The Value of Water Rights in Farmland

The Value of Water Rights in Farmland

Tim Hammerich
Tim Hammerich
News Reporter
This is Tim Hammerich of the Ag Information Network with your Farm of the Future Report.

There is nothing more valuable to western agriculture than water. Whether its a wet year or a dry year, access to sustainable irrigation sources is fundamental to the existing of farming west of the Rockies. Craig Wichner says this is a part of their farmland investment strategy, because he wonders if the price of water might someday be allocated to crops based on their value.

Wichner… “Longer term, I think we'll continue to go through periods where there's longer-term droughts and longer-term wet periods. That's kind of what the dynamic climate is, the weather patterns are projected to be heading. And so what that means, like right now, water rights are undervalued because it rained after a multi-year drought. We think that that'll be cyclical. We also think that eventually, you'll get to the standpoint. that Australia got to, which is actually creating a water market where maybe water going to alfalfa isn't as profitable as water going to a city because 70 percent of water is used by agriculture. But maybe we do want water going to blueberries and strawberries, you know, those crops should get more valuable because people not only want water from their tap but they also want wonderful fruits and food in their refrigerators as well. And we think that the pricing of water over time will adjust to reflect higher values, and that'll be reflected in the crops as well.”

Wichner is the managing partner and founder of Farmland LP.

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