In the arid West, scarce water supplies are growing scarcer. Climate change is shrinking snowpack in river basins throughout the region, leaving the future water supplies for cities, industries and farmers uncertain.

Throughout the region, farmers hold rights to the vast majority of available water, while the demand for new supplies is in growing cities or industries. To try and solve that problem, and make some money in the process, a new actor has emerged in some water-stressed pockets of the West: the private investor.

Investors are writing big checks in heavily-irrigated farm communities. Their presence alone is making people nervous, as lawmakers, local leaders, farmers and water managers try to understand just how these new players plan to profit from water.

Western Colorado Water Purchases Are Stirring Up Worries About The Future Of Farming

For five years, Zay Lopez tended vegetables, hayfields and cornfields, chickens and a small flock of sheep here on the western edge of Colorado’s Grand Valley — farming made possible by water from the Colorado River. 

Lopez has a passion for agriculture, and for a while, he carved out a niche with his business, The Produce Peddler, trucking veggies seven hours away to a farmers market in Pinedale, Wyoming. 

Lopez also moonlights as a realtor, with his finger on the pulse of the local real estate market. A few years ago, he noticed a strange new phenomenon. Much of the irrigated agricultural land sold in the valley — such as parcels just down the road from his farm — wasn’t being bought by another farmer. Instead, his new neighbor was Water Asset Management, a New York City-based hedge fund with deep pockets.

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Arizona Housing Growth Tees Up Opportunity For Water Investors

By Bret Jaspers (KJZZ) | June 2, 2020

Central Arizona has been booming – more people, more houses, more need for water. There’s also a long-term drought, and less water to buy from the Central Arizona Project canal system. It’s leading Phoenix exurbs to cast about, looking for new buckets.

Other regions of the state say: don’t come here.

“They want to come and take from the rural counties, which is completely wrong, in my opinion,” said Holly Irwin, a county supervisor in La Paz County, in far-west Arizona. Her district is where the Colorado River runs along lush irrigated farmland and small towns. 

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In Nevada, Investors Eye Underground Water Storage As A Path To Profits

Twenty-two miles outside of the nearest town (Wells, pop. 1,246), graffiti on a crumbling hotel wall reads: “Home on the Strange.” Down a dirt road, there’s an abandoned car. An arch stands at the entrance of a dilapidated school. It’s what is left of a town that lost most of its water rights.

Around the turn of the last century, New York investors established Metropolis, Nevada as a farming community. By 1912, they had constructed a dam. They built a hotel, a school and an events center. The Southern Pacific Railroad constructed an office and built a line to the town. 

Then the water ran dry. 

Downstream irrigators in Lovelock, 250 miles away and with claims to water dating back to the 1800s, challenged the East Coast investors, and were successful in blocking the town’s water. 

On a late February afternoon, near the remains of the former town, a plaque reads: “Lack of water, a typhoid epidemic, rabbits and Mormon crickets led to the town’s demise. With the closing of the post office and last school in the 1940s, the town ultimately died of thirst.”

Along the Humboldt River, a river so small Mark Twain once joked about jumping across it for sport, investors were there from the start. Water was often scarce, except for the flood years. 

Today a new type of investor has started eyeing water in the basin, less intent on building a new community than on supporting existing ones within one of the nation’s fastest growing states.

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Cash Flows is a collaborative reporting project focused on water investment in the West, produced by KUNC in Colorado, Aspen Journalism, KJZZ in Arizona and the Nevada Independent.