Sen. Melissa Hurtado

published on May 18, 2022 - 1:23 PM
Written by The Business Journal Staff

State Sen. Melissa Hurtado (D-Sanger) has joined forces with a colleague to call on the feds to investigate potential drought profiteering by corporate investors in the Western U.S.

Hurtado and Sen. Dave Cortese (D-San Jose) have sent a letter to U.S. Attorney General Merrick Garland with concerns about “the increasing amount of water rights being purchased by hedge funds, their potential anti-competitive practices and the devastating impact that could have on our water security,” according to a news release.

“I am concerned about the increase in water profiteering across California and the Western States,” Hurtado said in a statement. “As the west grapples with historic drought, California farmers and water managers are struggling to find the water we need to survive. We must be able to determine how anti-competitive practices and corporate investors may be disrupting water rights – leading to potential water shortages, water theft and skyrocketing water rates.”

The letter states that private investor interest and water rights purchasing was likely accelerated by the 2015 water crisis. It states that a single hedge fund has become the largest landholder in Grand Valley on the Western Slope of the Colorado Rockies. The same hedge fund also holds a water account in Lake Powell, according to the letter.

We are concerned about the ability of investors such as the one described above, or others, to sit on the resources they own allowing them to accrue value during times of crisis, if they so choose, and what that would mean for the people we represent and the position that puts us in collectively,” according to the letter. “While water markets have the ability to redistribute water fast and flexibly, they also have the potential to be abused, and are highly sensitive to outside forces that increase demand or reduce supply which could cause prices to soar.”

Hurtado also expressed concern about investors potentially purchasing water rights through subsidiaries, limiting the ability to track the original buyer.

Increased institutional investor activity has been evident in the Westlands Water District with recent changes to how much land can be purchased in the district.

“Private interests have zeroed in on our precious water supplies and are buying up local water rights, the economic and social impacts of which could be disastrous,” says Sen. Cortese. “Water scarcity is already worsening, threatened by climate change, pollution, and increased demand. We must stand firm in keeping water a resource for the public.”

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