Investors are buying up rural Arizona farmland to sell the water to urban homebuilders

CIBOLA — In fields on the Arizona-California border, farmers draw water from the nearby Colorado River to grow alfalfa, irrigating crops as they have for decades.

That could change soon. An investment company has purchased nearly 500 acres of farmland and wants to strip it of its water and send it 200 miles across the desert to a Phoenix suburb, where developers plan to build thousands of new houses.

Similar deals could follow as the demand for water in the growing Southwest outpaces the dwindling supply. Investors have begun buying thousands of acres of farmland to acquire the water, which they view as an increasingly valuable asset.

Here along the western edge of Arizona, the investment company Greenstone bought 485 acres of farmland and now awaits federal approval to sell most of its water entitlement from the land to the town of Queen Creek, one of the fastest-growing suburbs in Arizona.

The fields that would be left dry represent a small portion of the vast stretches of farmland this company and other water-focused investors have been buying, properties where the water could be taken, partially or entirely, to quench the thirst of growing cities and suburbs.

These large-scale purchases of farmlands have occurred as years of severe drought and the effects of climate change have contributed to dramatic declines in reservoirs along the Colorado River and throughout the West. As water has grown scarcer, investors have stepped in to try to profit by offering water to the highest bidders.

An examination of property records by The Arizona Republic found that Greenstone and related companies have bought at least 8,863 acres of farmland in three Arizona counties in recent years. They have amassed enough land in Yuma County to trigger alarms among longtime residents, whose water rights are among the most valuable on the lower river.

The Republic’s review of county property records in Arizona revealed that two other water-focused investment companies, Water Asset Management and Vidler Water Company, own agricultural lands totaling about 8,642 acres in several areas of the state. These same companies have bought land and water rights in places across the West, amassing a growing list of investments in Colorado, Nevada, California, New Mexico and Idaho.

The surge of investments in farmland with the primary purpose of selling water has kindled emotional debates about whether the deals will dry up farming towns. On one side are those who argue that landowners should be able to sell water and that free-market forces hold promise to reallocate scarce water supplies. On the other are people who argue that a public resource shouldn’t be sold like a commodity for easy millions and that these profit-driven deals will fuel more urban growth at the expense of rural communities.

Cibola is a community of about 300 people surrounded by farm fields and a wildlife refuge of forests and wetlands, a place where residents must drive half an hour to the nearest supermarket, across the river in Blythe, California. There is one main bridge leading from California into Cibola, and on weekends people often bring boats to launch from ramps into the river.

One of Greenstone’s leading critics is Holly Irwin, a La Paz County supervisor who lives in Cibola near the fields where the company has proposed to stop irrigating and supply water for housing.


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She said this sale of water rights, if endorsed by the federal government, would open the door to other deals in areas along the Colorado River, allowing a wave of water transfers that would leave farming towns with less and damage their economies.

“They feel that they can do a land grab and just flip it and make a make a ton of money off of it,” Irwin said. “I think it’s wrong for them to be able to come here and just purchase property for the sole purpose of just making a big buck off of it by transferring the water.”

Investors have increasingly sought farmland with reliable water supplies in the Colorado River Basin as hotter temperatures caused by climate change have intensified more than two decades of drought and added to the river’s chronic overallocation problem. With the river’s largest reservoirs now at their lowest levels since they were filled decades ago, the federal government’s first-ever declaration of a Colorado River shortage will trigger major water cutbacks next year for farmers in parts of central Arizona.

A swather cuts alfalfa, May 26, 2021, in a field near Cibola, Arizona. The land, owned by GSC Farm LLC, will sell and transfer the water to Queen Creek and the field will eventually go dry.
Some Arizona cities have for years been searching for new sources of water they can buy and import through the Central Arizona Project Canal to ease their reliance on groundwater and enable growth. That’s where Greenstone comes in.

The Phoenix-based water investment company was established in 2010. It says on its website that it “has an interest in acquiring and developing water assets located throughout the western United States.” Its investors include the financial services conglomerate MassMutual as well as various public-employee pension funds.

Greenstone, through the affiliated company GSC Farm LLC, in January secured approval from the Arizona Department of Water Resources to permanently sell its annual entitlement of 2,033 acre-feet of Colorado River water, enough to supply more than 6,000 single-family homes in Queen Creek, where local officials say they need the water to reduce reliance on groundwater and support plans for more growth. The sale price: about $21 million.

Executives of the investment company now must wait for an environmental review by the U.S. Bureau of Reclamation. Irwin and other local officials in western Arizona have vowed to continue fighting what they call a despicable water grab.

“We have the right to develop as well, and not to rape us of our water so the metropolitan areas can prosper. It’s not fair,” Irwin said. “It sets a bad precedent. I think it’s opening Pandora’s box and it’s a very dangerous policy.”

If the water sale is allowed to go forward, she said, one company after another will try to follow suit to buy more land and strip away the water.

“It’s going to be devastating for all the counties that are up and down the river,” Irwin said. “You start letting these fields go fallow and then you’re just going to create a big dust bowl.”

‘This gate should not be opened’
Water has been bought and sold in parts of the West for decades. But the deals have often involved small quantities of water and have been limited by various constraints and obstacles.

In each area of Arizona, investors who are trying to move water away from farmland for development face different rules and limitations.

In parts of central Arizona where groundwater is regulated, for example, owners of farmland with “grandfathered” pumping rights can stop irrigating and profit from the water by selling “extinguishment credits,” which cities and developers rely on while lining up supplies. Much of the growth around Phoenix has for decades depended on retiring farmlands and converting fields to rooftops.

Baseline Road, April 16, 2021, Cibola, Arizona.
In farming areas around Yuma, in contrast, landowners entitled to receive water to irrigate fields are barred — at least under current rules — from selling water for use elsewhere.

But in rural La Paz County, Greenstone and other landowners have argued they ought to be able to sell and transfer Colorado River water.

Greenstone has invested in farmland in all these areas. In Yuma County, these land purchases have provoked alarm among some in the agriculture business.

Property records show that Greenstone-linked companies, which appear in public documents under the same corporate address, own at least 2,682 irrigable acres in Yuma County’s Wellton-Mohawk Irrigation and Drainage District, representing about 5% of irrigable acres in the district.

Farms in the district produce lettuce and other crops that, along with farms in California’s neighboring Imperial Valley, supply a large portion of the country’s winter vegetables.

Records from the county and the Wellton-Mohawk Irrigation District show that Gila Seco Farm LLC, one of the Greenstone-affiliated companies, now owns more irrigable acres than any other single entity in the district and has become its fourth-largest single water user.

Defenders of Yuma agriculture have voiced concern about these purchases, saying they raise suspicions that the company could seek to change the rules to make water transfers possible.

During a state-convened hearing on Greenstone’s proposal in Yuma in 2019, many stood to denounce the plan.

“This is a company that treats water as an asset to be sold for profit,” said Wade Noble, a lawyer who represents Yuma County agricultural irrigation districts. “The land in Cibola Irrigation District was chosen, not for farming but for its expected transferable water rights.”

As the rules now stand, Yuma irrigation districts control the water contracts, Noble said, so Greenstone would “have to get control of the irrigation boards.” Noble said once Greenstone’s people do, “then they expect to be able eventually to open up the contracts in Yuma County so that the water can be transferred.”

He referred to the bestselling book “Barbarians at the Gate” and said that title fits the situation.

“The barbarians are at our gates. They are, in fact, within the walls. This gate should not be opened,” Noble said, and the audience applauded and cheered.

Noble is the coordinator for the Yuma County Agriculture Water Coalition, which includes irrigation districts and a water users association. He stressed that there is reason to be alarmed about investors who see dollar signs in permanently moving water away from agriculture.

“These companies come in, they buy land, they farm it, and then they also express intent to be able to be compensated for transferring the water off of it,” Noble said.

“It also happens with a lot of our local farmers. The siren song of making big money on your water … that siren song is hard to resist,” Noble said. “But the overall effect is you’re crippling economies, you’re crippling the food supply of the nation. And that’s just not a good thing.”

Representatives of Greenstone declined a request for an interview.

Grady Gammage Jr., a lawyer who represents the company, has said the proposal wouldn’t open “any floodgates” for many other such transfers to occur.

“There is plenty of water on the river for both urban growth and continued agricultural use,” Gammage said in an interview earlier this year. “This is not in any way going to cause some catastrophic result.”

Water investors:Tensions rise over company’s plan to sell Colorado River water in Arizona

Buying land for water
It’s not easy to get a complete picture of the land, and the water that comes with it, owned by investors like Greenstone. The Republic reviewed deeds data to better understand the access to water that Greenstone and other companies have through their landholdings and what this could mean for the future of water markets in the West.

County assessors’ records show that 15 limited liability corporations (LLCs) listed under the same address as Greenstone own about 8,863 acres in La Paz, Pinal and Yuma County. Further review of property records like deeds, requests for easements and requests to transfer the irrigation status of land, show documents signed by Greenstone CEO Michael Schlehuber, further linking the company to these LLCs.

The total purchase price of this land was nearly $66 million, property records show.

Greenstone shares a family tree with other big players in trading water resources in the West. Schlehuber once worked for Vidler Water Company and Water Asset Management was founded by one of Vidler’s cofounders. Those companies own thousands of acres in counties that contain much of Arizona’s irrigated farmland.

The Republic’s analysis of property records found that Vidler owns about 2,439 acres in La Paz and Maricopa County. LLCs connected with Water Asset Management own another 6,202 acres, mostly in Maricopa and Mohave but also in Yuma County. Property records show the parcel owners are LLCs named after WAM’s investment vehicles and list an ownership address that is the same as WAM’s.

The investments by these two companies go beyond the ones in Arizona. Between them, they have assets in Arizona, California, Colorado, Idaho, Nevada and New Mexico.

Most of the land owned by the LLCs related to Greenstone lies in Yuma County, where on Nov. 3, 2016, property records show Schlehuber signed off on the transfer of the properties to the LLCs currently listed as the owners. Because those companies are registered in Delaware, there are scant details about who is involved in the companies, but all were formed on the same date, about a month before the transfer, and use the same registered agent. Property data for land owned by the companies registered in Delaware also list the owner’s address as the one used by Greenstone.

Unlike the water entitlements tied to the land in Cibola, which are held by a Greenstone LLC, the water that flows to farmland in Yuma County is based on higher-priority rights and is administered by irrigation districts like the Yuma Mesa Irrigation and Drainage District and the Wellton-Mohawk Irrigation and Drainage District. This means that, under the current rules, a single landowner cannot independently strike a deal to move water to another community like the agreement between Greenstone and Queen Creek.

Alfredo Lopez works on one of Cibola Valley Irrigation & Drainage District’s four water pumps, August 5, 2021, on a stand over the Colorado River, near Cibola, Arizona. The irrigation district can pump up to seven acre-feet per hour from the river.
Decisions about water in the irrigation districts are made by the district boards. Some people critical of water transfer deals, like Noble, say that buying up irrigable land is one way to gain influence on these boards, ultimately paving the way for more transfers.

“They can do that in many ways, by persuading board members or by becoming board members themselves and having others elected to the board position where they can control the board,” Noble said in an interview. “Under those circumstances, regardless of which irrigation district it is, if you have control of the board, then you’ll start seeing movement of water itself as they are enticed by the profits to be made.”

For now, the land the Greenstone-related companies own in Yuma County is being irrigated for farming, records show. Gammage, the attorney who represents Greenstone, has said that on a day-to-day basis, the company is “primarily engaged in farming” on thousands of acres that produce alfalfa, cotton, wheat, citrus and other crops.

“It has its own farm team and has invested millions into its farming operation over the years,” including for farm equipment and ditches, Gammage said in an email.

Greenstone-related LLCs own at least 2,682 irrigable acres in the Wellton-Mohawk Irrigation and Drainage District, about 5% of all irrigable acres in the district. One company, Gila Seco Farm, LLC, owns more irrigable acreage than any other single entity in the irrigation district and is the fourth-largest user of water, though the LLC uses less than its minimum allotment of water.

Cities and suburbs like Queen Creek have been under growing pressure to buy water supplies from farming communities as they seek to continue rapid growth.

In 1990, one year after the town was incorporated, Queen Creek’s population was 2,667. In 2020, the population was nearly 60,000, and in the last decade, it grew by 126%, more than any other city or town in the state, the latest data from the U.S. Census Bureau show.

The town estimates that its population is even higher, and its water service area goes beyond the town’s boundaries, supplying an estimated population of more than 90,000. To sustain this growth and meet the requirements of the state’s groundwater law, town officials say they plan to draw water from a variety of sources to avoid over-reliance on groundwater supplies, which have been declining in many areas and have posed challenges for other growing suburbs.

“Our water strategy in Queen Creek is largely to diversity our water portfolio,” Queen Creek Town Manager John Kross said. “This relatively small amount that we’re hoping to acquire helps with that larger water sustainability strategy.”

Queen Creek gets a relatively small amount of Colorado River water from the CAP Canal. The amount of water that Queen Creek is slated to receive through the deal would be enough to supply more than 6,000 single-family homes, based on average water use in the Phoenix area.

Free-market forces are playing an increasing role in water management in the West, but water markets don’t necessarily need to threaten farming communities, said Robert Glennon, a water researcher and professor of law and public policy at the University of Arizona.

“As the West enters an era of water reallocation, most of the water will come from farmers, who consume more than 70% of the region’s water,” Glennon wrote in an August article.

More efficient irrigation practices can allow farmers to produce similar crop yields, even with less water, Glennon said. He said Western states need a process that protects “the long-term viability of rural communities,” and he suggested urban water users could help fund new irrigation technologies for farmers, possibly bringing “a win-win solution to the West’s water crisis.”

Water master Richard Becker (37 years) checks the flow meter on his morning rounds for the Cibola Valley Irrigation & Drainage District, August 5, 2021, near Cibola, Arizona. The district was pumping 3.5 acre-feet per hour from the Colorado River to irrigate cotton.
‘It’s our water’
The modern history of farming in Cibola began with farmers who came to the area after World War II, cleared desert brush, built canals and began pumping water from the Colorado River.

Pumps beside the river continue to hum in Cibola, sending water flowing through the canals to about 3,500 acres of irrigated land.

On one of the fields where Greenstone plans to stop irrigating, the alfalfa was ready for cutting one morning in May, the lush plants sprouting purple blossoms. A swather machine rolled across the field, leaving a clean path of fallen hay on the stubble.

“Nothing better than fresh-cut alfalfa, the smell of it,” said farmer Michael Mullion, stopping his pickup beside the field.

“This is second-year alfalfa,” Mullion said. “We’ll get this year and two more years out of this, of course, depending on what Greenstone does.”

Mullion leases the land from Greenstone. He said much of the hay is trucked to dairies and cattle feedlots in California.

Mullion is the president of the Cibola Valley Irrigation and Drainage District, and his family has been farming here since the early 1950s, when his grandfather, Joe McCain, arrived from Mississippi and started clearing land and building irrigation ditches.

Before the Hoover Dam was built in the 1930s, the river regularly swelled in floods, covering the area and depositing sediment. That made for fertile land along this curving stretch of the river, which for decades has produced cotton, hay, wheat and other crops.

Jose Perez with the free-range eggs he collected, April 16, 2021, at his home in Cibola, Arizona. Perez has been selling the eggs for five years.
Mullion said his grandfather used to say the Cibola Valley has “some of the best dirt around.”

“We’re farming the bottom of the Grand Canyon. That’s what he used to always tell people,” Mullion said. “It’s a great valley to farm in.”

Mullion is one of a handful of growers who work in Cibola, and he lives across the river in California. To get to his fields from Blythe, he passes through farmland in the Palo Verde Valley and then crosses a narrow bridge into Arizona.

In the 1950s, before there was a bridge, Mullion said his grandparents bought some old pontoons, put a camper trailer on them and ran a cable across the river. For a toll charge, farmers could transport their cotton and hay across the river on this raft, which someone would drive using the current and a fin.

When traffic picked up in the 1960s, the farmers built a bridge. In 1976, during Hurricane Kathleen, floodwaters picked up debris and toppled the bridge. Afterward, farmers rebuilt the bridge. The county has since taken over the bridge and retrofitted it.

Today Mullion and his father farm about 1,800 acres in the Cibola Valley, much of which they lease.

Mullion and other members of the irrigation district board voted to approve Greenstone’s proposal. Greenstone Managing Director Michael Malano is on the board but abstained from the vote.

The company is seeking to permanently transfer a “fourth-priority” water entitlement. Entitlements to Colorado River water in Arizona are divided into six levels of priority based on the doctrine of prior appropriation. The highest levels include some of the oldest “senior” rights, which are first in line in the priority system and are unlikely to see cuts, even in a shortage situation.

Those with the most secure levels of senior water rights include entities such as the Yuma County Water Users’ Association, and a tribal nation, the Colorado River Indian Tribes, where people have grown crops along the river for centuries. Among those with mid-tier rights along the river, fourth-priority water users include farm companies, the Mohave Valley Irrigation and Drainage District, the town of Quartzsite and other entities.

If Greenstone’s deal secures federal approval and goes forward, it will mean some of the land Mullion now farms will be left largely dry and will be used to build homes. Mullion said he expects that as homes are built, it will bring more money into the community and there will still be a future for farming.

“If this water transfer goes through, we will continue to farm in the Cibola Valley, for generations,” Mullion said. He has three daughters and said he’s confident “my kids will farm down here.”

Mullion said farmers in Cibola have long understood that in addition to buying land, they were buying water that would become more valuable in the future.

“They always knew for years and years and years that eventually an urban area, Phoenix in particular,” Mullion said, “would have some interest in this water.”

Growing suburbs in central Arizona have relied heavily on groundwater, leading to overpumping and declining water levels in many areas. Given the strains on water supplies, growing suburbs will likely continue to search for more sources of water.

“The value of our land is in the water,” Mullion said. “Without the water, the land would be worth nothing. So I think landowners and farmers should have every opportunity and right to market and sell their water.”

Other farmers in the area agree and support Greenstone’s proposal.

“It’s their land, their water,” said Ron Swan, an 87-year-old grower. “It’s our water. We developed the water rights. I think we should be able to do what we want.”

Ron Swan (retired farmer) enters the Cibola Valley Irrigation & Drainage District building, April 7, 2021, 63522 River Road, Cibola, Arizona.
Proposed water sale sparks fears
In her work as county supervisor, Irwin has researched the history of La Paz County’s creation after a referendum in 1982. She’s convinced powerful players at the time wanted to carve out the new county to make it a future source of water, a jurisdiction where groundwater could legally be pumped and moved elsewhere by canal to support the growing urban areas of central Arizona.

“We were created because of the water,” Irwin said.

Irwin said three parts of the area were envisioned as potential groundwater sources by state officials when they drew up the state’s Groundwater Management Act in 1980. That law regulated pumping in urban areas at a time when federal officials were imposing conditions for the construction of the Central Arizona Project Canal, which would bring Colorado River water to Phoenix and Tucson.

“They needed to show a future water source in order to continue to get the funding for CAP,” Irwin said. The canal cost about $4.7 billion to build.

The formation of La Paz County was sold to residents in what then was part of Yuma County with promises of improving services and local government. But Irwin said her theory is that for key figures behind the push, it was really about the water. Voters approved the measure in 1982 and La Paz County was established the following year.

In the mid-1980s, the city governments of Phoenix and Mesa bought farmland — “water farms” they were called — intending to eventually pump and transport groundwater to the cities to supplement their water supplies. Some people voiced concerns about the potential for exportation of groundwater, which led to discussions in the Legislature.

In 1991, when the Legislature barred the transport of groundwater from most rural areas to the state’s regulated “active-management areas,” three groundwater basins were included on a shortlist of exceptions: Harquahala Valley, McMullen Valley and Butler Valley, all in La Paz County. In those areas, with some restrictions, the rules allowed groundwater to be pumped and transferred elsewhere.

Since then, some water investment firms, such as Vidler and Water Asset Management, have bought farmland in these areas seeking to sell the water.

While considering options for augmenting water supplies in Arizona, state officials have recently discussed the possibility of moving water from farms in these valleys to urban areas.

“I think that La Paz County was set up to be the sacrificial lamb,” Irwin said.

And this history of establishing the county as a source of water for cities is concerning, Irwin said, because the rural desert communities need the water.

“Not only are they targeting our groundwater basins,” she said, “now they’re trying to grab water off the Colorado River.”

In April, Irwin contacted neighbors in Cibola and invited them to an informal meeting at the park on their street. They sat at picnic tables as Irwin explained her concerns about the Greenstone water deal.

Holly Irwin (left, La Paz County Supervisor) greets Danielle Shufelt (with dogs, Hunter (white) and Snickers), April 16, 2021, after a community meeting at Cibola Park, Cibola, Arizona.
“We all believe that it sets a bad policy. You open the door for this to happen, and then you’re going to have other ones right behind them that are going to want to do the same thing,” Irwin told them.

“You open the door for one, you’re going to have others coming behind. Because it’s all about the mighty dollar. It’s all about them making money,” she said. “They’re going to benefit millions and millions of dollars off this water if it gets transferred.”

Irwin said the fight against the deal is “about the principle of keeping the water here, where it belongs, up and down for the river communities.”

When Irwin had finished, one woman at a table asked: “What can we do?”

Irwin said the Bureau of Reclamation would soon hold public hearings, and she urged people to speak out.

Lauren Cooley, another resident, said afterward that she shares Irwin’s concerns.

“I don’t mind growth. But I just don’t understand water being taken away from communities and farms,” Cooley said.

Mark Bargman said he’s been coming to Cibola from Southern California since he was a boy, for about 50 years. At first, he came to camp, enjoying the remote areas where the Colorado River flows alongside bluffs in the desert.

In 2000, he and his wife Jeanne bought land and built a home. He and his family come regularly to boat on the river.

“We all stand together on the fact that we don’t want the water to be diverted from our river,” Bargman said. “These big people from Wall Street are going to come here, ‘We want that.’ And they’re going to take it. And I don’t think that’s right.”

The river’s flows already get quite low during part of the year, Bargman said, and he worries about how water transfers might affect the levels, which they count on for boating.

“It’s opening up a big can of worms. It’s going to benefit some people that are doing current development, but it’s going to hurt us here,” Bargman said. “We made a life here. We’ve built these places with our own hands and our backs, and I’m real proud of what we’ve done here. And now that’s in jeopardy.”

Bargman said he’s concerned that “they’re going to leave these areas dry, and it’s going to create a dust bowl down here.”

“It seems to me that the greed is just rampant in this country,” he said.

Later that afternoon, Bargman backed his trailer down a ramp and his boat slid into a lagoon fringed with reeds.

Soon he was speeding upriver. The yellow blossoms on palo verde trees whizzed past as the boat cut through the turquoise water. Bargman steered the boat toward a sandbar that formed an island. He cut the engine and jumped out barefoot on the sand. His cousin pulled up in another boat and two dogs scrambled onto the island.

Bargman said the water that flows in this section of the river, headed for farmland, is vital to his way of life.

“We have a really good thing here. We don’t want it to go away,” Bargman said.

Larry Shufelt throws a ball for his dog, Snickers, on April 16, 2021, from a sandbar on the Colorado River, north of Cibola, Arizona.
When GSC Farm submitted its proposal in 2019, it sparked an outpouring of opposition in communities along the river. But the Arizona Department of Water Resources endorsed the proposal in September 2020, recommending the federal government’s approval.

Initially, ADWR Director Tom Buschatzke recommended allowing the transfer of only a portion of the water, a little more than half the proposed amount. Buschatzke said the idea was to keep enough water on the property to meet future needs as it’s developed for housing.

In late January, opponents of the plan learned Buschatzke had, after receiving more information from the company, reassessed how much water should remain on the land. This reassessment dramatically increased the amount of water the company would be allowed to transfer, just a little less than its original request.

That change by the state drew strong criticism from local officials in western Arizona, who argued such a big increase ought to have involved another round of public hearings.

Mohave County supervisors have passed resolutions opposing the deal. And in a letter to the federal government last year, nine mayors of cities and towns along the river said the water transfer threatens to kill their agriculture industry and would be devastating for their communities.

Rep. Regina Cobb, R-Kingman, has tried to block the deal through a bill that would prohibit such water transfers, but the measure has failed to advance in the Legislature.

Cobb has warned that if the deal goes through, it would set a harmful precedent and put “a big price tag on water,” clearing the way for more deals to follow.

Now that the state has signed off, the final step is for the Bureau of Reclamation to consider the proposal.

The rise of water investors
Representatives of Water Asset Management declined requests for an interview. In response to a list of questions from The Republic, the private equity firm emailed a statement saying it works with farmers and ranchers to develop and implement “market-based, sustainable solutions to address water resource challenges.”

“There is no single solution to the current situation in the Colorado River Basin, but we adamantly believe it is solvable if there is cooperation between rural and urban interests. It will take a thoughtful combination of improved conservation from every sector, water storage/banking, infrastructure development, institutional flexibility, partnerships among the states and with the tribes, and perhaps most importantly it will require leadership,” the firm said in the statement.

Water Asset Management is headquartered in New York and has gradually expanded its investments in farmland and water over the past decade. It has invested over $300 million in agriculture in the West, Marc Robert, the company’s chief operating officer, said during a webinar last year.

“We own a significant amount of Western agriculture,” Robert said. “And we’re firm believers that in order to solve the water availability issues in the West, you need to compel ourselves and our fellow landowners to operate more efficiently.”

He said the firm has assets in four states — Arizona, California, Nevada and Colorado — and is pursuing transactions in Texas and New Mexico. Its purchases have included about 2,300 acres of irrigated farmland in Colorado’s Grand Valley, which are being farmed to produce alfalfa, corn and wheat.

“We focus on investing in farms with water-rich assets that have significant opportunities to become more efficient,” Robert said.

The Wall Street firm generally buys farms with flood-irrigated crops — such as alfalfa, cotton, corn or wheat — and aggregates them in groups of 2,000 acres or more, Robert said.

“We then explore other opportunities to create sustainable businesses around those assets. That can include aquifer storage and recovery. It can include solar development. It can include other infrastructure improvements to the irrigation systems that would conserve water,” Robert said. It can also include land-fallowing programs in which farmers leave a portion of their land dry and unplanted on a rotating basis, freeing up water.

“And to really crack this nut in the Colorado River Basin, you’re going to need the collaboration of the local farming community,” Robert said. “We use both agriculture and water as a way to improve their income statements, their balance sheets, but also to provide long-term supplies for the West.”

Deals that move water away from farmland have bred distrust in some communities. Several years ago, the agency that manages the Central Arizona Project considered buying farmland in Mohave County and leaving some land fallow to put the water into the CAP Canal and send it to cities. Water Asset Management owns land where the water would have been transferred away. After an outpouring of opposition, the agency’s directors dropped the proposal in 2018.

Robert said the company began to invest in farmland in the Mohave Valley Irrigation and Drainage District in 2012 and within five years had bought 16 properties for $20 million.

“We worked with our farm partners to put together a fallowing program which was approved not only by 11 neighbor farmers but also the Bureau of Reclamation,” Robert said.

The voluntary program has helped reduce water use, freeing up water that has been kept in Lake Mead, he said.

The Mohave Valley Irrigation and Drainage District’s land-fallowing program was approved by the Bureau of Reclamation, which provides the funding, said Kerri Hatz, the district’s general manager. In 2020, the district received nearly $1.2 million for the water that was conserved through fallowing of farmland, Hatz said, and those funds were paid to 11 participating farms.

Farmers in the district left 1,196 acres dry and fallow last year, more than one-fourth of the district’s irrigated land, Hatz said in a letter detailing the program. That conserved water, which totaled 6,173 acre-feet, stayed in Lake Mead to help the reservoir’s levels, which have been dropping to new lows.

The district has continued the program this year, aiming to conserve more water in Lake Mead, Hatz said.

Robert said the program “shows the level of potential for collaboration between private landowners and the larger community, when properly incentivized.” He said the firm has been involved in fallowing programs in three states.

Property records show that Water Asset Management and Vidler both own farmland in the Harquahala Valley, one of the groundwater basins where state law allows groundwater to be pumped and transferred to other areas. Emails released by state agencies show these companies and Greenstone have regularly talked with officials about planned water deals.

Vidler lists a portfolio of investments in six Western states, from New Mexico to Idaho. In Arizona, the company says on its website that its investments in the Harquahala Valley go back to the mid-1990s, when it bought over 18,000 acres, with its exportable water.

“The project was sold in multiple transactions over several years to a power company, a golf course developer and finally, in June 2005, to a real estate developer,” the company said, generating about $110 million in proceeds.

Vidler kept some land in Harquahala and in 2013 sold 1,021 acres and the associated groundwater to two Scottsdale golf courses for $10 million. In 2015, the company agreed to sell 258 acres and the remaining transferable water rights to Scottsdale, leaving the company with water rights that can only be used on Vidler’s 1,926 acres in the Harquahala Valley.

Among its current projects, Vidler lists its underground water storage facility in Harquahala, where the company has been banking Colorado River water on the expectation that there will be demand for the water in the Phoenix area.

The Colorado River from Farmers Bridge, April 17, 2021, near Cibola, Arizona.
Greenstone has also been involved in a variety of water transactions, according to its website, including sales of Rio Grande water rights in New Mexico, as well as sales of credits for halting groundwater pumping in parts of Arizona and sales of other water-storage credits.

Some representatives of water investment firms say the private sector can be a helpful ally in addressing scarcity as climate change and drought shrink water supplies in the West.

James Eklund, a water lawyer and former director of the Colorado Water Conservation Board, serves as an adviser to Water Asset Management. Eklund told the Colorado Sun earlier this year that the investment firm purchases farms, pays for upgrades that improve water efficiency and leases land back to farmers.

Eklund said these types of investments can help address water challenges while preventing “buy-and-dry” water deals that leave farmland dry.

Eklund has advocated what water managers in the Upper Colorado River Basin call “demand management” plans, which would pay farmers and ranchers to voluntarily and temporarily turn over some of their water to help boost depleted reservoirs.

In an article in April, Eklund wrote that paying farmers to leave some of their water in the river is a “critical tool” that can help “control the system’s descent.” He said this can encourage conservation and innovation, as well as farming practices that can capture carbon in soil to help address climate change.

Without these sorts of alternatives, rural areas could end up facing more of the sort of “buy-and-dry” land deals that people fear, Eklund told The Arizona Republic. “If you don’t do anything, that’s the fastest path to buy-and-dry,” he said, because cities eventually won’t have other options.

In Eklund’s opinion, government officials at all levels have been “lethargic in their responses” to the Colorado River crisis. He said he thinks private investors can help.

Eklund said that he doesn’t want to see farms eliminated and that he’s turned town potential clients who’ve asked him to work on deals that would leave farmland dry.

“If I could put a moratorium on buy-and-dry tomorrow, I would. But we have private property rights,” Eklund said, and when a farmer or rancher decides to sell, it’s a personal decision.

“I don’t begrudge them. I know exactly why they’re doing it,” Eklund said. “But it’s a tragedy of the commons, that if everybody does that, then nobody’s going to the co-op, nobody’s going to the school district, nobody’s going to the restaurant. And these towns literally dry up.”

In Colorado, one example of what can go wrong, he noted, is Crowley County, where decades ago many farmers sold their land and water rights and moved away. The water has ended up supplying cities, leaving empty, dusty farmlands.

Eklund said he doesn’t want to see this sort of thing happen elsewhere. He comes from a ranching family. His parents own a cattle ranch in Plateau Valley, where he sometimes helps with chores like fixing fences.

“Keeping land in agricultural production should be the focus,” Eklund said. “We should be doing everything we can to encourage that kind of investment.”

Profit and perils
Growers and residents in rural communities along the river say preserving irrigated agriculture is critical for the food supply and rural economies, but that’s not in the calculus of those who see big profits in the water, said J.B. Hamby, vice president of the Imperial Irrigation District’s board.

The district in California’s Imperial Valley holds the single largest water entitlement on the Colorado River and delivers it to farms that produce hay and other crops from lettuce to carrots.

“Water as a public resource is at risk of becoming privatized for profit,” Hamby said. “We know the statement, the truism in the West, that water flows uphill towards money, and the concern is that with the rise of these private companies seeking to make big profits off of drought and climate change, that they are going to be profiting at the expense of rural and agricultural communities.”

J.B. Hamby, vice president of California’s Imperial Irrigation District, says that the way the Colorado River has been managed in the past “is not how it should be managed in the present or in the future.”
Hamby has joined a coalition of conservation activists who held a news conference at the Hoover Dam in July and declared that the federal government’s business-as-usual approach to managing the Colorado River is failing. He said farming communities will be in trouble if private companies are able to take large quantities of water away to feed more growth in the Southwest.

“Rural agricultural communities are not reservoirs of water to be drained to continue relentless, reckless and unsustainable sprawl,” Hamby said. “It is just simply wrong that you have growth for some supported by the decline of others.”

Some academic researchers say water transfers from farms to cities, if well-managed, can benefit communities on both sides. Doing so requires planning so the transfer of water compensates the region, not just the individuals who decide to sell water, said Dustin Garrick, an associate professor of global water policy at the University of Waterloo in Ontario and research fellow at the University of Oxford.

Garrick and other researchers have studied the reallocation of water from rural to urban areas, and they’ve examined ways of making water trades mutually beneficial.

Potential dangers arise when there is a “buy-and-dry mentality” in transactions that fail to account for risks to agricultural economies, Garrick said.

“A buy and dry mentality concerns me because it means that these deals are happening in the absence of a regional development plan,” Garrick said in an email. “The priority is to involve those who are affected by these deals in the planning for mitigating their impacts. Efforts to rush these deals without attention to those who lose out, or perceive they do, always seems to come back to bite.”

Researcher Elizabeth Koebele said both permanent selling of water rights and temporary water leases “will be an important tool” for adapting in the West.

Koebele is an assistant professor of political science at the University of Nevada, Reno, who has studied what role water markets can play in adapting to climate change. She said there are potential dangers if water transfers aren’t done carefully, ranging from lost food production to dust blowing from fields.

“When we start talking about big investors,” Koebele said, “these concerns are exacerbated.”

She said policymakers could consider requiring that a percentage of the water remain on the land when a portion of the water is transferred.

Nicholas Schupbach, who leads investments in water rights for Barings, touted the potential for more deals in a 2020 report on water investing.

He noted that water rights values in Arizona have increased by about 10% per year from 2005 to 2018, “and water scarcity is driving prices higher in most regions.”

Near the fields that Greenstone plans to leave dry, 77-year-old farmer Claude Cranmer Jr. has been growing alfalfa for decades.

Cranmer, who goes by Junior, said he’s interested in selling some of his water and recently discussed the possibility with Malano of Greenstone.

“He said, ‘We’ve got plenty of buyers that want water out here,’” Cranmer said. “He said, ‘We can get a good price out of it.’”

A portrait of Claude Cranmer, Jr., April 16, 2021, at his farm near Cibola, Arizona. Cranmer has been farming since 1974.
Cranmer said they met at the irrigation district office months ago when the water sale was being discussed.

“He said he had more water buyers than he needed for his property that was going through,” Cranmer said.

For many years, Cranmer said he’s been expecting that the Phoenix area would eventually need more water, and he’s continued farming in hopes of being able to sell water.

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The idea, he said, would be to use some of his land to develop and sell houses, and keep some water on the remaining land so he could still farm wheat, which consumes less than alfalfa.

Cranmer said he strongly believes Greenstone should be able to sell its water, and so should he.

“I’ve been out here for 40 years trying to hang on to the water, using it. You’ve got to use it or you lose it,” Cranmer said, referring to a provision of state law that, with some exceptions, requires growers to keep irrigating or forfeit their rights.

“You’ve got to keep farming it to keep the water. And that’s why I was mainly doing it, was to hang on to the water,” he said. “Because I know it’s climbing in price all the time.”

Cranmer said he isn’t sure how much his water is worth, but he thinks it should fetch a substantial price.

Environmental coverage on and in The Arizona Republic is supported by a grant from the Nina Mason Pulliam Charitable Trust. Follow The Republic environmental reporting team at and @azcenvironment on Facebook, Twitter and Instagram.

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AUTHOR: Ian James and Geoff Hing

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