California, Harvard Endowment, Russell Gold discussed on Marketplace

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Slowing you down out there. On the southbound four zero five just north of Studebaker. It looks like a mini van is blocking the number three lane and people somebody's out of their vehicles. So watch out in that area. Also in cerita eastbound ninety one before Studebaker wrote a crash blocking the carpool and left lane. Has you backed up from Avalon hard. Holy thanks so much right now, sixty three degrees in Calabasas at four eighteen. This is marketplace, I'm KAI. Resolve the central coast to California is one of the state's key winegrowing regions climate soil. Also because agriculture and all the ready access to water make the land in the grapes, their key commodities. But also good investments in ways, not always visible to those not in the know among those definitely in the know though, or the people running Harvard University's endowment which five maybe six years ago quietly started buying vineyards up on the California's central coast. Russell gold had the story on the Harvard endowment. And it's ask investments for the Wall Street Journal good to have program. Thanks for having me on the feary that the Harvard endowment folks know what they're doing. Why were were they buying this land for above market prices? All the way back in two thousand twelve well what they were doing is. They were grabbing land right in the middle of the drought in California. When agriculture land that had good access to water was starting to develop a premium and basically made a premium on on cultural land that had water and started to discount land the didn't. So look the catch is that to make wine. You need grapes to make grapes you need water. And that's what's going on here. Absolutely. I mean, the the the the weight of your average wine grape is about seventy five percent water without water. You do not have grapes. You don't have wine. So in order to make a go of of this agricultural investment. They needed to make sure they had good water. And that's really what they did. If you look at where they purchase their land. They made sure that they were where the the water was still good just to get to the water wind comparison live leaving the biblical story ahead of it. There's a great phrase in this piece, the the math proxy for the investment in water turning into money with wine run me through that. So remember the investor Michael berry who very famously made a big bet against the housing market running up to two thousand and eight rate at the end of the book and the movie the big short. There's a little tagline in the movie that says, well, you know, Michael berry is now investing in water and the way he's investing in water is if you dig into it as we did that he's making purchases of agriculture. You know, you can't take the large ship. Amount of water from California and take it somewhere else like you can with oil. So if you can't move water what you can do is use the water where it is to grow crops and then move those crops. California wine is a globally sought after product. And so essentially what Harvard's doing is that they were growing grapes and developing wine in a place, which still had good water and then selling that wine, but essentially what it comes down to as you can't do that without water. So let's actually look farther down the road. Then though with a warm climate and water becoming these scarce commodity Harvard's gotta sit and Brady they're going to be sitting on top of one of the largest groundwater basins west of the Mississippi. I mean that in and of itself becomes an asset. And you make a good point. The climate is changing water is going to become more places and more scarce in places, and if you're sitting on top of agricultural land where it's becoming increasingly difficult to grow crops, but you've got one of the last few good values which has. Water. That's going to be a good investment. A word here for the surrounding grape growers and farmers up near this Harvard investment one wonders what they're thinking about all this. Well, there's some nervousness going on especially among some of the local residents. You have a lot of rural residents out there people who've moved out from the cities to to less expensive land and they're on well water. And all of a sudden, they're wells are not deep enough. They've got to be paying tens of thousands of dollars to to deepen their wells. And so they're getting upset. They're getting upset at some of these larger industrial type agriculture operations moving in that are able to drill wells thousand feet deep, and there's been some showdowns downs in front of the the county board of supervisors there was some yelling and finger pointing and I suspect that's that's this a little glimpse of what we're gonna see more of in the future. Russell gold writes on energy also water. Most recently for the Wall Street Journal Russell thanks a lot, Tom. Thanks for having me..

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