(2021-09-20) Amid Drought, Billionaires Control A Critical California Water Bank

Amid Drought, Billionaires Control A Critical California Water Bank. Water prices are soaring in California’s Central Valley, where a quarter of the nation’s food is grown. As the West Coast’s megadrought worsens, one farming company has long been scrutinized for its outsize role in the arid region’s water supply.

Wonderful, the closely held company owned by billionaires Stewart Resnick and Lynda Resnick, can buy up huge amounts of water whenever it needs more. Most of the Resnicks’ water comes from long-term contracts and other water from land rights they have from the farms they own. Around 9% of the total water used by Wonderful is bought out on the open water market.

The Resnicks own more than 30,000 acres of almond orchards and 50,000 acres of pistachio orchards in California’s Central Valley.

it is stored in the Kern Water Bank, the most valuable water resource in a region critical to America’s fresh food supply. The water bank, which is a public-private partnership in which the Resnicks own a 57% stake, is a 32-square-mile recharge basin.

The Resnicks’ storage arrangement is controversial. “They have been banking water by using public and private dollars to corral a public resource. Because of their water rights and their wealth, they are insulating themselves from the drought,” says Char Miller, the director of environmental analysis at Pomona College.

Miller points out that in the same counties where the Resnicks have banked water underground, there are marginalized communities, often made up of migrant farmworkers and immigrants, with little access to public water. “Water has to be brought in on trucks,” adds Miller.

The Resnicks, who became wealthy after setting up a string of businesses in Los Angeles, such as a janitorial cleaning service, bought their first farmland in the Central Valley four decades ago as a hedge against inflation

Wonderful says it’s the world’s largest producer of tree nuts, America’s largest citrus grower and biggest floral delivery service via Teleflora. It also sells Fiji Water and citrus pomegranate drink Pom. Altogether the company has about $5 billion in sales, and the Resnicks, who split their time between Beverly Hills and Aspen, are now worth a combined $8 billion.

They wouldn’t have been able to create such an expansive farming operation without a sweetheart deal that gave them access to the Kern Bank. In 1994, some of Stewart Resnick’s most trusted advisors met with several leaders from southern California water districts and state water officials to broker negotiations, in what some critics have called secret meetings.

In exchange for giving up some state water deliveries—which were already vulnerable to not getting delivered in drought times—the Resnicks’ Westside Mutual Water Co. and a group of five public water districts got public land and former farmland and oilfields with major water storage capacity.