H2O Hedge Fund- buys H2O rich land

[JayDubP]

Water Asset Management is a fast-growing hedge fund based in New York that buys "water-rich" properties (primarily in Western US) and re-sells the excess water. They have a 2nd office in San Francisco.

Concerns I have are:
1) will this mean less land used for agriculture when the hedge fund starts making more money re-selling the H2O than using it for agricultural purposes. Who determines how much H2O must be used for agriculture or canthey sell it all?

2) Will the price to H2O consumers increase because the hedge fund wants to maximize its profits-- and the return for investors?

3) Will the hedge fund take all of a river's flow to create water banks where it can store "excess" H2O or to divert the H2O into canals to flow to another watershed-- (They are doing this in Winnemucca, NV area to the Humboldt River and have even proposed connecting the Humboldt River to a subsidiary of the Colorado River so the H2O can flow south -- to sell to S California???)

This was the original purpose of the Kern Water Bank--- to save H2O in good years to help agriculture in low rain/snow years BUT, in reality most of that H2O is re-sold and not stored.

Article on water banking in NV:
https://ucononline.com/news/2021/april/nevada-farmers-and-conservationists-balk-at-water-banking

[Mr T]

If a hedge fund buys it you can be sure the intent is to maximize profit- ethical philanthropy is not in their lexicon...

[Darian]

Agree with Mr T on Hedge Funds. Seems like the fund would become a competitor with existing water agencies for access to available water.

Assuming the fund intends to sell to Big-Ag, this situation might result in increased cost per acre foot for all users and increased acreage under cultivation since most water taken from CVP/SWP is on behalf of big-ag. In CA, whether a private company could take an entire river flow for any purpose, might not be possible under current law.

Diversion/storage/sale of water on a large scale is part of CA history. Everything described about diversion of the Humboldt River to canals is already being done in CA (e.g. Trinity River thru dams/diversion of partial flow to Sacramento River, etc.).

Because surface and ground water are regulated separately, the availability of surface water for sale is currently handled by contracts from federal/state water project administrators to water agency/contractors who, in turn sell to growers/municipal/private water districts (actually more complex than this explanation). Formal regulation of groundwater won't occur until 2022, if I recall correctly.

[WLREDBAND]

What he said. What they are doing is buying properties with established water rights, including ground water and surface, so they can resell the water to the highest bidder. There are some interesting legal cases floating around right now, that are involving this basic premise. A friend is a cotton farmer in Corcoran, who has established water rights, and is involved in this. As of right now, their are no established regulations involving groundwater sale (and it's rights) in the state of California. That may be changing soon, so everyone is looking into this, before something happens to change that so they can make a buck or two (or more!).


If a hedge fund buys it you can be sure the intent is to maximize profit- ethical philanthropy is not in their lexicon...

[WLREDBAND]

To answer your questions.
1) The owner of the land and its water rights has exclusive control of its groundwater rights (at this moment in CA) and some control over surface water rights. So yes, they can do whatever they want.
2) I think you already know the answer to this question! And its yes!!!!
3) Surface water has different regulations and is a very complex answer. The short answer is no, in California you can not "de-water" a river (at least in legal terms, in practical terms it happens all the time).
And your example of the KWB is a very good indicator as to what's coming.


Water Asset Management is a fast-growing hedge fund based in New York that buys "water-rich" properties (primarily in Western US) and re-sells the excess water. They have a 2nd office in San Francisco.

Concerns I have are:
1) will this mean less land used for agriculture when the hedge fund starts making more money re-selling the H2O than using it for agricultural purposes. Who determines how much H2O must be used for agriculture or canthey sell it all?

2) Will the price to H2O consumers increase because the hedge fund wants to maximize its profits-- and the return for investors?

3) Will the hedge fund take all of a river's flow to create water banks where it can store "excess" H2O or to divert the H2O into canals to flow to another watershed-- (They are doing this in Winnemucca, NV area to the Humboldt River and have even proposed connecting the Humboldt River to a subsidiary of the Colorado River so the H2O can flow south -- to sell to S California???)

This was the original purpose of the Kern Water Bank--- to save H2O in good years to help agriculture in low rain/snow years BUT, in reality most of that H2O is re-sold and not stored.

Article on water banking in NV:
https://ucononline.com/news/2021/april/nevada-farmers-and-conservationists-balk-at-water-banking