Legislation says investor funds buying or selling water without beneficial use would be considered a waste
(Bloomberg) — California lawmakers advanced a bill that would prohibit hedge funds and other institutional investors from buying and selling agricultural water resources for financial gain.
Under the measure, which passed the State Assembly by a 46 to 17 vote on Monday afternoon, speculation or profiteering by investment funds in the sale, transfer or lease of water rights on agricultural land would be considered a waste or unreasonable use of water.
In a legislative analysis, the bill’s sponsor, California Assembly member Rebecca Bauer-Kahan, a Democrat, cited a recent Bloomberg Green investigation that showed how institutional investors have purchased agricultural land and used diminishing groundwater supplies to grow almonds and pistachios at a significant profit, drawing down aquifer levels as nearby household wells dried up. “These practices have seemingly accelerated in the midst of two of California’s worst droughts on record,” according to the staff report.
Read More: Wall Street Turns Water Into Wealth, Worsens California Crisis
Western Growers Association and other agricultural trade groups opposed the bill, saying that it would “prohibit a potential solution afforded by private capital invested in developing reliable supplies,” the bill analysis said. The measure still needs to be passed by the California Senate and signed by Governor Gavin Newsom before it becomes law.
Separately, a bill designed to curb excessive agricultural groundwater pumping is advancing in the state assembly. That measure would require local groundwater sustainability agencies to approve well permits in basins considered to be in critical overdraft. Assembly member Steve Bennett, Democrat and sponsor of the bill, recently said during a committee hearing that Bloomberg Green’s reporting exposed failures in the state’s landmark 2014 groundwater law that was designed to combat excessive groundwater pumping during droughts.
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