Water for sale: Investors Are Mining for Water, the Next Hot Commodity

CADIZ, Calif. — Gazing out of a turboprop high above his company’s main asset — 34,000 acres in the Mojave Desert with billions of gallons of fresh water locked deep below the sagebrush-dotted land — Scott Slater paints a lush picture that has enticed a hardy band of investors for a quarter-century.

Yes, Mr. Slater admits, his company, Cadiz, has never earned a dime from water. And he freely concedes it will take at least another $200 million to dig dozens of wells, filter the water and then move it 43 miles across the desert through a new pipeline before thirsty Southern Californians can drink a drop.

But tapping cash, as opposed to actual water, has never been a problem for Cadiz. “I think there’s plenty of money out there,” Mr. Slater said.

Real profits may be nearly as scarce as snow in the High Sierra, but Wall Street, as it is wont to do, smells profit as California endures its worst drought in decades.

“Investing in the water industry is one of the great opportunities for the coming decades,” said Matthew J. Diserio of Water Asset Management, a New York firm that is a major backer of Cadiz. “Water is the scarce resource that will define the 21st century, much like plentiful oil defined the last century.”

So far, though, this veritable Gold Rush has mostly turned up fool’s gold.

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