
Harvard Quietly Amasses California Vineyards–and the Water Underneath - jelliclesfarm
https://www.wsj.com/articles/harvard-quietly-amasses-california-vineyardsand-the-water-underneath-1544456396?mod=rsswn
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jelliclesfarm
[..] Steve Sinton, a rancher, was baffled when a company he’d never heard of
began buying large tracts of agricultural land near his pastures at above-
market prices. The firm, Brodiaea Inc., over a few months in 2012 acquired
more than three square miles of a flat-bottomed valley.

“It was surprising, the prices they were willing to pay,” says Mr. Sinton, a
partner in a family-owned ranch that raises cattle and grows grapes. A
conventional agricultural business’s returns couldn’t have justified those
prices. “It didn’t make sense to me.”[..]

[..] The university’s endowment manager, Harvard Management Co., was
stealthily building a sizable grape-growing business on the Central Coast
through entities including Brodiaea. With the land, it was acquiring rights to
vast sources of water in a region where the earth’s warming is making the
resource an ever-more-valuable asset.

Drought has plagued California in recent years, hitting farmers particularly
hard. The Central Coast experienced drought conditions for 30% of the past two
decades, compared with 14% of the prior 100 years, a 2015 study found.
Droughts have led to spikes in withdrawals from aquifers, many of which aren’t
recharging as much during rainy season, says study co-author Noah Diffenbaugh,
a Stanford University professor.

Harvard’s bet has proven prescient. The $39 billion fund, among America’s
biggest endowments, now values its vineyards at $305 million, up nearly
threefold from in 2013, while its overall natural-resources investments have
done poorly.

The wager has also earned backlash from some farmers and other locals who fear
Harvard eventually will use up groundwater and unduly influence water-use
regulations. “Should they be controlling our groundwater plans?” says Debbie
Arnold, a San Luis Obispo County supervisor. “I don’t think so.”[..]

[..] A Harvard Management spokesman says it is the endowment’s policy not to
discuss individual investments. In its financial report issued in 2012, the
year Brodiaea began buying, Harvard said it liked the natural-resources asset
class “because we believe its physical products are going to be in increasing
demand in the global economy over the coming decades.”[..]

