Why Is Harvard Buying Up California Water Rights During A Drought

Over the past three years, worsening drought conditions have been one of the biggest challenges facing winemakers in California. The drought has been front and center on the minds of farmers across the state. It turns out that some of those “farmers” are folks you would never suspect.

The California State Water Project Map
The California State Water Project By Shannon1 via Wikimedia Commons

Against a backdrop of fear, economic uncertainty, and raging debates over the flow of water through the state’s massive 1960s-era aqueduct system, Reuters revealed a Chinatown-esque plot twist this week: Harvard University, acting through Brodiaea Inc, a subsidiary of its secretive $36 billion endowment fund, has spent over $60 million dollars buying up 10,000 acres of prime wine grape growing land, winning the right to drill 16 deep water wells in the process.

While ‘Rainpocalypse’ unleashed a brief torrent of water throughout the state back in December — resulting in flooding in Napa, among other places — the state is looking at the possibility of continued drought conditions for decades. Back in September, USA Today spoke to a number of scientists to explain the state’s worsening water situation:

The dryness in California is only part of a longer-term, 15-year drought across most of the Western USA, one that bioclimatologist Park Williams said is notable because “more area in the West has persistently been in drought during the past 15 years than in any other 15-year period since the 1150s and 1160s” — that’s more than 850 years ago.

“When considering the West as a whole, we are currently in the midst of a historically relevant megadrought,” said Williams, a professor at the Lamont-Doherty Earth Observatory of Columbia University in New York.

The newspaper also offered a glimpse of what a multi-decade drought might look like in the Golden State:

Specifically because of global warming, Ault says, the chances of the Southwestern USA experiencing a decade-long drought is at least 50% (but may be closer to 80%-90%), and the chances of a three-decade-long megadrought range from 20% to 50% over the next century. Ault is writing a study about this that will be published in a forthcoming issue of the American Meteorological Society’s Journal of Climate.

“If California suffered something like a multi-decade drought,” University of Arizona climate scientist Gregg Garfin said, “the best-case scenario would be some combination of conservation, technological improvements (such as desalinization plants), multi-state cooperation on the drought, economic-based water transfers from agriculture to urban areas and other things like that to get humans through the drought.

“In the worst-case scenario, there might be out-migration and/or ghost towns,” Garfin said. As a way to avoid this, “we could simply suck down more and more groundwater, which would have its own set of ramifications for local aquifers and the environment.”

California’s vineyards rely on a combination of rain and water pumped up from underground aquifers. The state also is home to a massive aqueduct system (The California Aqueduct which is a part of the California State Water Project), which has been the subject of intense debate over the past year.

The California Aqueduct which is a part of the California State Water Project


The aqueduct system was built to bring water to cities in the southern part of the state, but recently, the state’s farmers — wine grape growers being one of the largest members of that group — have been lobbying to reverse the flow, in a bid to head off the growing water crisis.

Those underground aquifers are where the story gets interesting, and Harvard’s shadowy, massively successful investment arm enters the picture:

Brodiaea Inc, wholly owned by the secretive $36 billion Harvard endowment fund, has spent more than $60 million to purchase about 10,000 acres in Santa Barbara and San Luis Obispo counties since 2012, making it one of the top 20 growers in Paso Robles.

Since it began its buying spree – which coincided with the start of California’s latest drought – Brodiaea has acquired rights to drill 16 water wells of between 700 and 900 feet deep, two or three times deeper than the average residential well, according to county records. Deeper wells will continue to give them access to water as shallower wells run dry.

Paso Robles, CA. - October 2014: Despite the severe drought, a mechanical harvester collects a bounty of old Vine Zinfandel grapes from a California vineyard.
Paso Robles, CA. – October 2014: Despite the severe drought, a mechanical harvester collects a bounty of old Vine Zinfandel grapes from a California vineyard. via James Mattil / Shutterstock.com


Of course there’s one final plot twist! According to Reuters, Harvard secured “water well drilling permits to feed its vineyards days before lawmakers banned new pumping.”

As local lawmakers were trying to figure out how to deal with the worsening water shortage in Paso Robles in 2013, Brodiaea and a number of other investors, agricultural land owners and residents moved fast to secure water rights.

The company got permits for seven 800-foot wells on Aug. 21, 2013, six days before a ban on new pumping from the hardest-hit part of the basin took effect, according to previously unreported data from the records.

No one is accusing Harvard of foul play, just a combination of aggressive alternative investment activity timed with some good luck. There are concerns though about the commitment Harvard, or any other investment firm, would have to sustainable agriculture in a time of crisis:

“It remains to be seen what commitment they have to the business of agriculture,” said Susan Harvey of environmental advocacy group North County Watch, which has been following the drought closely. “Is Harvard going to keep pumping ground water, or cut back on returns to protect water quality and quantity?”

Head over to Reuters to learn more about Harvard’s investment.