Joe Bernal has spent his entire life as a rancher in the Grand Valley of Colorado. The land, including the sky, irrigation ditches, and the unique late-summer light over the fields, is as familiar to him as anything can be since his family moved there almost a century ago. There has always been the Colorado River. It must have been. Nothing on that land can grow, drink, or survive without it. He says, “That’s all we’ve got is that river,” in a tone that isn’t intended to be dramatic. It’s simply true. Bernal became aware of this when a hedge fund with its headquarters located on Manhattan’s Madison Avenue began purchasing farms in his valley, eventually acquiring over 2,500 acres and becoming one of the Grand Valley’s biggest landowners. He was not happy. “Would I have invited them here? No.”
Founded in 2005, the company is known as Water Asset Management, and it only makes investments in businesses and assets related to the supply and quality of water. In 2021, Matthew Diserio, the company’s president and co-founder, called the US water market “a trillion-dollar market opportunity.” More succinctly, the company’s own website states that “scarce clean water is the resource defining this century, much like plentiful oil defined the last.” This company is not the only one that frames water as the petroleum of the upcoming decades. It’s evolving into an organizing concept for a portion of the investment industry that is quietly and methodically positioning itself to profit from the resource that the American West is running low on.
| Key Information: Wall Street & Water Scarcity | Details |
|---|---|
| Key Investment Firm | Water Asset Management — headquartered on Madison Avenue, Manhattan |
| Founded | 2005 — invests exclusively in water supply and quality assets |
| Colorado Land Acquired | Over 2,500 acres of farmland in Western Colorado (Grand Valley) |
| Estimated Land Investment | At least $20 million in Western Colorado over 5 years |
| Co-Founder’s Assessment | Matthew Diserio — called US water “a trillion-dollar market opportunity” (2021) |
| Water Futures Launch | December 2020 — CME Group launched water futures tied to California water districts |
| Colorado River Stats | Flows through 7 states; supplies Denver, Salt Lake City, Albuquerque, Los Angeles |
| Current Reservoir Levels | Lake Powell & Lake Mead combined at just 25% capacity |
| Drought Duration | 23-year megadrought — worst in 1,200 years |
| River Flow Reduction | ~5% drop per degree of temperature rise — nearly 20% total reduction over a century |
| Global Water Demand Projection | Demand to exceed supply by 40% by 2030 — UN Environment Programme |
| 101 Countries | Losing fresh water faster than it replenishes |
| Key Critic | Andy Mueller, GM — Colorado River Water Conservation District: called investors “drought profiteers” and “vultures” |
| Firm’s Own Language | “Scarce clean water is the resource defining this century, much like plentiful oil defined the last” |
There are serious problems with the Colorado River. The basin that supplies water to seven states and cities like Denver, Salt Lake City, Albuquerque, and Los Angeles has been severely damaged by a 23-year megadrought, the worst in 1,200 years. The two biggest reservoirs in the country, Lake Powell in Arizona and Lake Mead in Nevada, are only 25% of their maximum capacity. The river’s flow has decreased by roughly 5% for each degree that the local temperature has increased, a nearly 20% decrease over the previous century. These are not models or projections. They are measurements. The demand on the river hasn’t decreased in proportion to its obvious and quantifiable decline. With the reasoning that scarcity consistently creates value, investors have inserted themselves into that gap between a declining supply and an unchanged or increasing demand.
Water futures contracts linked to California’s drought-prone water districts were introduced by CME Group in December 2020, enabling hedge funds, farmers, and municipalities to speculate on the future cost of water availability. The official acknowledgement in a trading document that water is a commodity subject to price discovery like oil, wheat, or natural gas marked a turning point in the economic treatment of water. At the time, the launch probably should have made headlines, but it didn’t. In December 2020, water markets were not on the minds of most people. However, the machinery continued to operate.
The Colorado River Water Conservation District’s general manager, Andy Mueller, has been observing this with obvious annoyance. Protecting Colorado’s portion of the river is his responsibility, and he doesn’t hold back when discussing what he believes private equity firms are doing in his domain. “I view these drought profiteers as vultures,” he stated. “They want to profit greatly from this public resource. Your future lies in water in Colorado and the West. You cannot have a future without water. Because it isn’t rhetorical, the final sentence has weight. Residents of the American East Coast, with their consistent rainfall and full reservoirs, do not have to consider water access as urgently in an area characterized by aridity.
For its part, Water Asset Management turned down CBS News’s requests for an interview. Its stated plan is to purchase farmland, improve its infrastructure to use water more efficiently, and then sell some of the water rights it has acquired to other farmers and to cities that are becoming more and more in need of water. There is a version of that argument that sounds like sound resource management, such as finding buyers who most need the water, cutting waste, and allocating resources efficiently. Another version is similar to buying low during a crisis and selling high as it gets worse. Both readings are available in the same business model; which one is more prevalent will depend on how the incentives develop over time, which is currently unknown.
In a Colorado farming valley that has been dependent on the same river for a century, a New York investment firm with offices on Madison Avenue is growing to become one of the biggest landowners. It’s difficult to ignore the unique texture of this moment. Its geography conveys a message. Capital moves from the East Coast’s dense financial infrastructure into the West’s physical landscape, acquiring rights to resources that the local population actually needs to survive. The fact that Water Asset Management hired the former top water official from Colorado as one of its attorneys indicates that the company is aware of the political and regulatory landscape in which it operates and has positioned itself appropriately.
The American West’s predicament appears to be an early warning rather than a singular instance as the pressure on fresh water is increasing globally. According to the UN Environment Programme, if current trends continue, water demand will surpass supply by 40% by 2030. Fresh water is already being lost in more than 100 countries more quickly than it is being replenished. It’s not incorrect for investors to perceive a resource becoming more scarce based on those figures; rather, they are interpreting a true trend logically.
Whether the financialization of water access is a mechanism that helps solve the issue or one that allows some parties to profit while others bear the costs is a question that typically receives less attention. Whether Wall Street capital in Western water markets will result in improved infrastructure and more efficient use, or just higher prices for the farmers, ranchers, and cities that have no choice but to pay them, is still genuinely unclear.
The river continues to get smaller. Warming temperatures that do not appear to be reversing on any meaningful human timescale have reduced the amount of snowpack in the Rockies, which feeds the Colorado as it melts every spring. From the highway outside of Las Vegas, one can see Lake Mead’s waterline marks, which are pale horizontal bands of exposed rock that record decades of declining water levels. These marks serve as a sort of geological receipt for what has been consumed. The argument that water is this century’s most important resource is becoming harder to refute somewhere in Manhattan. The question that the American West will have to deal with for a long time is whether that thesis benefits the people who rely on the river or mainly the investors who now own portions of it.
