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Speaker 1: As California is ravaged by drought, it pushes residents into

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Speaker 1: conflict with companies.

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Speaker 2: What happens when there's not enough water to go around?

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Speaker 3: From Bloomberg News and iHeartRadio, it's the big take. I'm

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Speaker 3: West Casova today. California's underground water is in danger of

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Speaker 3: being drained away. The recent epic rainfalls in California have

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Speaker 3: helped to green up parch lawns and dusty landscapes in

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Speaker 3: areas hard hit by drought, but beneath the ground, it's

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Speaker 3: a much different story. The state's aquifers that feed farms

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Speaker 3: and provide water for homes, which are already depleted, are

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Speaker 3: now at risk of being tapped out, in part by

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Speaker 3: giant commercial farms growing lucrative cash crops.

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Speaker 4: Because the ground has been depleted, they're having to build

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Speaker 4: these massive wells that plunge one thousand feet or deeper

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Speaker 4: into the deeper aquifer in order to find the resource

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Speaker 4: that they need to water these crops during drought periods.

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Speaker 3: That's reporter Mark cheddi act He and Bloomberg's Peter Waldman

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Speaker 3: and Sinduja Runkarajin are here to tell us about their

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Speaker 3: investigation of how some companies are turning California's increasingly scarce

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Speaker 3: water into enormous profits, leaving many people in the state

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Speaker 3: with less to drink. Peter, We've seen record floods in California.

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Speaker 3: The places inundated with water after so many years of drought.

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Speaker 3: And that's a good thing, right.

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Speaker 5: Absolutely, Rainfall, precipitation, snow in the mountains is what California

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Speaker 5: relies on for water, both in the big cities and

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Speaker 5: especially the central Valley where the farms are. The issue

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Speaker 5: is it can be a little deceiving. Scientists say that

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Speaker 5: we're in a mega drought period. Obviously, this year is exceptional,

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Speaker 5: but since about the year two thousand, all of the

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Speaker 5: West has had a majority of sub average years of precipitation.

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Speaker 5: In California, there have been maybe half a dozen good

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Speaker 5: years in that twenty three year time span. It's problematic

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Speaker 5: in the sense that people tend to relax and they

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Speaker 5: don't focus on the underlying issues, which are quite literal

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Speaker 5: in this case, as we move into groundwater, and.

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Speaker 4: I think that the idea is that even though we've

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Speaker 4: had a record wet winter here in California, what's been

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Speaker 4: happening is that underneath the surface, our aquifers, our groundwater

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Speaker 4: has been severely depleted for decades or actually up to

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Speaker 4: a century. It will take almost just as long to

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Speaker 4: refill these aquifers, this groundwater, years, decades perhaps to replenish

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Speaker 4: that resource.

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Speaker 6: So you know, one great wet win isn't gonna do

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Speaker 6: the trick.

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Speaker 1: Some of that harm is also irrepeatable. Just because it

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Speaker 1: rains more, it doesn't mean that harm is repaired. So

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Speaker 1: that's another component to the story, is that some of

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Speaker 1: the harm has already been caused and rain cannot repair

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Speaker 1: that harm.

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Speaker 3: And as you write in your stories, Sinduja, this drought

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Speaker 3: problem that's happening underground, that these aquifers and wells have

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Speaker 3: dried up over many years a long way away from

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Speaker 3: being filled, is being exacerbated by some pretty big problems

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Speaker 3: with farming.

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Speaker 1: Yes, there's been an explosion of permanent crops in Central Valley,

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Speaker 1: and this has been happening for decades. Perman crops require

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Speaker 1: more water, and they require water all around. And therefore,

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Speaker 1: like whether it's a drought period or whether it's a

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Speaker 1: period when you have wet winters, you have to constantly

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Speaker 1: keep watering them. And therefore, you know, in a place

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Speaker 1: where you don't have a lot of sourface water coming in.

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Speaker 1: You rely on groundwater, and so you have these really

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Speaker 1: deep wells that have to constantly keep supplying water to them.

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Speaker 3: Peter, what are these permanent crops and why have they

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Speaker 3: become such a big problem.

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Speaker 5: Permanent crops, in some respects are cash crops, at least

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Speaker 5: in the framework of our article, in the sense that

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Speaker 5: they exploded because our farmers in California and then investors

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Speaker 5: who were lured in by the profit potential, could grow

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Speaker 5: almonds and pistachios and wine grapes and some stone fruits,

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Speaker 5: some citrus, things that grow on trees which require a

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Speaker 5: good deal of financial investment, not just for the land

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Speaker 5: and even not just for the water, but for the

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Speaker 5: saplings and for the labor, and then take anywhere from

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Speaker 5: ten to thirty years to really bear out. You get

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Speaker 5: these things going, they produce fruit or nuts year after year,

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Speaker 5: and then you can sell them. And in the case

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Speaker 5: of almonds, which was really the prototype permanent crop that

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Speaker 5: took off, California was able to really capture the global market.

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Speaker 5: Eighty percent of the world's almond production is from California,

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Speaker 5: and sixty percent of that is exported, So you could

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Speaker 5: see the opportunity there for investors who say, oh wow,

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Speaker 5: we get these trees up and going, we will make

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Speaker 5: a lot of money year after year on the sale

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Speaker 5: of the crop itself, especially to places like Japan and China,

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Speaker 5: other parts of Asia and in Europe, and the land

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Speaker 5: will appreciate at the same time. And you can see

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Speaker 5: why the returns were quite attractive, and it's generally considered

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Speaker 5: a quite stable investment. It counter cyclical at times. So

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Speaker 5: for example, when the investments really took off after the

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Speaker 5: Great Recession, investors had had a terrible experience with land

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Speaker 5: in stock values plummeting, but farmland was holding its value,

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Speaker 5: in fact increasing because food cultivation was viewed as a

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Speaker 5: long term stable bit Peter.

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Speaker 4: There's also you know this concept now that water managers

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Speaker 4: talk about in California, which is what's called the hardening

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Speaker 4: of the water demand, meaning that the demand for water

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Speaker 4: in the state, especially for agriculture, is pretty constant and steady.

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Speaker 4: It is not a flexible like it would be if

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Speaker 4: we had mostly like row crops, and I think that

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Speaker 4: has become a challenge as well for the state to

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Speaker 4: manage what's happening now is over time, the groundwater has

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Speaker 4: been depleted, the aquifer has been lowered, So in order

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Speaker 4: to get at this groundwater during drought periods when surface

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Speaker 4: water in the state isn't available or is very limited to,

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Speaker 4: what these big agricultural users have to do is drill

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Speaker 4: these deeper wells to access the lowering water table. And

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Speaker 4: when twenty thirty, even forty years go, wells could be

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Speaker 4: drilled one hundred two hundred feet deep into the ground

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Speaker 4: to find water from these aquifers. Now, because the groundwater

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Speaker 4: has been depleted, they're having to build these massive wells

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Speaker 4: that plunge one thousand feet or deeper into the deeper

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Speaker 4: aquifer in order to find the resource that they need

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Speaker 4: to water these crops during drought periods.

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Speaker 1: California has experienced the mega drought that we're going through.

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Speaker 1: It's the driest it's been in twelve hundred years, and

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Speaker 1: the overall water table has dropped two hundred feet and

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Speaker 1: that's left a lot of wells going dry. And in

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Speaker 1: twenty twenty two we've had like fifteen hundred wells that

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Speaker 1: have gone dry. And when you have the resources to

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Speaker 1: drill deep, then you have the insurance to tap into

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Speaker 1: water even when there's a drought.

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Speaker 3: But then that takes a toll. What is the effect

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Speaker 3: of these wells going dry across the state just on

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Speaker 3: homes and smaller firms.

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Speaker 4: Obviously, it takes a tremendous toll. It was near record

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Speaker 4: levels last year during the drought, and as our story

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Speaker 4: points out, they're basically either having to get bottled water

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Speaker 4: shipped in or they're having to use water that is

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Speaker 4: sometimes unsafe or tainted, ironically, farming communities up and down

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Speaker 4: the Central Valley. The state auditor found that more than

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Speaker 4: one million Californians don't have access to reliable drinking water.

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Speaker 4: This is in the fourth largest economy in the world.

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Speaker 4: Kind of speaks to the disparity we're looking at here

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Speaker 4: where these giant wells are pumping out thousands of gallons

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Speaker 4: of water a day, and then you have these communities

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Speaker 4: where they can't get one drop of clean, reliable water.

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Speaker 5: And let me paint that picture in the context of

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Speaker 5: supporting this story. The first time I went to the

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Speaker 5: Central Valley to start talking to people about the drought

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Speaker 5: was last summer, and I met a water manager in

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Speaker 5: a very small town. It's a really farm worker camp

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Speaker 5: that now has stucco houses on it called Woodville, and

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Speaker 5: the water manager's name there is Ralph Gucerez, and we

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Speaker 5: were talking about the proliferation, and Ralph at first was saying, well,

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Speaker 5: I really think it's the dairies. The dairies are big

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Speaker 5: water consumers. We all know it takes a lot of

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Speaker 5: water for a cow to produce milk. So we went

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Speaker 5: driving in his pickup and it became very clear that

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Speaker 5: it had changed since the last time Ralph had given

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Speaker 5: this a lot of thought. He said, these lands were

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Speaker 5: now covered with thickets thick as you could imagine, lined

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Speaker 5: in perfect rows with drip irrigation literally into the horizon.

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Speaker 5: It felt like of nut trees. And that's where this

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Speaker 5: extraordinary encapsulation of our story really came out, which was

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Speaker 5: this really is deeper pockets, deeper wells. That the folks

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Speaker 5: who we were planting out there were clearly very wealthy.

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Speaker 5: They could afford this land, They could buy out the dairies,

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Speaker 5: and they could wait on these nut trees to grow

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Speaker 5: big enough to yield enough to pay their debts and

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Speaker 5: return money to their investors.

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Speaker 1: Peter kind of had an inklink that there were all

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Speaker 1: these big investors, you know from Wall Street, coming to

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Speaker 1: these really small towns in Central Valley and buying up

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Speaker 1: land and drilling wells and changing things there to own water,

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Speaker 1: to turn things into profit. But I think we didn't

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Speaker 1: know the scale of this. We went to the California

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Speaker 1: Department of Water Resources and we asked them for all

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Speaker 1: of the wells that have been dug by everybody, and

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Speaker 1: we decided to look at some of the deepest wells.

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Speaker 1: One in six of these deepest wells were drilled by

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Speaker 1: institutional investors.

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Speaker 4: Since twenty ten, six major institutional investors have QUAE drew

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Speaker 4: their farmland in California to almost one hundred and twenty

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Speaker 4: thousand acres in total, which is basically the equivalent to

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Speaker 4: a third of all the cropland in the state of Connecticut.

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Speaker 3: After the break, Just how much water are these mega

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Speaker 3: wells pulling out of the ground mark For people who

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Speaker 3: may not be as familiar with institutional investment firms, what

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Speaker 3: exactly are they who invests in them and where does

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Speaker 3: that money go?

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Speaker 4: UBS is the world's largest bank, John Hancock, which is

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Speaker 4: owned by Manu Life, which is the Canadian investment bank.

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Speaker 4: They actually many times manage money for state pension funds

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Speaker 4: like the state of Florida or the state of Texas,

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Speaker 4: or police pension fund in New Mexico, and so they're

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Speaker 4: basically taking that pension fund money and investing it in

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Speaker 4: farmland in California and managing it to get stable, generous

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Speaker 4: returns out of that investment.

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Speaker 3: Mark. When you went to these companies and asked about

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Speaker 3: how much water these farms take and the deep wells

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Speaker 3: they need to dig, what did they say?

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Speaker 6: They had a number of responses.

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Speaker 4: I mean, essentially, what they said is that they are

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Speaker 4: trying to be good stewards of the land, and that

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Speaker 4: they've installed irrigation systems that are like drip irrigation, which

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Speaker 4: is a lot more water efficient, to reduce the amount

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Speaker 4: of water used. They also referred to the recent rains

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Speaker 4: and floods, saying that they were using that water to

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Speaker 4: recharge the groundwater that had been depleted, and that they

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Speaker 4: have been trying to manage these lands as sustainably as

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Speaker 4: they see fit. Tiaa told us that in terms of

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Speaker 4: their water use near the Woodville area farm that it

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Speaker 4: had become far more efficient. They'd replaced fourteen older wells

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Speaker 4: with five new ones and installed drip irrigation systems and

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Speaker 4: had followed some land. And they also say that they've

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Speaker 4: replenished more water than they've taken out since twenty nineteen.

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Speaker 4: A lot of that water that they've used to recharge

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Speaker 4: the aquifer was collected during.

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Speaker 6: The most recent rains.

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Speaker 4: Hancock has also said that what they're doing is recharging

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Speaker 4: the aquifer with access surface water and groundwater when then

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Speaker 4: get their hands on it. They're also following land and

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Speaker 4: installing more efficient irrigation systems. PSP, which had drilled some

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Speaker 4: wells near the California aquifers, said that they were abiding

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Speaker 4: by new groundwater management regulations which restrict the amount of

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Speaker 4: water they can pull out of the aquifer, and have

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Speaker 4: also drilled wells in areas that were deemed basically okay

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Speaker 4: by local authorities.

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Speaker 1: We realized that the wells have been getting deeper and

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Speaker 1: deeper in general. But here are these institutional investors who've

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Speaker 1: drilled wells that were at least twice as deep as

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Speaker 1: all the other agricultural wells, and they're wider in diameter,

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Speaker 1: and they're capable of yielding more groundwater than everybody else

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Speaker 1: around them.

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Speaker 3: Peter, these big deep wells that Sinduja describes how much

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Speaker 3: water are they pulling.

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Speaker 5: It's not uncommon to find the large investors and the

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Speaker 5: large agribusiness companies, the big growers with wells that can

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Speaker 5: extract as much as thirty five hundred gallons per minute

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Speaker 5: from the deep aquifer.

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Speaker 3: One side effect of so many wells being dug is

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Speaker 3: something called subsidence.

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Speaker 2: For more than a century, farmers have been pumping water

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Speaker 2: out of the ground so much so the land around

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Speaker 2: here is slowly sinking, a process known as subsidence. In

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Speaker 2: less than one hundred years, it's dropped eight and a half.

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Speaker 3: Meters Sinduja, can you explain how this happens.

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Speaker 1: Subsidence is one of the things that's happening because of

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Speaker 1: not just deep wells, but prolific well pumping which has

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Speaker 1: happened during this drought period. And the harm caused by

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Speaker 1: s silence is irreparable. Just because we have a good

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Speaker 1: wet year, subsidence won't go away. And the soil, particularly clay,

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Speaker 1: which is amply present in parts of Central Value that

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Speaker 1: we write about, it starts compacting and it's capable of

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Speaker 1: storing less and less water. And that's been happening pretty rapidly.

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Speaker 4: Subsidence has become an issue for the state because it's

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Speaker 4: actually damaging critical infrastructure, such as the California Aqueduct, which

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Speaker 4: is the just main water artery that delivers snow melt

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Speaker 4: from the Sierras down to Los Angeles through this four

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Speaker 4: hundred mile concrete canal. The state that actually found that

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Speaker 4: parts of that concrete aqueduct had sunk up to three

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Speaker 4: feet over a three year period during the most recent drought.

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Speaker 6: Basically has caused almost.

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Speaker 4: A billion dollars in damage that will need to be repaired.

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Speaker 3: When we come back. What happens when deep commercial wells

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Speaker 3: drain the shallower wells that homes and community these depend on.

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Speaker 7: We did run out completely. We had no water for

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Speaker 7: a few days, and it was so hard you either

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Speaker 7: ran down upon it and took a shower and went

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Speaker 7: to someone's.

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Speaker 6: House, or you.

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Speaker 7: Just went and bottled water and did sponge bath.

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Speaker 3: That's Shelley Easton. She's a resident of Maderira, California, and

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Speaker 3: she spoke to Bloomberg quick take mark as we heard

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Speaker 3: just there. The water shortage has a big impact on

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Speaker 3: people in the Central Valley whose wells are running dry,

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Speaker 3: and in the story you write how less wealthy communities

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Speaker 3: are often the ones that get hit especially hard.

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Speaker 6: Yeah, so there's multiple reasons for that.

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Speaker 4: One is just the lack of water itself means that

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Speaker 4: these communities access to surface water is restricted. Secondly, because

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Speaker 4: there's so much deep water drilling, the water tables dropping,

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Speaker 4: and a lot of these poorer communities just have shallow wells,

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Speaker 4: which essentially means that their wells are going dry, so

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Speaker 4: their most reliable source for clean water basically it goes away.

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Speaker 6: Essentially.

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Speaker 4: One of the themes of our story is deep wells

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Speaker 4: drained shallower wells, and a lot of these poorer communities

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Speaker 4: tend to have the shallower wells.

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Speaker 7: It's just getting more instead of better. And I know

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Speaker 7: the farmers need water because without the farming, we're not

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Speaker 7: going to have food, but they go down so deep

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Speaker 7: because they don't have the irrigation like they used to.

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Speaker 5: The upshot of our reporting about institutional investors in the

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Speaker 5: Central Valley of California shows the convergence of climate change

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Speaker 5: and inequality, and that's because it's the poorer communities, the

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Speaker 5: farm worker communities that have been chronically under invested and

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Speaker 5: don't have the water infrastructure, particularly adequate wells or municipal

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Speaker 5: water systems that supply households. This isn't a coincidence because

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Speaker 5: farm worker communities have been sort of left on the

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Speaker 5: dusty byways of the central Valley away from the largely

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Speaker 5: white farming towns forever. So households and small farmer communities

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Speaker 5: communities of farm workers are left without water.

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Speaker 3: Sinduja. This is obviously a very big and long lasting problem.

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Speaker 3: What is the solution. What is the state doing to

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Speaker 3: try to minimize the depletion of the state's water.

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Speaker 1: I mean, I think in some cases, you know, importing

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Speaker 1: surface water is like one of those small solutions. But

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Speaker 1: I think the really big thing is to first of

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Speaker 1: all manage water and track who's using how much, and

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Speaker 1: make progress towards The second thing is to really impose

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Speaker 1: limits on what can be taken from the ground and

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Speaker 1: how much water can be taken from the ground, and

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Speaker 1: see what the impacts of that are. And really I

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Speaker 1: think that when in twenty fourteen Sigma A Sustainable Groundwater

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Speaker 1: Management activis passed, they wanted the local agencies nearby to

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Speaker 1: take responsibility for coming up with plans, coming up with

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Speaker 1: ways to use water sustainably. The state is sort of

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Speaker 1: like trying to have the local agencies come up with

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Speaker 1: plans and then managing and enforcing those plans, and also

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Speaker 1: monitoring them and approving them and denying them where they

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Speaker 1: lack that enforcement.

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Speaker 4: I think the most significant thing the state has done

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Speaker 4: is pass the Sustainable Groundwater Management Act, which essentially requires

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Speaker 4: the balancing of these aquifers so you're recharging as much

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Speaker 4: water as you're taking out of it. Actually, California with

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Speaker 4: the last state in the West to impose such regulation,

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Speaker 4: and the idea of this act is that over time,

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Speaker 4: it will restrict the amount of groundwater that could be

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Speaker 4: pumped out of these aquifers. The challenge with this regulation

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Speaker 4: is that the rules don't really have to have teeth

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Speaker 4: until twenty forty, so there's a long runway before a

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Speaker 4: lot of these restrictions will be imposed.

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Speaker 3: Sinduja, Mark Peter, thanks so much for coming on the show.

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Speaker 1: Thanks Wes, thanks for having us.

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Speaker 3: Thanks for listening to us here at the Big Take.

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Speaker 3: dot net. The supervising producer of the Big Take is

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Speaker 3: Vicky Vergalina. Our senior producer is Katherine Fink. Our producers

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Speaker 3: are Mow Barrow and Michael Falleerro Gilder Garcia is our engineer.

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Speaker 3: We'll be back tomorrow with another Big TAKEE

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Speaker 7: Mhm