Springs in Hays County. 

Of the 31 springs classified as “large”, only 17 remain today.

It is likely that the Rule of Capture is one of the contributing factors of the diminishment of Texas springs in the past few decades.

It was in 2001--when the GCD was commissioned to limit and alter the Rule of Capture--when the first steps were taken to preserve the integrity of the aquifers.

Although grave environmental policies were put in place, it didn’t restrict the Rule of Capture in all areas of Texas.

The Texas White Zones

The Texas “White Zones” are places where there is an absence of an established GCD, which means the Rule of Capture is still in full effect.

On the map of GroundWater Conservation Districts, all of the white zones are where landowners enjoy the unlimited protection of the Rule of Capture due to the lack of regional GCD. This is how these zones got their name.

So, it makes sense why the land along the I-35 corridor these white zone areas are some of the fastest-growing places, in terms of population, in the United States.

It didn’t take the folks at Electro Purification long to understand that a line drawn from the Hays County white zone to anywhere along the booming I-35 corridor would easily pay for itself and its investors. 

Soon, the property owned by Electro Purification was annexed into the Barton Springs-Edwards GCD in 2015. The fight to protect the aquifers is still in full swing.  

Essentially, as illustrated by the Electro Purification controversy, the existence of “white zones” and the Rule of Capture stand as a threat to the health of the aquifers throughout Texas. 

As landowners better understand the dynamics surrounding the scarcity of groundwater and the popularity of the Texas Hill Country, they’ll know why land prices have steadily been rising.

It’s easy to see that these unicorn pieces of land--ones still on the Rule of Capture--are quickly becoming extinct. It’s for this reason why we suggest that clients strike while prices are as affordable as they will ever be.

Want more information about real estate in Texas Hill Country? Contact Legacy Broker Group today!


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