Sunday preview: Why hedge funds are eyeing Utah’s shrinking water supply

(Francisco Kjolseth | The Salt Lake Tribune) Hite Crossing Bridge stretches over the Colorado River as it flows into Lake Powell near Hite Marina on Thursday, Feb. 4, 2021.

Editor’s note: Here are three perspectives from Tribune reporter Zak Podmore’s reporting on water rights in southern Utah. Read his full story Sunday at sltrib.com or in Sunday’s newspaper.

‘A trillion-dollar market opportunity’

Matthew Diserio, the president of New York-based hedge fund Water Asset Management, has called water in the United States “a trillion-dollar market opportunity.”

The hedge fund invested $300 million in farmland in Colorado, California, Arizona and Nevada as of 2020, including $16.6 million on 2,220 acres of farmland with senior water rights in Colorado’s Grand Valley just upstream from where the Colorado River crosses into Utah.

‘Don’t see room for private speculation’

Gene Shawcroft grew up on a small farm in southern Colorado and is the general manager of the Central Utah Water Conservancy District, Utah’s largest diverter of Colorado River water. He’s seen the move from investors and he is concerned it could lead to Wall Street speculation on water resources in the region.

“I’ve been involved in water for a long, long time,” said Shawcroft, who represents Utah on the Upper Colorado River Commission. “I don’t see room for private speculation on Colorado River water — or water anywhere, for that matter.”

18 percent decline

The increased interest in investing in the future of water and what it might mean for Utah, comes as the Colorado River Basin has been in a deep drought. Rising temperatures linked to the burning of fossil fuels are leading to reduced river runoff, and average flows have diminished by 18% over the past two decades compared to the previous century. This is a trend known as the Millennium Drought.

Water managers are working on plans to head off the worst effects, including the possibility that the water level in Lake Powell will drop so low that it would prevent power generation. One idea is to develop a program in the four Upper Basin states — Utah, Colorado, Wyoming and New Mexico — to pay farmers who voluntarily stop irrigating in dry years. This is still under discussion, but for it to be implemented, all four would have to agree.

For more on the moves being made by states, private equity and the people who use Colorado River resources, see Sunday’s print newspaper or visit sltrib.com.