I have noted on a number of occasions that the western United States' first use policies on water rights are dysfunctional, and lead to corruption and perverse incentives.
It appears that California may be looking at fixing it, around the edges at least, by banning financial institutions from buying and selling water rights for a profit.
If this makes its way to the governor's desk and is signed into law, this would be a very good thing™.
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.
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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.
By, "Potential solution[s] afforded by private capital invested in developing reliable supplies," they mean that there are farmers out there who want to make bank from private equity and hedge funds because it's all about the Benjamins.
As I have noted on multiple occasions, "There is no human activity that private equity cannot ruin."
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