At a time when water conscious California is re-assessing the wisdom of growing grapes for wine in parched areas of the state, one iconically smart-sounding investor has stepped up their involvement.

Harvard University has invested a good-sized chunk of its $36-billion endowment fund in the Paso Robles wine region. News reports nearly a year ago noted that the school had bought 10,176 acres in Santa Barbara and San Luis Obispo counties for $61 million since 2012 through the fund’s Brodiaea, Inc.

Reuters says the purchases made Harvard one of the 20 biggest growers in the area, but the school’s commitment to agriculture and wine has been questioned. The move into Paso Robles wasn’t the first Harvard wine play. Months earlier, Harvard divested itself of a stake in two private Napa-based vineyard investment funds.     

Some observers wonder whether Harvard is making a play in California’s impressive wine market or its stressed water market. The purchases began close to when the three-year drought began. Brodiaea quickly bought the rights to drill 16 new water wells, twice the depth of normal residential wells, just before restrictions on new pumping took effect in August 2013.

The San Luis Obispo County Board of Supervisors prohibited new development or new irrigated crop production unless there are conservation offsets for water used. Blogger Michael Fritz at Farmland Investor Center said the Brodiaea purchases were made “aggressively” at the top of the market.

If the drought continues, the value of land in the region will be closely tied to the availability of water. “The area they bought in has some of the best groundwater in the region, and having working wells puts their investment in a strong position,” local real-estate appraiser David Hamel told Reuters.   

“It remains to be seen what commitment they have to the business of agriculture,” North County Watch President Sue Harvey told Reuters.

–Ken Broder

To Learn More:

Harvard Buys Up Water Rights in Drought-Hit Wine Country (by Richard Valdmanis, Reuters)

Harvard Pushing Further into Farm Sector with California Central Coast Vineyard Play (by Michael Fritz, Farmland Investor Center)

Water District Booster Buying Land for Harvard U. (by Daniel Blackburn, Cal Coast News)

Harvard Invests in Vineyards on California's Central Coast (by W. Blake Gray, Wine-Searcher)