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In drought, fortunes are made selling groundwater

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By Froma Harrop
BAKERSFIELD, Calif. — This summer, even drinking water may be hard to find in some central California towns. This region is in its third year of drought, among the worst in recorded history.
Yet agribusinesses are planting huge new groves of thirsty almond and pistachio trees. Bear in mind, these are permanent plantings. A quick crop such as alfalfa can be plowed under during a water crisis. Trees and vines, on the other hand, need years to mature. An acre could be a $3 million investment.
So what gives? What gives is a byzantine system of allocating water to a farming empire built where it shouldn't be — in a desert. In Louisiana and Mississippi, water for cotton falls from the heavens. Under these dry skies, it comes from engineers.
Farmers draining the underground aquifers increasingly rely on state and federal projects to bring in supplies from elsewhere. Much of the “new” water comes from the overtaxed Sacramento-San Joaquin River Delta, home of several endangered fish and plant species.
California has about 3,000 water districts, but the California Department of Water Resources doesn't know the exact number. Nor does it have a clear idea what the districts are doing.
Out of complexity hidden in darkness rise corruption and reckless public spending. And fortunes are made.
In normal times, the water scheme holds up. These aren't normal times.
“This year, all bets are off,” Lois Henry, an investigative columnist for The Bakersfield Californian, told me.
Henry let me jump in her truck to tour a corner of the vast Central Valley. We stopped at a strawberry farm, perfectly spaced rows of fat, red perfection going on and on. Down the road, however, we passed a small plot of Kern County in its natural state — a dreary piece of desert scrub.
What bothers Henry these days are the massive plantings of new crop trees right in the jaws of a drought. Put in only a year or two ago, lines of tiny trees stretch to the horizon with military precision. Between 2008 and 2012, agribusiness planted 68,000 more acres of permanent crops in Kern County alone.
California is the only state that doesn't regulate groundwater. Farmers may plant anywhere.
Residential developers, however, must first show that they have a source of water. So investors buy farmland, not for the land but for the groundwater. And though they are banned from selling water they move through the publicly owned system of canals for urban development, they do.
Example. Billionaires Lynda and Stewart Resnick of Beverly Hills own Paramount Farms, an agricultural titan. Again, the water they obtain through public infrastructure may be used only for agriculture or restoring groundwater — according to law, anyway.
But that doesn't seem to matter. The Resnicks appear to be selling some of their water to a developer seeking to create a new 2,000-acre planned community, Gateway Village, in another county. This is being done through a web of exotic arrangements — with the water bouncing through a maze of Resnick-owned companies, West Side Park Mutual Water Co. in particular.
Henry surmises that the Root Creek Water District, where Gateway is located, is in on the deal. Its lawyers will argue that the water being moved around is really just meant to recharge depleted groundwater. And that groundwater will be used for ... the pistachio and almond trees.
Have you seen the movie “Chinatown”?
The drought is getting so bad that the water barons have begun turning on one another. What happens if there's hardly a drop left?
“It would be almost the perfect solution to our problem,” Henry said, “because we'd have to come to a solution.”
Froma Harrop is a Providence Journal columnist. She can be reached at

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