Investors Grabbing Colorado River Water Rights as Scarcity Grows

What’s the story?

• As Southwestern states struggle to abide by the federal government’s demanding water cuts, private Wall Street firms are showing interest in investing in the Colorado River. 
• A joint investigation by CBS News and The Weather Channel found that the investors are looking into gaining water rights over the scarce natural resource — which 40 million people depend on for water. 

What are firms doing?

• The Water Asset Management firm has bought land in the Colorado Grand Valley that hands water rights over to the company. The New York-based firm bought at least $20 million worth of land in the last five years, making it one of the largest landowners in the area. 
• The hedge fund said it invests only in assets and companies that promote water supply and quality, but locals are concerned. In 2021, the firm’s co-founder and president, Matthew Diserio, said the U.S. water crisis is a “trillion-dollar market opportunity.” 
• Additionally, Diserio told Fintech TV in 2020 that one of the firm's main strategies is to purchase the water and sell it back to the farmers and cities that are increasingly desperate for the resource.
• Andy Mueller, general manager of the Colorado River Water Conservation District, confirmed that the investors only have an interest in the water rights, not the land, the people, or the environmental conditions. He said:

“It’s the water. These are folks that have identified the drought as an opportunity to make money…I view these drought profiteers as vultures…looking to make a lot of money off of this public resources.”

How are people being impacted?

• In Colorado’s Grand Valley, the Bernal family raises cattle and grows crops, all of which rely on water from the Colorado River. The family’s newest neighbor is Water Asset Management. Joe Bernal, who works for the firm’s farm, shared his concern. He said: 

“That’s all we’ve got is that river…Would I have invited them here? No. Am I glad that there’s a big company here buying properties in our valley, under our system? Not really…We’ll be watching for what may be coming.”

• Former Colorado state senator and current rancher in the Colorado Rockies, Kerry Donavan, is alarmed by the amount of land being bought for water rights, pointing to the desperation and shortages soon to come. She said: 

“Scarcity does equal value, right? They'll probably make money because the state will be forced to create a system that doesn’t exist right now to allow more flexibility in how a water right is used.”

What’s happening in the Colorado River?

• The Colorado River is running out of water, mainly because of the decline in water levels from the river’s two substantial reservoirs, Lake Mead and Lake Powell. 
• Reservoir levels are plummeting fast due to the 23 years of megadrought in the region, leaving the states with little time to find other solutions to the impending shortages. Experts fear that if the drought continues, the reservoirs will reach “dead pool status,” where the water levels are so low that they become stagnant. 

Do you think investment firms should be allowed to buy water rights of the Colorado River?

-Jamie Epstein

(Photo credit: iStock/Petr Kahanek)