Riparian Capital Partners’ green water lease in successful South Australia pilot

Riparian Capital Partners executed what it believes to be Australia’s first commercial ‘green water lease’ at the end of 2022, through an agreement with a family-owned vineyard business in South Australia.

“There’s a really big opportunity here – decarbonization has focused more on livestock grazing and broadacre cropping up to now,” said managing partner Nick Waters, who co-founded Riparian Capital Partners in 2019.

“But you can’t have a proper conversation about decarbonization without considering water, as every time you use water you are typically also using energy, for example through lifting water out of rivers into a channel, or pumping from a dam onto your fields. So we saw an opportunity, through the lease products we offer through the Riparian Water Fund, to provide a product that incentivizes more sustainable farming practices in the irrigated farming sector.

“We see it as an Australian first and we think there will be quite a lot of demand for it from irrigators.”

The agreement with the family-owned vineyard in South Australia was the strategy’s pilot operation, which Waters said had been successful so far. Riparian is now in conversation with capital providers who might want to finance further loans by investing through the Riparian Water Fund.

Waters declined to comment on the size of the Riparian Water Fund. A filing with the US Securities and Exchange Commission dated April 2022 shows the firm had raised just over $50 million for a feeder fund for the Water Fund.

Waters said there is no “cookie-cutter” model and that leases can be tailored depending on a farm’s needs.

“It’s very much a bespoke product that can be built around any irrigation operation, providing a range of different outcomes that, at its core, are more favorable lease terms in exchange for delivering measurable sustainability outcomes,” Waters told Agri Investor.

Waters said these outcomes could involve a farming operation shifting to renewable energy sources by installing solar arrays, for example, or implementing water-saving measures such as variable speed drives on irrigation pumps, the use of soil moisture probes or the installation of drip tapes.

“The less water you use, the less energy you use. The rewards for the farmer comes through in more favorable lease terms. It’s a really positive step for the irrigation industry to have these sorts of products available.”