Wall Street’s Greed Leaves California Communities High and Dry

Apr 17, 2023

Last year, nearly 1,500 wells in California went dry, and a state audit found that almost one million Californians did not have safe drinking water in their homes.

One major reason behind this crisis is the reckless extraction of very large amounts of groundwater by big agricultural companies. These companies have the means to drill very deep wells, tapping underground aquifers for very profitable, and extremely water-guzzling, crops such as almonds, pistachios and walnuts. These nuts are known as “permanent crops” because, unlike seasonal food crops, they require water year-round, and a lot of it, over a 30-year life span.

Researchers at Bloomberg Green have found that, since 2010, six major buyers have increased the farmland they own in California fourfold, to a total of 120,000 acres. They include big insurance companies such as Manulife, Allstate and Prudential; pension funds such as TIAA (Teachers Insurance and Annuity Association of America) and the Public Sector Pension Investor Board of Canada; the Mormon Church; as well as the largest private bank in the world, UBS.

These financial speculators are putting huge amounts of money into nut farming, especially in California’s Central Valley. As nut exports to Europe and Asia have been growing fast, California’s almond acreage has soared by 50%, and pistachio by 90%.

But water is scarce, so these speculators have been spending millions of dollars to drill very deep wells, as deep as 1,000 feet or more, to pump very large amounts of water from underground aquifers. But this has dire consequences.

Since these deep wells deprive shallow wells of their water, other farmers and households lose their water, and water gets poisoned.

Yet another, and permanent, consequence of over-pumping is that, with the aquifer emptying out, the land above it sinks, damaging roads, bridges, dams, canals, and other infrastructure. Much of Central California has been sinking at varying rates for close to a century—parts of the San Joaquin Valley have been dropping as much as a foot per year. Subsidence, as this type of sinking is known, has also been affecting the California aqueduct, a 440-mile canal that carries water to Los Angeles.

Of course, water sources will eventually dry out, and entire agricultural areas will stop producing food. In fact that future may not even be so far, considering that California, for example, is in the middle of a very long and severe drought. But as Graham Fogg, an emeritus professor of hydrology at the University of California at Davis put it: "Capitalism is driving this. Investors [speculators] don’t care, because in 10 years they can make all the money they want and leave."

No, concerns about the future don’t slow down the narrow-minded frenzy of speculators for a quick profit. And the capitalist system encourages, and protects, this unfettered profit drive at the expense of the whole human society.