Preserving natural capital, and specifically making careful use of water, is a longstanding priority of Westchester, Nuveen’s farmland investment specialist. The passage of the Sustainable Groundwater Management Act by the California legislature in 2014 further emphasized the importance of managing water resources.

The challenges likely to result from implementing the SGMA, which places limitations on extracting groundwater, have prompted Westchester to work diligently in pursuit of viable solutions. One key strategy is the creation of groundwater recharge basins – sites capable of receiving deliveries of excess surface water, which then percolates through the soil and recharges the underlying aquifer. There are limited sites that are suitable for developing these basins, as they must have ready access to surface water deliveries and contain sandy soils that allow for water to percolate rapidly.

In late 2018, Westchester identified a 40-acre site well-suited for use as a recharge basin adjoined to a 1,000-acre property targeted for pistachio development.

With a good potential site for recharge identified, Westchester confirmed that the local water district would allow an individual landowner to receive ‘credit’ for the water it recharged (in some areas, recharged water belongs to the district rather than the landowner). Westchester then solicited bids from engineering firms to complete a thorough assessment of the site to determine the likely recharge rate and to design the pond to the specifications established by the water district.

Before beginning construction, Westchester requested and received a grading permit from the county and had a dust control plan approved by the Air Pollution Control District. With the necessary permits and approvals in hand, construction began in mid-August 2019 and was completed by the end of the month. Water began flowing into the pond on September 1.

Ample water supplies were available toward the end of 2019 (the result of heavy rain and snow during the 2018-19 winter). Westchester was therefore able to recharge over 1,000 acre-feet of water in just over two months. This represents enough water to irrigate about 285 acres of pistachios for an entire year.

Based on historical rainfall patterns and water availability, Westchester estimates that the project will recharge an average of 550 acre-feet (179 million gallons) of water per year. This amount is sufficient to ensure the sustainability of the underlying aquifer, in addition to meeting the irrigation needs of the pistachio orchard. In reality, larger quantities will be recharged in wet years (like 2019) and smaller quantities will be recharged in normal and dry years.

Through this investment in sustainable groundwater management, investors are able to achieve a 20-year internal rate of return of more than 14 percent, while also reducing long-term water supply risk.

Projects such as these are representative of the type of proactive management Westchester employs to improve property returns and benefit the environment.