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Wastewater, often called effluent, was considered a burden by local governments not long ago.

But now there is a growing market in rights to water supplies — even the least-palatable-sounding ones — be cause they could be a key to future housing developments.

Last month, the town of Prescott Valley sold a portion of its effluent at auction for a whopping $67 million to a New York-based investment firm, Water Property Investors LLC. Tucsonan Ram Narayanan represented the firm at the auction.

"We consider water to be liquid gold out there," said Narayanan, a partner in Water Asset Management, a fund associated with Water Property Investors. "It's going to get to be very expensive."

The firm plans to sell those rights to developers who would need the effluent credits to satisfy state water-supply requirements. The Arizona Department of Water Resources generally requires that developers in active-management areas, such as the Tucson and Prescott areas, prove that their developments have legal access to water supplies lasting for least 100 years.

Builders are able to cash in effluent credits for rights to potable water for their developments, said John Munderloh, water resource manager for Prescott Valley.

"It's very much like a bank account balance," Munderloh said. "The (water) department is the banker."

The town sold 2,724 acre-feet of effluent water per year. That's about enough to account for water supplies to more than 8,000 new houses, Tubac water attorney Hugh Holub said.

Water-rights trading is "as old as the West," Holub said. But the Prescott Valley sale was unprecedented because it involved effluent and because of the price, he said.

"It's setting a new price bar here," he said, adding: "Like they say, one man's trash is another man's treasure."

Most water-rights sales also include land, Holub said. The sale of a water source without land also makes the Prescott Valley sale unusual, he said.

The credits sold can be used only for projects within Prescott Valley, Munderloh said. The effluent will be recharged and returned to the ground, he said.

Prescott Valley is using the proceeds of its sale to help pay for a new water pipeline needed to bring more potable water to the town, Munderloh said.

Access to effluent also underlies an ongoing dispute between the town of Marana and Pima County. Marana has sued the county to take over a portion of the county's sewer system and the effluent that comes with it. That would allow Marana to control its growth, the town argues.

Other local governments also may be considering selling effluent, Holub said.

Narayanan, who moved to Tucson about 2 1/2 years ago for family and business reasons, said he sees effluent sales as a good way for local governments to generate cash for infrastructure projects. He added that Water Property Investors might be interested in buying effluent rights in the Tucson area.

However, Tucson Water isn't interested in selling effluent rights, said Dennis Rule, strategic planning administrator for Tucson Water. Tucson uses its effluent both as credits for pumping potable water and as a water source for golf courses and parks, he said.

"Selling it to someone else for their uses is not something we want to do," he said. "We want to maintain it for our customers and our city residents."

Higher prices for water rights, including effluent, might benefit some communities such as Prescott Valley, Holub said. But they also probably will be passed along to new-home buyers, he said.

"Ultimately, all this stuff comes out either (of) water bills for the house or the price of the house," he said.