Harvard's big bet on climate: vineyards

Basically, Harvard’s endowment doesn’t believe there is going to be enough water to grow grapes and has invested in buying up water rights. From Axios below:

"Harvard’s endowment manager, Harvard Management Co., has stealthily built a sizable grape-growing business on California’s Central Coast, The Wall Street Journal’s Russell Gold reports (subscription):

“With the land, it was acquiring rights to vast sources of water in a region where the earth’s warming is making the resource an ever-more-valuable asset.”

“Harvard’s bet has proven prescient. The $39 billion fund … now values its vineyards at $305 million, up nearly threefold from in 2013, while its overall natural-resources investments have done poorly.”

“The wager has also earned backlash from some farmers and other locals who fear Harvard eventually will use up groundwater and unduly influence water-use regulations.”

They probably should focus on their admissions policies.

Another story of the rich getting richer…

Precisely Michael…excellent point.

It’s probably a bad investment. If it’s too hot and dry, having water rights isn’t going to do much.

“now values its vineyards at $305 million, up nearly threefold from in 2013”

I’m also an incredible investor when I can do my own valuations.

Agree here.

Water rights in California? Central and Southern California are a desert if it were not for the aqueduct.

Seen the lake levels in Central California?

Robber Barons redux

Welcome to Private Equity or Unicorn valley (most startups these days) models!

What will this do to the value of the wine in our cellars . . .

The thing with water rights within a property is that although it may be easy to extract via wells, it can become quite costly to move long distances

I suppose if the supply of wine goes down your value will go up. Get while the getting is good while you still can

Oh, isn’t it so much fun to hate Harvard? Guess what: Harvard Management’s job isn’t to handle admissions. It is to generate a financial return so that Harvard can do all of the good things that the people who have contributed to its endowment have contributed for the university to do. “Rich getting richer”? “Robber barons”? About 18% of Harvard’s endowment returns fund financial aid. The rest go to fund costs of running an institution of higher education that exceed what Harvard charges to students and research sponsors (its other two major sources of income). It’s not exactly paying for someone’s summer house or funding their wine collecting hobby. Doing their “own valuations”? It’s real estate – they probably use outside appraisers and even if not, it’s not like real estate appraisals are a blind guess – it’s pretty well-trod ground. “[P]robably a bad investment”? Well, with due regard to their sometimes iffy performance over the last decade, it’s safe to assume the folks doing this for HMC know a little bit more about what they’re investing in than the amateur climatologists posting here…

– Matt