Our team understands the importance of agricultural water valuation for state water management purposes, farm and water district management, and investor due diligence. We are well-versed in the existing water price indices and historical data on water transfers, but our team typically favors a fundamental economic analysis approach to value water assets. This bottom-up valuation methodology recognizes that the values of land and water are fundamentally driven by the revenue streams that those assets can generate. We work on behalf of our clients to define baseline water supply conditions, prices, costs, and returns. Importantly, we evaluate how those factors are changing over time in response to key market, regulatory, and policy changes. For example, our assessments have considered the effect of water policies such as the Delta Conveyance Project, Sites Reservoir, local Flood-MAR, and implementation of SGMA on future land and water values.
We work with a range of investor clients that buy and sell agricultural land and water assets. Our team prepares detailed economic analyses of water supply conditions for investor due diligence. This includes preparing economic assessments of current and future water valuation under changing policy and market conditions. For example, in California, changing groundwater management under SGMA implementation has important implications for the availability and value of water supply.
In addition to supporting investors, our team works directly with farming companies. Changing regulations and policy affect the cost, availability, and value of water. We work with companies to help them turn complicated policy direction into actionable decisions for their businesses. This can involve developing an agricultural water valuation and calculating the cost of proposed changes in water policy or other regulations affecting farm production costs. We also help inform our clients of state and federal policy changes and funding opportunities affecting water management.
We recognize the importance of effective state water policy, and our team has worked extensively with state agencies to integrate economic considerations into state water planning. We recently prepared a section of California’s Bulletin 118 2020 Groundwater Update outlining the economic value of groundwater. Our staff experts have also contributed supporting analysis for California Water Plan Updates going back to Water Plan Update 2009.