“‘Because we believe its physical products are going to be in increasing demand in the global economy over the coming decades,”
Harvard Management Co., the Harvard University endowment manager, likes the natural-resources asset class.
“In a warming planet, few resources will be more affected than water, as droughts, storms and changes in evaporation alter a flow critical for drinking, farming, and industry.
“Even though there aren’t many ways to make financial investments in water, investors are starting to place bets.
“Buying arable land with access to it is one way.
“In California’s Central Coast, ‘the best property with the best water will sell for record-breaking prices,’ says JoAnn Wall, a real-estate appraiser specializing in vineyards, ‘and properties without adequate water will suffer in value.'”
The Harvard Management Co. has, since 2012, been buying agricultural land, with rights to sources of water, on California’s Central Coast. The idea was pitched to Harvard by agricultural investment advisory firm Grapevine Capital Partners LLC, founded by Matt Turrentine, formerly of his family’s Central Coast grape-brokerage business, and James Ontiveros, a local vineyard manager.
“Harvard’s investing guidelines say respecting local resource rights are of increasing importance ‘in the coming decades as competition for scarce resources, such as arable land and water, intensifies due to increasing global population, climate change, and food consumption.’”
“Investors who see agriculture as a proxy for betting on water include Michael Burry, a hedge-fund investor who wager against the U.S. housing market was chronicled in the book and movie ‘The Big Short.’ In a 2015 New York Magazine interview, Mr. Burry was quoted as saying: ‘What became clear to me is that food is the way to invest in water. That is, grow food in water-rich areas and transport it for sale in water-poor areas.'”
“In California vineyards, the water-proxy math is compelling. When grapes are harvested, about 75% of their weight is water. Owning vineyards effectively turns water into revenue.”
“Kat Taylor, an environmentalist and wife of hedge-fund billionaire and liberal activist Tom Steyer, resigned earlier this year from Harvard’s board of overseers in protest of the endowment’s investments in things such as fossil fuels and water holdings she says threaten the human right to water.
“‘It may, in the short run, be about developing vineyard properties,’ she says of Harvard’s California investments. ‘In the long run, it was a claim on water.'”
See:
“Harvard Amasses Vineyards – and Water. A bet on climate change in California gives it agricultural land and the rights below it,” Russell Gold, The Wall Street Journal, 11 December 2018
“In Drought-Stricken Central California, Harvard Hopes to Turn Water Into Wine,” Eli W. Burnes and William L. Wang, The Harvard Crimson, 13 April 2018
“Michael Burry, Real-Life Market Genius From The Big Short, Thinks Another Financial Crisis Is Looming,” Jessica Pressler, New York Magazine, 28 December 2018