A very important story from Bloomberg, April 11:
Banks, pension funds and insurers have been turning California's scarce water into enormous profits, leaving people with less to drink
As storms battered California in March, the state’s inland breadbasket erupted with almond blossoms. It happens every year. The Central Valley—the source of 40% of America’s fruit and nuts—explodes in a riot of pink and white blooms. This year petals fluttered off branches into raging irrigation ditches that only a few months earlier had twisted across the dry dust like coils of snake molt.
California has a temporary reprieve. At the Woodville Public Utility District, 60 miles southeast of Fresno, Ralph Gutierrez has watched these cycles of flood and drought for decades. Gutierrez, 65, who grew up picking tomatoes and grapes with his parents in the nearby fields, has spent the past 43 years operating water systems for some of the poorest communities in the state. He’s a well whisperer. Brawny, with a tattooed forearm, a silver belt buckle and Western boots, Gutierrez coaxes water from stone aquifers that have been hammered for years by agricultural pollution and overpumping.
He took over Woodville’s 500 or so household hookups in 2001, when the water table beneath the small farmworker community’s well field was about 100 feet below the surface. The district’s two community wells, powered by electric pumps, produced ample clean groundwater for residential taps. Since then, California has experienced its driest pair of decades in 1,200 years, and the water level has dropped to almost 200 feet. One Woodville well dried up and cracked two years ago. The second was shut down because of nitrate contamination.
Last year almost 1,500 domestic wells went dry statewide, and the state auditor reported almost a million Californians had no safe drinking water in their homes. Today the people of Woodville drink bottled water.
This winter’s record storms, a welcome break from drought, lifted Woodville’s water level 18 feet. It will take decades of wet winters to refill the aquifer. For drought is only part of California’s water woes. The other part unspools outside the window of Gutierrez’s white Toyota Tundra, on a drive through Woodville’s outskirts. Each side of the road is covered in dense thickets of almond, pistachio and walnut orchards that have grown to dominate the landscape in the past few decades. The nut trees are known as “permanent crops,” because they need copious, year-round irrigation over the course of their 30-year life span. That’s in contrast to row crops such as tomatoes and lettuce, or silage like corn and hay, which can be fallowed to save water during drought.
The owners of the unmarked groves are a mystery to Gutierrez. Every few miles, huge U-shaped nozzles stick up, spouts for disgorging water extracted from deeper and deeper underground for California’s nut juggernaut. The prodigious pumping has helped drop the water table in the San Joaquin Valley, California’s food belt between Sacramento and south of Bakersfield. The decline has deprived many shallower wells belonging to small farmers and poor communities such as Woodville of sufficient water supplies.
“Deeper pockets, deeper wells. That’s what’s basically going on here,” Gutierrez says, growing agitated as the endless rows of trees whiz by. “Whoever is doing this doesn’t give a damn about the small people.”
The invisible hand, it turns out, belongs to the long arm of investors in New York, Toronto, Zurich and other financial capitals. Some of the world’s largest investment banks, pension funds and insurers, including Manulife Financial Corp.’s John Hancock unit, TIAA and UBS, have been depleting California’s groundwater to grow high-value nuts, leaving less drinking water for the surrounding communities, according to a Bloomberg Green investigation. Wall Street has come to Woodville, wringing it dry. Since 2010, six major investors have quadrupled their farmland under management in California, to almost 120,000 acres in all, equivalent to a third of all the cropland in Connecticut. Despite epochal drought, these companies have fueled the growth of permanent crops, disregarding some of the most basic principles of sustainable investing.
Much has been made of the water use of local farmers and industrial-scale agribusinesses such as California’s biggest nut farmer, Wonderful Co., but the growing role of institutional investors in the state’s water crisis has gone largely unnoticed. Over the past decade, the financier-farmers have poured millions of dollars into digging deep wells, expensive capital projects that many communities couldn’t dream of matching on their own. In a presentation to investors obtained by Bloomberg Green, one company said it will eventually have to dial back its groundwater pumping yet can still reap handsome returns before that day comes.
Since the start of 2019, one of every six of the deepest wells in the San Joaquin Valley has been drilled on land owned or managed by outside investors, according to Bloomberg Green’s analysis of state well completion reports through August 2022. Of the landowners that have drilled the greatest number of deep wells since 2019, two of the top three are institutional investors: TIAA and the Public Sector Pension Investment Board of Canada....
....MUCH MORE
That's not very ESG of the teachers and other government employee union pensions, now is it.
Indirectly related:
One of the few Limits to Growth that actually is a limit rather than some sort of scarcity meme.However even this should be beatable if some smart people can do the deep dive into the wonder and magic (okay, chemistry and physics) that is H2O.
We'll be hearing about virtual water with increasing frequency, right now there are only 298,000 hits in a Google search....[now up to 459,00]
February 2014
California Drought: Why Farmers Are 'Exporting Water' to China
March 2016
Shipping U.S. Water To Saudi Arabia
As we've noted elsewhere this is an example of what the hydrology pros call 'virtual water'.
July 2019
"Water is the hidden imbalance in U.S./China trade..."
February 2022
Embedded Water
And another angle:
"Why Wall Street investors’ trading California water futures is nothing to fear – and unlikely to work anyway"
I don't know. Anything that normalizes the commodification of water, that, rather than exalting it as a giver of life (and one of the weirdest compounds in the universe) reduces it to just another thing to trade, brings us closer to the day when pure power politics forces the U.S. to drain the Great Lakes just to keep Phoenix and Las Vegas and Los Angeles going.Or something.
Trying to Make a Buck Off Water Investments
It's So Hard to Find a Decent Bet on Water (investment vehicles)
May 2013
Swiss Private Bank Pictet Making Money in the Water Biz (XYL; DHR)
July 2013
"Can Powdered Water Cure Droughts?"
October 2010
Muni's: "Water Scarcity a Bond Risk, Study Warns"
April 2015
A Look At A Second Water Focused Hedge Fund
World Water Day 2019: Hedge Funds and Investing In H2O
