When it comes to agricultural real estate in the Western United States, there’s one factor that outweighs all others: water. Soil quality, location, crop type, and infrastructure all play critical roles in determining a property’s worth, but without a reliable water source, even the most fertile ground can quickly lose its value.

In a recent National Land Podcast episode, Land Professional Brian Neufeld offered a boots-on-the-ground perspective from California’s Central Valley on the ways that water availability is shaping buyer behavior in 2026 and what sellers should know about how their water rights could impact land value.

Water Is the Foundation of Agricultural Value

For decades, land values were often tied to productivity potential, historical yields, and market conditions. Today, those considerations still matter, but they all hinge on one critical question: Is there enough water to sustain production? As Neufeld explains, “Without the water supply there, you really don’t have anything… agricultural-wise that you can do with it.”

That reality has fundamentally shifted how buyers evaluate land. Instead of starting with soil types or crop history, most begin with water availability. For many buyers, uncertain water availability is enough to kill interest in an agricultural property on the spot.

Especially between two properties within the same area, water availability can make a property really stand out. According to Neufeld, “We could be standing in the middle of a road. As you could imagine, the land on both sides is the same. You could have identical soil types and ideal conditions, but one side has more water and one side has less. Obviously, that changes the value a lot.”

This kind of disparity is becoming more common as regulations tighten and natural water supplies become less available and less predictable.

The Rise of Water Regulations

In states like California, water use is no longer an open-ended resource. Groundwater pumping restrictions and sustainability mandates are reshaping how land can be used, and how it’s valued.

Neufeld notes that these changes are creating uncertainty across the market and driving land values throughout the southwest. Historically, landowners could rely on pumping groundwater as needed. Today, those rights are being limited, measured, and in some cases reduced significantly. This has forced both buyers and sellers to rethink what land is truly worth under new constraints.

Looking Ahead: A More Selective Market

As water regulations continue to evolve, the gap between high-value and low-value land is expected to widen. Properties with secure, sustainable water access will command premium prices, while those with uncertain supply may struggle to attract buyers.

Another factor contributing to water availability in some parts of the country is the development of AI data centers, which require massive amounts of clean freshwater to operate efficiently. Some regions are already feeling the strain that these developments can put on water availability. As these developments become more common across the country, water availability may become even more important to land buyers in the years to come.

Water has always been essential to agriculture, but today it’s the defining factor in land value. Whether you’re buying, selling, or investing, understanding water rights, availability, and long-term sustainability is no longer just optional; it’s critical. If you have questions about water availability or water rights on your land, get in touch with your local Land Professional today!