Situated in the Sonoran Desert near the Arizona-California border is the tiny rural town of Cibola – home to roughly 300 people, depending on the season.
Life here depends almost entirely on the Colorado River, which nourishes thirsty crops like cotton and alfalfa, sustains a nearby wildlife refuge and allows visitors to enjoy boating and other recreation.
It’s a place few Americans are likely to have heard of, which made it all the more surprising when investment firm Greenstone Management Partners bought nearly 500 acres of land here. On its website, Greenstone says its “goal is to advance water transactions that benefit both the public good and private enterprise.”
But critics accuse Greenstone – a subsidiary of the East Coast financial services conglomerate MassMutual – of trying to profit off Cibola’s most precious and limited resource: water. And it comes at a time when Arizona’s allocation of Colorado River water is being slashed amid a decadeslong megadrought.
“These companies aren’t buying up plots of land because they want to farm here and be a part of the community, they’re buying up land here for the water rights,” said Holly Irwin, a Cibola resident and La Paz County district supervisor.
Those water rights could soon benefit Queen Creek, Arizona, a growing Phoenix suburb about 200 miles away. Last September, the town approved the transfer of a $27 million purchase of Colorado River water from Greenstone’s properties in Cibola, though the deal is now mired in a lawsuit filed by La Paz, Mohave and Yuma counties against the federal Bureau of Reclamation for signing off on the water transfer.
The Bureau of Reclamation referred all lawsuit questions to the Department of Justice, which did not respond to CNN’s request for comment.
In a court-filed response to the counties’ lawsuit, DOJ attorneys argued that Reclamation’s environmental assessment “fully satisfied” the National Environmental Policy Act. It convincingly demonstrated that the transfer would not result in any significant impacts to the environment: at most, it will result in a trivial reduction (for less than half the year) in the flows in one stretch of the Lower Colorado River.”
After hearing arguments from the counties’ attorneys and DOJ attorneys on Wednesday, US District Judge Michael Liburdi said he will make a ruling on the lawsuit in late April.
“Greenstone is going to make millions at the expense of what it’s going to do to our communities in the future and the precedence it’s going to set,” said Irwin. “We are in the midst of an extreme drought, our communities need this water. At some point, the state has a responsibility to protect the people that are here and to protect our water and not cater to those that are buying property for the water rights to make millions off of it to benefit metropolitan areas.”
Grady Gammage, an attorney representing Greenstone, told CNN in a statement that its “proposal was recommended for approval by the Arizona Department of Water Resources after extensive hearing and comment” and “has no impact on the potential of cities along the river to grow.
“As property owners, my clients hold a water right,” Gammage said. “This is the same as all the farmers along the river, who hold land that has been irrigated, in most cases for over 100 years. That water right is valuable property, which can be transferred. It’s like buying and selling land, except that, Colorado River water can only be transferred if it goes through an extensive review process at both the State and Federal Levels. Any proposed transfer is independently analyzed.”
In neighboring Mohave County, Supervisor Travis Lingenfelter describes what he sees as a battle for the future of Colorado River communities, adding that a number of East Coast investment firms have been trying to get in on the action.
“These companies are actually pretty savvy in that they come out West, purchase and pick up cheap rural agricultural land, they sit on it for a little while and then they’re trying to sell the water,” Lingenfelter said. “I don’t think that they should be allowed to profiteer off of Arizona’s finite resources … If they’re coming after a portion of our only water supply on the river for many of our communities, we have to fight it.”
It’s not just Arizona. East Coast firms have bought up thousands of acres of irrigated land across the Southwest, local officials told CNN. Water Asset Management, a New York-based investment firm, has become one of the biggest players in the field, with purchases in Arizona, California, Colorado and Nevada as well as pending deals in New Mexico and Texas.
Water Asset Management president Matt Diserio has called water in the United States “a trillion-dollar market opportunity,” and said he started the company “on the core belief that scarce clean water is the resource defining this century, much like plentiful, cheap dirty oil defined the last century.”
Water Asset Management describes its mission online as “investing in companies and assets that ensure water quality and availability.”
“Water Asset Management is proud of our investments in production agriculture and water in the American West,” company COO Marc Robert told CNN via email. “In the face of record shortages on the Colorado River, we have voluntarily answered urgent and repeated calls to conserve water. Moreover, we will continue to manage our assets in a manner that contributes to solutions to water scarcity and work actively to promote conservation.”
Andy Mueller, the general manager of the Colorado River District Water District, disagrees, describing Water Asset Management and other East Coast investment firms as “drought profiteers.”
“They’re trying to suck the very lifeblood out of these communities for their own financial benefit,” Mueller said.
Water Asset Management owns at least 3,000 acres in Western Colorado’s Grand Valley, where Mueller works to protect Colorado’s share of the river. He said the full scale of the land grab is difficult to track because investment firms use different names to disguise ownership.
“Water Asset Management has engaged in a number of different purchase methods to keep their transactions unknown to many of the local jurisdictions,” Mueller said. “It’s a very unpopular move to come from New York and invest in irrigated agriculture with the intent to dry it up and watch it blow away.”
The investment firm did not respond to CNN’s question about allegations it hides its land ownership by using names other than Water Asset Management. In property searches on county assessor websites in Mohave County and Mesa County in Colorado, no results were found when CNN searched for properties with the name Water Asset Management as the listed owner.
CNN found multiple properties in both counties under various names, such as WPI Hulet Farm AZ LLC, WPI II-GV6 Farm CO LLC and WPI-919 Farm AZ LLC, all of which have a mailing address that match the address for Water Asset Management’s headquarters in New York City.
Under a pilot program, the federal government has dedicated $125 million in drought-relief funds to pay Colorado River farmers and ranchers to conserve water by fallowing their land. The feds are also readying additional funding for short-term fallowing. Some are worried that outside investment firms could profit from such a program.
“That’s where I think we start to see this investment speculation, when these outside landholders get big dollars to grow nothing,” said Kerry Donovan, a rancher in Eagle County, Colorado, who tried to strengthen Colorado’s anti-speculation laws during her time as a state senator. “These companies don’t have the passion to grow crops, they have a passion to make money. It’s a very different land management mindset.”
Donovan now runs her family’s 400-acre Copper Bar Ranch, where she raises highland cattle along with her husband and two dogs. Like other farmers and ranchers in the state, she worries about how Wall Street will influence their future.
“It’s not their land, it’s not their legacy – it’s their bottom line,” Donovan said. “For me it’s personal because it’s my family’s land that we are fighting to preserve … and that could be in jeopardy when New York comes to play.
“One day they will sell that water off, which means the land would go out of agriculture production,” Donovan continued. “And they’ll sell when water is worth the most, which is when we have the least of it.”