www.bloomberg.com Open in urlscan Pro
151.101.129.73  Public Scan

Form analysis
0 forms found in the DOM

Text Content

Skip to content



Skip to content
Bloomberg the Company & Its ProductsThe Company & its ProductsBloomberg Terminal
Demo RequestBloomberg Anywhere Remote LoginBloomberg Anywhere LoginBloomberg
Customer SupportCustomer Support

Bloomberg Webinars: Access a broad range of analysis, research, insight & ideas.

MenuSearch
Bloomberg Green
Sign InSign OutSubscribe



 * HOME


 * MARKETS


 * TECHNOLOGY


 * POLITICS


 * WEALTH


 * PURSUITS


 * OPINION


 * BUSINESSWEEK


 * NEW ECONOMY


 * EQUALITY


 * GREEN


 * CITYLAB

--------------------------------------------------------------------------------


 * QUICKTAKE


 * BLOOMBERG TV+


 * PODCASTS


 * RADIO


 * BLOOMBERG LIVE

--------------------------------------------------------------------------------


 * NEWSLETTERS


 * WATCHLIST


 * SUBSCRIBE


 * SIGN IN

--------------------------------------------------------------------------------


 * SUBMIT A TIP


 * HELP CENTER


 * LICENSE

Read
 * Bloomberg New Economy
 * Future Finance
 * Wealth
 * Next China
 * Crypto
 * Checkout
 * Hyperdrive
 * Well Spent
 * Prognosis
 * Good Business
 * Billionaires
 * Graphics
 * Sponsored Content
 * Screentime

Watch
 * The David Rubenstein Show
 * The David Rubenstein Wealth Show
 * Art + Technology
 * Future GO

Special Reports
 * Covid-19 Vaccine Tracker
 * What Wall Street Expects for 2021
 * Where to Invest $10,000
 * 50 Companies to Watch
 * Where to Invest $1 Million

Follow
 * Facebook
 * Twitter
 * Instagram
 * LinkedIn


Read
 * Economics
 * Deals
 * Odd Lots
 * The FIX | Fixed Income
 * ETFs
 * FX
 * Factor Investing
 * Alternative Investing
 * Markets Magazine

Watch
 * Daybreak
 * Surveillance
 * Markets
 * What'd You Miss
 * Real Yield
 * Charting Futures
 * Futures in Focus

Follow
 * Twitter
 * Facebook

Data
 * Stocks
 * Currencies
 * Commodities
 * Rates & Bonds
 * Sectors
 * Economic Calendar

SUBSCRIBE
 * Five Things: U.S.
 * Five Things: Europe
 * Five Things: Asia
 * Evening Briefing

Listen
 * What Goes Up
 * Stephanomics
 * Odd Lots
 * Surveillance
 * P&L
 * Trillions


Read
 * Work Shifting
 * Code Wars
 * 5G Network

Special Reports
 * The Elon Musk Tracker
 * Tesla Model 3 Tracker

Watch
 * Bloomberg Technology TV
 * Studio 1.0

Subscribe
 * Fully Charged
 * Power On
 * Game On

Listen
 * Decrypted

Follow
 * Twitter
 * Facebook


Read
 * Election 2020
 * Global Trade Tracker

Listen
 * Sound On
 * Bloomberg Law

Watch
 * Balance of Power

Subscribe
 * Balance of Power

Follow
 * Twitter
 * Facebook


Read
 * Investing
 * Living
 * Opinion & Advice
 * Savings & Retirement
 * Taxes
 * Reinvention

Watch
 * Good Money
 * The David Rubenstein Wealth Show

Listen
 * The Paycheck

Follow
 * Twitter
 * Facebook
 * Instagram


Read
 * Travel
 * Autos
 * Homes
 * Living
 * Culture
 * Style

Special Reports
 * Where to Go in 2021
 * London Property Prices
 * New York Property Prices

Watch
 * Made
 * Traveler
 * Invitation Only

Follow
 * Twitter
 * Facebook
 * Instagram


Read
 * Editorials
 * Letters

Follow
 * Twitter
 * Facebook
 * Instagram

Listen
 * Masters in Business

Subscribe
 * Bloomberg Opinion Today
 * Money Stuff
 * Ritholtz's Reads
 * Early Returns
 * Sparklines


Special Reports
 * Business of Equality
 * The Bloomberg 50
 * Best B-Schools
 * Small Business Survival Guide
 * Working From Home
 * 50 Companies to Watch

The Magazine
 * Subscribe
 * Manage

Follow
 * Twitter
 * Facebook
 * Instagram


Watch
 * New Economy Conversation Series
 * 2020 Digital Program Highlights

Subscribe
 * Turning Points

Listen
 * Stephanomics

Follow
 * Twitter
 * Facebook
 * LinkedIn
 * WeChat


Read
 * Corporate Leadership
 * Capital
 * Society
 * Solutions

Follow
 * Twitter
 * Instagram


Read
 * Science & Energy
 * Climate Adaptation
 * Finance
 * Politics
 * Culture & Design

Special Reports
 * Data Dash

Subscribe
 * Green Daily

Follow
 * Twitter
 * Facebook
 * Instagram


Read
 * Design
 * Culture
 * Transportation
 * Economy
 * Environment
 * Housing
 * Justice
 * Government

Subscribe
 * CityLab Daily
 * MapLab
 * Most Popular

Follow
 * Twitter
 * Facebook
 * Instagram
 * LinkedIn


Live
 * Watch Live TV

Original Series
 * Storylines
 * Moonshot
 * Hello World
 * Good Money
 * Game Changers
 * CityLab Solutions
 * Accelerate
 * See all series...

News Shows
 * Take Charge
 * Take a Break
 * Take the Lead
 * Geo

Follow
 * YouTube
 * Twitter
 * Instagram
 * Facebook


Watch Live TV
 * US
 * Europe
 * Asia
 * Australia
 * Schedule+Shows

Shows
 * Surveillance
 * Daybreak
 * Markets
 * Balance of Power
 * Bloomberg Technology
 * The David Rubenstein Show
 * What'd You Miss?
 * All Shows...

Follow
 * YouTube
 * Twitter
 * Facebook


Listen
 * What Goes Up
 * Stephanomics
 * Odd Lots
 * Foundering
 * Masters in Business
 * Surveillance
 * The Tape
 * Businessweek
 * The Pay Check
 * Prognosis
 * Travel Genius
 * Works for Me
 * Trillions
 * All Podcasts…
 * All Radio Shows…



Cut through the chaos with real time updates on the news affecting the global
economy. Enable Notifications.
Enable Later



Pistachio trees in Inyokern, Calif.

Photographer: Justin Maxon for Bloomberg Green
Green
Climate Adaptation


A PISTACHIO TYCOON PICKS A FIGHT WITH THE U.S. NAVY

Wonderful Co.’s demand for nuts is straining the water supply in a remote
California community of farmers and military types.

By

Brent Crane

+Follow
December 14, 2020, 12:00 PM GMTCorrectedDecember 16, 2020, 3:03 PM GMT


SHARE THIS ARTICLE






Copied

John Conaway has lived in and around the town of Ridgecrest since before it was
much of a town. In 1967, when he moved his young family to the remote Southern
California community, Ridgecrest had been incorporated for only a few years. “It
was all dirt roads,” he says. “No stop signs, no nothing.” Mostly, the town was
there to support the Naval Air Weapons Station China Lake, an arms-testing base
built nearby during World War II. The military contractor Grumman, which
employed Conaway as an engineer, had given him a bonus to relocate from New
York. Like many of his colleagues and their families, he and his lived on base.

A handful of years later, the Navy decided China Lake contractors would have to
find their own housing. The Conaways bought 4 acres and built a house in the
adjacent town of Inyokern, which like Ridgecrest is nestled in the Indian Wells
Valley, a roughly 11,000-square-mile stretch of desert in the eastern Sierra
Nevada about three hours north of Los Angeles. When Conaway learned there were
tax incentives for farmers, he started planting. By the early 1980s he’d settled
on pistachios as his crop of choice.



That was the right call. California’s pistachio industry, which comprised only a
few thousand acres then, today spans 300,000 acres and takes in about $1.6
billion a year. Conaway’s business grew, too. He gave up engineering and now, at
age 83, owns 175 acres’ worth of nuts. A decade ago, that was enough to make him
one of the more serious farmers around. Successes like his attracted the
attention of a Bakersfield pistachio magnate named Rod Stiefvater. In 2011,
Stiefvater’s company, Mojave Pistachios LLC, acquired about 1,600 acres near
Conaway and planted more than 100,000 trees.

Mojave sells most of its nuts to the Wonderful Co., one of America’s most
powerful agricultural enterprises and the reason pistachios now rank among the
country’s bestselling salty snacks. Mojave has established a farming operation
on a scale unprecedented for the area. If they’re well-tended, its trees will be
fully mature by 2025, turning the once-barren land into a fertile realm worth an
estimated $25 million a year.


DESERT ORCHARDS





Data: U.S. Department of Agriculture



That’s a bigger “if” than it might seem. In the arid, isolated Indian Wells
Valley, underground aquifers are the only reliable sources of fresh water. To
make its trees grow big and strong, Mojave says, it will need almost as much
groundwater as the entire Ridgecrest area uses today.

China Lake has grown at a pace faster than that of Conaway’s and other small
farmers’ pistachio trees. The naval base now encompasses 1.1 million acres, an
area larger than the state of Rhode Island. Ridgecrest, home to about 30,000
people, remains a sort of company town for the naval installation, which employs
about 10,000 active-duty military, civilians, and contractors. The base
contributes $36 million in state and local taxes each year, representing about
90% of the town’s economy. In 2019, China Lake said one of its top concerns was
encroachment on its groundwater supply, based on a recent assessment of the
aquifer’s use, and implied that water shortages could mean the base would have
to shut down permanently.


Conaway (center) with his sonsat the Inyokern farm
Photographer: Justin Maxon for Bloomberg Green

Local officials have taken steps to assuage the Navy. The government of Kern
County, where Ridgecrest is located, banned new development of farmland in the
valley in 2015, against Stiefvater’s protests. This past September, Ridgecrest
announced that, as part of a groundwater sustainability plan set to take effect
in January in compliance with state law, all farmers would have to pay costly
new fees to pump water from the Indian Wells Valley basin. The idea is to offset
the expense of importing sufficient water for the area’s future needs.

Since then, Conaway and other locals have found themselves aligned with
Stiefvater in suits against the valley’s groundwater regulator. Small and big
farmers alike are pushing for much lower pumping fees. Stiefvater, who declined
to be interviewed for this story, is demanding that the sustainability plan be
struck down and that the town fork over more than $255 million in damages. “My
client has made a huge investment in the valley,” says Anthony Brown, a Mojave
hydrological consultant. “Why rush to put him out of business?”

Climate change, comes the answer. Global warming has exacerbated the region’s
droughts and their consequences, up to and including the record-breaking
wildfires that have become California’s nightmare. In Ridgecrest, rainwater and
melting snow aren’t recharging the valley’s aquifer the way they used to, and
with the local population growing along with the naval base, thirsty crops such
as pistachios make a more noticeable dent in the water supply every year. A
state review of the valley rated the aquifer as critically overdrafted and
called it one of California’s worst-managed. Ridgecrest’s hydrological
consultant, Steve Johnson, estimates that 60% of the outflow goes to farming,
the most “upside down” he says he’s ever seen.


A Mojave Pistachios farm in Ridgecrest
Photographer: Justin Maxon for Bloomberg Green

In California, agricultural interests tend to win the usual battles between
long-term community needs and short-term sales targets, but the Navy’s influence
has given the Ridgecrest area a fighting chance. Some 18% of the state’s water
now flows into vineyards, orchards, and fields, giving life to most of America’s
pistachios, almonds, avocados, oranges, grapes, tomatoes, and lettuce. The tree
nuts have emerged as California’s reigning cash crop, their acreage almost
doubling over the past decade as demand has soared. The costs to local water
tables are obvious, and perhaps unsustainable. In potentially precedent-setting
places like Kern County, the question is whether the stakes are finally high
enough to force people to farm less—in some cases, much less.

California is a desert disguised as a mass of fertile fields. The state’s vast
water transport grid, developed after World War II, brings rainwater and melted
snow from the misty northwest to inland farms and parched southern population
centers. This is the chief reason California can function as Earth’s
fifth-largest economy, the world’s technology capital, and the nation’s most
productive farming state. It’s also why, really, the state can function at all.


Nuts at a farm in nearby Inyokern.
Photographer: Justin Maxon for Bloomberg Green

For that reason, little divides Californians more sharply than water rights. The
state receives close to 63 trillion gallons of water a year in rain and snow,
the vast majority of it in the north, far from thirsty farms and cities
downstate. A century’s worth of legal battles over redirecting that
precipitation have yielded, among other things, the Los Angeles Aqueduct, which
carries water far south through often-parched farmland. Agricultural interests
in the dry south have turned to litigation and hoarding to get more water. The
Wonderful Co., which declined to comment for this story, has proven particularly
adept at such maneuvers. In the 1990s, the company led a successful effort to
privatize the Kern County Water Bank, a massive groundwater reserve. It now
controls a majority of the water bank and sells some unused water back to the
state at a profit. It’s also consistently repelled environmentalists’ lawsuits
seeking wider sharing of the scarce natural resource.

Given how many Californians style themselves as hippies, futurists, or hippie
futurists, it’s weird that the state still settles the question of water rights
based on who called dibs. Much as it was in frontier times, the first person to
access a source of California water receives the right of first refusal on its
use forever, a legacy of gold rushes and might-makes-right ranching. America’s
other Western states have long since recognized that modern economies require
much broader and more secure access to water and regulate their residents’ water
rights accordingly.

California began trying to tackle its growing water problems in 2014, just as
Stiefvater was planting his pistachio trees and digging his wells in Inyokern.
That year, then-Governor Jerry Brown signed into law the Sustainable Groundwater
Management Act (SGMA), which for the first time required each county to
determine how much groundwater it had, figure out whether that total was rising
or falling, and phase in detailed plans to make sure it didn’t run out. In 2021
counties and local water authorities have to begin implementing new groundwater
sustainability plans and meet locally determined targets. By 2040, the law says,
they must be fully sustainable. Putting the sustainability plans into practice
is complicated, because SGMA hasn’t overturned the dibs-based system of
groundwater rights.



In Kern County, the site of the highest-profile SGMA lawsuits to date, the job
of accounting for the water falls to a board of five publicly elected
supervisors. Mick Gleason is the supervisor for District 1, which includes
Ridgecrest and much of the Indian Wells Valley. He’s also the chair of the
valley’s groundwater authority.

Gleason, like Conaway, is an engineer originally from the East Coast who moved
to the area to work at China Lake. Unlike the pistachio farmer, Gleason was a
captain in the Navy when he arrived, a fighter pilot who moved to Ridgecrest in
2004 to become the commanding officer of the naval base. He won election as
supervisor in 2012, a few years after he retired from the military.


Gleason
Photographer: Justin Maxon for Bloomberg Green

Gleason has big hands, a big nose, a big presence, and until January to enact
the sustainability plan and start getting the valley’s water consumption under
control. If not, SGMA stipulates that he’ll have to turn water use over to the
state Department of Water Resources, the agency that rated the Indian Wells
Valley basin as critically overdrafted. Gleason says the state agency would
likely take a more draconian approach than the ban on new agriculture and the
pumping fees for farmers. “Their main tool is going to be how many showers I
take a week,” he says.

Elected officials and the Navy have both said they’re basing their assessment of
the area’s needs on a study of the local aquifer conducted by the Desert
Research Institute, the research arm of the University of Nevada at Reno.
Neither party has released the institute’s baseline numbers on groundwater
reserves. Brown, the Mojave Pistachios consultant, says that based on the
published data, he estimates the aquifer holds more than 67 million acre-feet or
21.8 trillion gallons, of which about 2.9 trillion gallons are in shallow,
easily reached areas. Gleason doesn’t dispute those figures. He does, however,
dispute the conclusion reached by Brown, Stiefvater, and the local farmers that
the problem isn’t urgent. The town uses 10.8 billion gallons of water each year
and replenishes only 2.5 billion gallons, leaving an 8.3 billion gallon annual
deficit—a paltry amount compared with the area’s vast reserves, they say. “Why
rush to start the pumping reductions?” Brown asks. “Why rush with huge fees?”


Workers prune trees on a Mojave Pistachios farm.
Photographer: Justin Maxon for Bloomberg Green

One reason to rush is that, as it stands now, the town can’t afford to import
water into the valley, a key long-term component of its sustainability plan.
Such a pipeline will require tens of millions of dollars in funding by 2035,
which Gleason calls a “tremendous challenge” and says he hopes the fees will
offset.



For the pistachio farmers, who’ve been careful not to pick a fight with the Navy
directly, the county supervisor has become the scapegoat. “I take Gleason to
talk out of both sides of his mouth,” Conaway says. “I believe his intention is
to get rid of farming and to strengthen the Navy any way he can.” In a
statement, Stiefvater, too, stressed that his lawsuit against the groundwater
authority seeks no relief from the Navy. “It is made necessary by the madness
and arrogance of former Navy Base Commander Mick Gleason and his intention to
destroy agriculture and specifically us,” Stiefvater said.

Gleason doesn’t seem intimidated by the outcry. One afternoon in October, he
listens dispassionately while locals call in to a socially distanced meeting of
the groundwater authority and complain about the forthcoming pumping fees,
$2,130 per acre-foot (about two-thirds of a penny per gallon). Farming in the
valley, he says, will eventually require the groundwater authority to import
water from elsewhere, so best to start financing pipeline construction now with
fees from the people using most of the water. The farmers say that would drive
them out of business.

“I hope that you all hear lots and lots of seriously irate comments from all
kinds of people in this valley in the coming days and weeks,” says local Mike
Neel. “Just know that when you hear it, you’re getting what you deserve.”

Later, in his dull, brown office on China Lake Boulevard—former Navy
land—Gleason says he wasn’t swayed by Neel’s argument, but he appreciates the
civic engagement. “He’s a concerned citizen,” Gleason says, dressed in a
checkered jacket and yellow tie. “I wish all citizens were as concerned as he
is.”


A well in Indian Wells Valley.
Photographer: Justin Maxon for Bloomberg Green

The legal disputes under way in the Indian Wells Valley offer an early taste of
what might happen throughout California as various local authorities turn SGMA’s
broad principles into actionable demands. As one of the U.S.’s farthest-reaching
and most aggressive climate-mitigation efforts to date, SGMA also offers a
preview of what backlash to a similar national policy might look like.

The water-pumping fees lie at the heart of the lawsuits Stiefvater, Conaway, and
others have filed against the groundwater authority, none of which have set
court dates yet. If these are proxy fights between the Navy and the Wonderful
Co., both parties have stayed pretty quiet so far. Margo Allen, a public-affairs
officer at China Lake, says, “The Navy is engaged in consistent, proactive, and
cooperative participation” with the local groundwater authority. The company,
owned by billionaire couple Stewart and Lynda Resnick, also sells almonds,
grapefruit, mandarin oranges, wine, Fiji Water, flowers, pest control products,
and its namesake pomegranate juice.

Within Indian Wells Valley, the face of the farming interests is Paul Nugent, a
local consultant for Stiefvater who previously spent decades working for a farm
credit bank. Toward the end of an October afternoon, he drives through
Stiefvater’s pistachio orchards in his white Denali pickup truck, its front
license plate framed by a Wonderful Co. decal that reads “Get Crackin’. ”

Out of the truck, Nugent strolls through rows of pistachio trees and black
irrigation lines stretching out in every direction, his red-checkered
button-down tucked into bluejeans that taper into handsome leather boots. The
fields are only now turning out quality harvests. “It takes seven years to get
your first decent crop,” he says, touching an unpicked clump of pinkish
pistachios as crows flit about. “Love those big old fruiting buds.”


Nugent near the Los Angeles Aqueduct.
Photographer: Justin Maxon for Bloomberg Green

After leaving the orchard, Nugent motors west into the Sierra, up a dirt road to
a lookout point above the valley. The ascent takes him past the Los Angeles
Aqueduct, which was also once a source of consternation to farmers. At the
lookout point, Nugent stops and walks outside into a cool wind. He says SGMA’s
20-year sustainability targets give farmers plenty of time to adapt without
having to take stronger measures that put people out of work. “See, it’s a big
valley,” he says, gazing out across the vista as the sunset tints his face
orange. “There’s a lot of water here.” Below, the landscape is a slate of dull
brown with bright patches of pistachio fields that look, from a distance, like
great globs of green paint.

Across California, a half-dozen lawsuits similar to the Indian Wells cases are
making their way through the courts, and a decision on Ridgecrest’s water could
prove a key precedent. Although the farmers have a chance to prevail—water law
is notoriously tricky—the Navy’s interest makes their odds look worse. “The
farming community in general is very troubled by what it sees in Indian Wells
Valley, and people are watching closely,” says Brown, the Stiefvater consultant.



Whatever happens in the valley, California farmers have reason to worry. To
comply with SGMA, at least 535,000 acres of irrigated farmland, about 6% of the
state’s total, will need to stop producing crops by 2040, according to the
Public Policy Institute of California, a think tank created by Hewlett-Packard
Co. co-founder Bill Hewlett. At today’s prices, that translates to billions of
dollars in lost annual revenue. It’s a considerable challenge that will require
farmers and farming communities to rethink how they do business and, likely,
grow less.

Conaway and other farmers say they’re worried about today, not 2040. The
octogenarian is paunchy and battling kidney cancer. Seated in a small office on
his farm, the door left open to a warm breeze, he says that concern about
sustainability in the valley is overblown, that the situation is “not as
critical as they’re making it out to be,” and that the old dibs-based
groundwater laws leave him plenty of room to play hardball. “If they shut me
down, I still own the land and I still own the water,” he says. “I will go to
heaven or hell and will not sell one goddamn gallon of water to the bastards for
the next hundred years.”

That’s a bit of an oversell; the county doesn’t need Conaway to sell them the
water, only to make him stop pumping it. But it’s also a reminder that in many
communities throughout California, the stakes of the next water wars will
probably be even higher than they are in Ridgecrest. After all, this is still
very much a company town. As Gleason says in his office, there is no Ridgecrest
without China Lake, and he’s betting on a future that puts the base’s water
needs first, including any future expansions. “My vision is, by 2035, we have a
Navy that is content and growing at the rate that they want to grow,” the county
supervisor says. “So the economy of this community is also moving in the same
direction as the Navy.” If he prevails in court, it will likely be a community
where farming isn’t worth the tax breaks.

This story was produced in collaboration with the Food & Environment Reporting
Network, a nonprofit investigative news organization.



 

(Corrects percentage of irrigated farmland that will need to stop producing
crops by 2040 in the 30th paragraph.)


SHARE THIS ARTICLE






Copied
+ Get alerts for Brent Crane
Have a confidential tip for our reporters?
Get in touch
Before it's here, it's on the
Bloomberg Terminal
Learn more
Terms of Service Manage Cookies Trademarks Privacy Policy ©2022 Bloomberg L.P.
All Rights Reserved
Careers Made in NYC Advertise Ad Choices Help


Your monthly limit of free content is about to expire. Stay on top of historic
market volatility. Try 3 months for $8.75 $0.50 per week. Cancel anytime.
Claim This Offer
Sign In
Bloomberg Anywhere clients get free access