11 ms·

Harvard Quietly Amasses California Vineyards and the Water Underneath

214 points by laurex 8y ago

kolbe 8y ago
https://outline.com/CwVvyu https://outline.com/CwVvyu
- hiei 8y ago
  Thank you
hunny9080 8y ago
How much non-campus land does Harvard own? Their troubles with dealing with their overseas land made the news earlier (https://www.bloomberg.com/news/articles/2018-09-06/harvard-s-foreign-farmland-investment-mess https://www.bloomberg.com/news/articles/2018-09-06/harvard-s...). Do other universities do this too?
- greeneggs 8y ago
  Most controversial are its holdings in Cambridge and Allston, across the river. > Based on data from Harvard’s building records, Harvard owns 9.56 percent of the land in Cambridge, 5.70 percent in Allston, and 0.27 percent in Boston. https://medium.com/harvard-open-data-project/how-harvards-expansion-affects-the-communities-around-it-c4e669dc9f2a https://medium.com/harvard-open-data-project/how-harvards-ex...
  - giggles_giggles 8y ago
    Harvard is in Cambridge.
    - kevinventullo 8y ago
      Also, the business school is in Allston, and the engineering school will move there in a few years.
      - cowsandmilk 8y ago
        When discussing Harvard in Allston, good reporters should spend the time to deconvolute their holdings. They have lots of campus holdings, and that is growing, but they also own plenty of things that aren't campus. They're the landlord for my auto repair place (Oriental Car King) and for the shopping mall with my grocery store (Brighton Mills). These aren't becoming campus any time soon in anything that Harvard has announced.
        zerohp 8y ago
        I stumbled across a planning map during my time at University of Illinois. It was marked showing 50, 75 and 100 year expansion possibilities. The land supporting 100 year expansion is already owned by the university and leased for commercial use. Harvard is 200 years older than UIUC. I'm sure they are also planning for 100 years in the future.
        cbm-vic-20 8y ago
        Indeed. In the past, Harvard seriously considered how to re-route the Charles River so they can "unite" their Cambridge and Allston campuses.
    - arkades 8y ago
      Allston is across the river.
- mathattack 8y ago
  I suspect quite a bit. Real Estate is a huge asset class and correlates well with one of their biggest costs.
- dragonwriter 8y ago
  > Do other universities do this too? What, own land as an investment? Yeah, when you have multibillion dollar investment fund (endowment and other funds), as most major private universities will, you probably have some of it in real estate.
- reaperducer 8y ago
  Do other universities do this too? University of Chicago opened a building in Hong Kong.† "Ownership" is hard to speak to, since it's my understanding that nobody "owns" land in Hong Kong, it's just leased from the government for 99 years. Or maybe I'm confusing that with the mainland. † University of Chicago to Open New Building Atop “Hong Kong’s Most Notorious Prison”: https://www.chicagoarchitecture.org/2016/11/30/university-of-chicago-to-open-new-building-in-hong-kong/ https://www.chicagoarchitecture.org/2016/11/30/university-of...
- techsupporter 8y ago
  By way of further example, and because quite a few universities also do this by "accident" of having land left over after either moving or redoing their campuses, the University of Washington owns approximately 10 acres in downtown Seattle, including (notably for various court cases about where the authority of the university, as a non-political arm of the State of Washington, and municipalities intersect) 4th Ave, a city-maintained street of public use. https://en.wikipedia.org/wiki/Metropolitan_Tract_(Seattle) https://en.wikipedia.org/wiki/Metropolitan_Tract_(Seattle)
  - oasisbob 8y ago
    Off-topic, but it's very normal for private entities to own public streets in the US. At the time when these areas were platted and lots conveyed, the streets were dedicated to the public use, but were not deeded to the municipalities. As a general rule, in most US states the adjoining landowners are assumed to have fee simple ownership and reversionary rights to the land underlying the streets. As a public policy matter, courts are loathe to create situations where tiny little bits of land are separately owned and can't be put to productive use. (the strips and gores doctrine.) For WA, Holmquist v. King discusses this in depth.
kylec 8y ago
Financially, Harvard is a hedge fund that also happens to own a university
- rajacombinator 8y ago
  And they’re somewhat of an underperformer in that regard. “...its overall natural-resources investments have done poorly.” University funds generally don’t pay well enough to compete for top talent. They shouldn’t be making exotic bets like this.
  - thfuran 8y ago
    I don't really think statements about "university funds generally" apply to Harvard or, say, Stanford.
- ordinaryradical 8y ago
  I honestly think I wouldn't have a problem with this if they zeroed out tuition for students. That is the glaring absurdity of the Ivy Leagues. I was in a program that more or less guaranteed some portion of its graduates to be perpetually in debt because the skills imparted, while taught by some of the most brilliant practitioners in the world, did not translate into real world earnings. I hate the idea of college being purely an exchange of money for future earning potential, but programs like mine I think are unethical at cost even as they are virtuous in learning. Our culture needs non-STEM genius, that keeps the republic alive. Forcing people into a cauldron of debt for it is reprehensible.
  - whitepoplar 8y ago
    I think we need to rethink the concept of a university from first principles: How much does it actually cost to provide the best education in the world? A sizable library, an old building with empty rooms, and professors? I'd bet you could make instruction 5x better with 5x lower costs than we have today. The real problem isn't building/finding a campus, though, it's figuring out how to make the cheap version of Harvard more prestigious than Harvard itself. Universities run on prestige and people pay vast amounts of money for social signaling (to others and even themselves).
hervature 8y ago
I thought I had seen this before: https://www.reuters.com/article/harvard-water/harvard-buys-up-water-rights-in-drought-hit-wine-country-idUSL1N0V02Z320150122 https://www.reuters.com/article/harvard-water/harvard-buys-u...
petermcneeley 8y ago
Harvard's average real annual return is 10.2% (Piketty's book "Capital" p569) You need a team of very talented investors to get these types of returns y/y
- savanaly 8y ago
  Isn't that almost exactly what, say, the s&p 500 returns? [0] And you don't need a team of anyone to buy and hold that. [0] https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp https://www.investopedia.com/ask/answers/042415/what-average...
  - petermcneeley 8y ago
    "Adjusted for inflation, the historical average annual return is only around 7%. " from your link.
  - dimva 8y ago
    There's a 10% nominal return, but a 7% real return. Harvard beats this by 3% annually, which is huge!
  - scrumbledober 8y ago
    the real test is how well Harvard's fund does in year where the s&p 500 is doing poorly.
    - longerthoughts 8y ago
      No, the real test is sustained performance over time in the form of an average. If the S&P 500 falls 10% in a given year, I can hold 100% cash, light 5% of it on fire, and outperform the S&P 500 - that doesn't make it a sound long term strategy.
      - incognition 8y ago
        Are we also omitting the fact that it's a nonprofit and therefore has grossly better tax treatment?
philipkglass 8y ago
The aquifer depletion was caused by irrigated agriculture in the first place. It's pretty rich hearing vineyard owners like the Steinbecks complain about Harvard buying land to take the underlying water. Until very recently [1], profitable vineyards could deplete water under their neighbors' property without limits or compensation. Profitable vineyards could afford deeper wells and larger pumps; if it hurt shallower wells on nearby properties, tough luck. My grandparents' land neighboring vineyards owned by the Steinbecks and others underwent a distressed sale in 2013 because the groundwater had been badly depleted. The Paso Robles groundwater crisis is just the end-stage symptom of an unsustainable process that has been going on for decades. https://waterinthewest.stanford.edu/sites/default/files/Case%20Study%201.%20Paso%20Robles.pdf https://waterinthewest.stanford.edu/sites/default/files/Case... Irrigated agriculture came to dominate this region only in the last decades of the 20th century. Relatives on my father's side started dryland farming on a property near Paso Robles in the 1910s. That property enrolled in a well-monitoring program in the 1970s. The trend line was clear by the 1980s: water levels dropping over time. But irrigated crops like grapes were more profitable -- at least as long as growers didn't have anyone pricing or otherwise limiting groundwater withdrawal to sustainable levels. Now the same growers who fought water limits are alarmed that Harvard might take the water they counted on claiming. I hope that it's a wake-up call for growers to support truly sustainable water usage plans, lest they lose at their own game to even richer out-of-state entities. [1] It appears that there are new limits on groundwater extraction for agricultural use in California, but if I read the article correctly they're not really enforced yet.
- sjg007 8y ago
  The "I drink your milkshake" approach to life.
  - r00fus 8y ago
    While the scene from the movie was evocative, I prefer to use the original term, parasitism.
    - rangibaby 8y ago
time-domain0 8y ago
HMC appears to be exploiting Tragedy of the Commons for profit: they'll have the most land and the deepest wells while homeowners run dry as they rush to suck everything they can out of the ground as fast as possible.
seltzered_ 8y ago
Somewhat related to California Water: There’s a documentary about California water use in Central Valley by land owners used for pistachios, pomegranates, etc. being crowdfunded right now: https://www.kickstarter.com/projects/7331688/pistachio-wars-killing-california-for-a-snack-food https://www.kickstarter.com/projects/7331688/pistachio-wars-... The story originated in the 2013 essay “journey through oligarch valley”: https://www.nsfwcorp.com/dispatch/oligarch-valley/ https://www.nsfwcorp.com/dispatch/oligarch-valley/
rdiddly 8y ago
So if you have Harvard-type money now, you can buy land that will be disproportionately valuable in 20 years when water is a problem. An excellent and unusual example of wealth concentration... with a bit of a Dr. Evil / Lex Luthor vibe about it too!
- rblion 8y ago
  Pretty apocalyptic if you ask me.
- cmuguythrow 8y ago
  This is the plot of Chinatown https://en.wikipedia.org/wiki/Chinatown_(1974_film) https://en.wikipedia.org/wiki/Chinatown_(1974_film)
mooreds 8y ago
If anyone enjoys dystopian science fiction, "The Water Knife" plays out the groundwater/climate change scenario in gripping detail: https://en.wikipedia.org/wiki/The_Water_Knife https://en.wikipedia.org/wiki/The_Water_Knife
slacka 8y ago
Another source, with a softer paywall: https://www.thestar.com/business/markets/2018/12/10/harvard-quietly-amasses-california-vineyardsand-the-water-underneath.html https://www.thestar.com/business/markets/2018/12/10/harvard-...
peteretep 8y ago
If I was a climate-change denier, this would probably make me reconsider that.
zachguo 8y ago
Is there any way for common people to invest in water assets or rights?
s3xham 8y ago
Freshwater speculation in the future is going to make a lot of people rich, given the current undervalued nature of fresh, clean, drinkable water. The kind that sustains life.
sunshinelackof 8y ago
I'm not sure how water rights work in California, but I think in many places on the west (coast) water rights are not transferable to avoid speculation over what--now more than ever--needs to be a public resource.
true_tuna 8y ago
Posting paywalled articles here is just advertisement for a subscription service. Anyone who already subscribed doesn’t need discovery and anyone who doesn’t can’t read the article.

214 points by laurex 8y ago

kolbe 8y ago

https://outline.com/CwVvyu https://outline.com/CwVvyu

hiei 8y ago
Thank you

hunny9080 8y ago

How much non-campus land does Harvard own? Their troubles with dealing with their overseas land made the news earlier (https://www.bloomberg.com/news/articles/2018-09-06/harvard-s-foreign-farmland-investment-mess https://www.bloomberg.com/news/articles/2018-09-06/harvard-s...). Do other universities do this too?

greeneggs 8y ago
Most controversial are its holdings in Cambridge and Allston, across the river. > Based on data from Harvard’s building records, Harvard owns 9.56 percent of the land in Cambridge, 5.70 percent in Allston, and 0.27 percent in Boston. https://medium.com/harvard-open-data-project/how-harvards-expansion-affects-the-communities-around-it-c4e669dc9f2a https://medium.com/harvard-open-data-project/how-harvards-ex...
- giggles_giggles 8y ago
  Harvard is in Cambridge.
  - kevinventullo 8y ago
    Also, the business school is in Allston, and the engineering school will move there in a few years.
    - cowsandmilk 8y ago
      When discussing Harvard in Allston, good reporters should spend the time to deconvolute their holdings. They have lots of campus holdings, and that is growing, but they also own plenty of things that aren't campus. They're the landlord for my auto repair place (Oriental Car King) and for the shopping mall with my grocery store (Brighton Mills). These aren't becoming campus any time soon in anything that Harvard has announced.
      - zerohp 8y ago
        I stumbled across a planning map during my time at University of Illinois. It was marked showing 50, 75 and 100 year expansion possibilities. The land supporting 100 year expansion is already owned by the university and leased for commercial use. Harvard is 200 years older than UIUC. I'm sure they are also planning for 100 years in the future.
        cbm-vic-20 8y ago
        Indeed. In the past, Harvard seriously considered how to re-route the Charles River so they can "unite" their Cambridge and Allston campuses.
  - arkades 8y ago
    Allston is across the river.
mathattack 8y ago
I suspect quite a bit. Real Estate is a huge asset class and correlates well with one of their biggest costs.
dragonwriter 8y ago
> Do other universities do this too? What, own land as an investment? Yeah, when you have multibillion dollar investment fund (endowment and other funds), as most major private universities will, you probably have some of it in real estate.
reaperducer 8y ago
Do other universities do this too? University of Chicago opened a building in Hong Kong.† "Ownership" is hard to speak to, since it's my understanding that nobody "owns" land in Hong Kong, it's just leased from the government for 99 years. Or maybe I'm confusing that with the mainland. † University of Chicago to Open New Building Atop “Hong Kong’s Most Notorious Prison”: https://www.chicagoarchitecture.org/2016/11/30/university-of-chicago-to-open-new-building-in-hong-kong/ https://www.chicagoarchitecture.org/2016/11/30/university-of...
techsupporter 8y ago
By way of further example, and because quite a few universities also do this by "accident" of having land left over after either moving or redoing their campuses, the University of Washington owns approximately 10 acres in downtown Seattle, including (notably for various court cases about where the authority of the university, as a non-political arm of the State of Washington, and municipalities intersect) 4th Ave, a city-maintained street of public use. https://en.wikipedia.org/wiki/Metropolitan_Tract_(Seattle) https://en.wikipedia.org/wiki/Metropolitan_Tract_(Seattle)
- oasisbob 8y ago
  Off-topic, but it's very normal for private entities to own public streets in the US. At the time when these areas were platted and lots conveyed, the streets were dedicated to the public use, but were not deeded to the municipalities. As a general rule, in most US states the adjoining landowners are assumed to have fee simple ownership and reversionary rights to the land underlying the streets. As a public policy matter, courts are loathe to create situations where tiny little bits of land are separately owned and can't be put to productive use. (the strips and gores doctrine.) For WA, Holmquist v. King discusses this in depth.

kylec 8y ago

Financially, Harvard is a hedge fund that also happens to own a university

rajacombinator 8y ago
And they’re somewhat of an underperformer in that regard. “...its overall natural-resources investments have done poorly.” University funds generally don’t pay well enough to compete for top talent. They shouldn’t be making exotic bets like this.
- thfuran 8y ago
  I don't really think statements about "university funds generally" apply to Harvard or, say, Stanford.
ordinaryradical 8y ago
I honestly think I wouldn't have a problem with this if they zeroed out tuition for students. That is the glaring absurdity of the Ivy Leagues. I was in a program that more or less guaranteed some portion of its graduates to be perpetually in debt because the skills imparted, while taught by some of the most brilliant practitioners in the world, did not translate into real world earnings. I hate the idea of college being purely an exchange of money for future earning potential, but programs like mine I think are unethical at cost even as they are virtuous in learning. Our culture needs non-STEM genius, that keeps the republic alive. Forcing people into a cauldron of debt for it is reprehensible.
- whitepoplar 8y ago
  I think we need to rethink the concept of a university from first principles: How much does it actually cost to provide the best education in the world? A sizable library, an old building with empty rooms, and professors? I'd bet you could make instruction 5x better with 5x lower costs than we have today. The real problem isn't building/finding a campus, though, it's figuring out how to make the cheap version of Harvard more prestigious than Harvard itself. Universities run on prestige and people pay vast amounts of money for social signaling (to others and even themselves).

hervature 8y ago

I thought I had seen this before: https://www.reuters.com/article/harvard-water/harvard-buys-up-water-rights-in-drought-hit-wine-country-idUSL1N0V02Z320150122 https://www.reuters.com/article/harvard-water/harvard-buys-u...

petermcneeley 8y ago

Harvard's average real annual return is 10.2% (Piketty's book "Capital" p569) You need a team of very talented investors to get these types of returns y/y

savanaly 8y ago
Isn't that almost exactly what, say, the s&p 500 returns? [0] And you don't need a team of anyone to buy and hold that. [0] https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp https://www.investopedia.com/ask/answers/042415/what-average...
- petermcneeley 8y ago
  "Adjusted for inflation, the historical average annual return is only around 7%. " from your link.
- dimva 8y ago
  There's a 10% nominal return, but a 7% real return. Harvard beats this by 3% annually, which is huge!
- scrumbledober 8y ago
  the real test is how well Harvard's fund does in year where the s&p 500 is doing poorly.
  - longerthoughts 8y ago
    No, the real test is sustained performance over time in the form of an average. If the S&P 500 falls 10% in a given year, I can hold 100% cash, light 5% of it on fire, and outperform the S&P 500 - that doesn't make it a sound long term strategy.
    - incognition 8y ago
      Are we also omitting the fact that it's a nonprofit and therefore has grossly better tax treatment?

philipkglass 8y ago

The aquifer depletion was caused by irrigated agriculture in the first place. It's pretty rich hearing vineyard owners like the Steinbecks complain about Harvard buying land to take the underlying water. Until very recently [1], profitable vineyards could deplete water under their neighbors' property without limits or compensation. Profitable vineyards could afford deeper wells and larger pumps; if it hurt shallower wells on nearby properties, tough luck. My grandparents' land neighboring vineyards owned by the Steinbecks and others underwent a distressed sale in 2013 because the groundwater had been badly depleted. The Paso Robles groundwater crisis is just the end-stage symptom of an unsustainable process that has been going on for decades. https://waterinthewest.stanford.edu/sites/default/files/Case%20Study%201.%20Paso%20Robles.pdf https://waterinthewest.stanford.edu/sites/default/files/Case... Irrigated agriculture came to dominate this region only in the last decades of the 20th century. Relatives on my father's side started dryland farming on a property near Paso Robles in the 1910s. That property enrolled in a well-monitoring program in the 1970s. The trend line was clear by the 1980s: water levels dropping over time. But irrigated crops like grapes were more profitable -- at least as long as growers didn't have anyone pricing or otherwise limiting groundwater withdrawal to sustainable levels. Now the same growers who fought water limits are alarmed that Harvard might take the water they counted on claiming. I hope that it's a wake-up call for growers to support truly sustainable water usage plans, lest they lose at their own game to even richer out-of-state entities. [1] It appears that there are new limits on groundwater extraction for agricultural use in California, but if I read the article correctly they're not really enforced yet.

sjg007 8y ago
The "I drink your milkshake" approach to life.
- r00fus 8y ago
  While the scene from the movie was evocative, I prefer to use the original term, parasitism.
  - rangibaby 8y ago

time-domain0 8y ago

HMC appears to be exploiting Tragedy of the Commons for profit: they'll have the most land and the deepest wells while homeowners run dry as they rush to suck everything they can out of the ground as fast as possible.

seltzered_ 8y ago

Somewhat related to California Water: There’s a documentary about California water use in Central Valley by land owners used for pistachios, pomegranates, etc. being crowdfunded right now: https://www.kickstarter.com/projects/7331688/pistachio-wars-killing-california-for-a-snack-food https://www.kickstarter.com/projects/7331688/pistachio-wars-... The story originated in the 2013 essay “journey through oligarch valley”: https://www.nsfwcorp.com/dispatch/oligarch-valley/ https://www.nsfwcorp.com/dispatch/oligarch-valley/

rdiddly 8y ago

So if you have Harvard-type money now, you can buy land that will be disproportionately valuable in 20 years when water is a problem. An excellent and unusual example of wealth concentration... with a bit of a Dr. Evil / Lex Luthor vibe about it too!

rblion 8y ago
Pretty apocalyptic if you ask me.
cmuguythrow 8y ago
This is the plot of Chinatown https://en.wikipedia.org/wiki/Chinatown_(1974_film) https://en.wikipedia.org/wiki/Chinatown_(1974_film)

mooreds 8y ago

If anyone enjoys dystopian science fiction, "The Water Knife" plays out the groundwater/climate change scenario in gripping detail: https://en.wikipedia.org/wiki/The_Water_Knife https://en.wikipedia.org/wiki/The_Water_Knife

slacka 8y ago

Another source, with a softer paywall: https://www.thestar.com/business/markets/2018/12/10/harvard-quietly-amasses-california-vineyardsand-the-water-underneath.html https://www.thestar.com/business/markets/2018/12/10/harvard-...

peteretep 8y ago

If I was a climate-change denier, this would probably make me reconsider that.

zachguo 8y ago

Is there any way for common people to invest in water assets or rights?

s3xham 8y ago

Freshwater speculation in the future is going to make a lot of people rich, given the current undervalued nature of fresh, clean, drinkable water. The kind that sustains life.

sunshinelackof 8y ago

I'm not sure how water rights work in California, but I think in many places on the west (coast) water rights are not transferable to avoid speculation over what--now more than ever--needs to be a public resource.

true_tuna 8y ago

Posting paywalled articles here is just advertisement for a subscription service. Anyone who already subscribed doesn’t need discovery and anyone who doesn’t can’t read the article.