WINTHROP, Okanogan County — Follow the water and you’ll find the money.
That’s how it often works in the dusty rural corners of Washington, where a Wall Street-backed firm is staking an ambitious venture on the state’s water.
Crown Columbia Water Resources since 2017 has targeted the water rights of farms on tributaries of the mighty Columbia River.
This March, the company sealed a $340,000 deal for Douglas County water.
The same day, it paid $1.69 million for a farming partnership’s water in Columbia County.
Two months later, the company spent nearly $1.61 million near Walla Walla.
Worldwide, as temperatures rise and aquifers dry, investors are increasingly bullish on water, and buying vineyards, farms and ranches for what’s underneath or flowing through.
In Washington state, there’s little water left unclaimed, according to the state Ecology Department. In the future, scientists expect less snowpack, more variable precipitation and more frequent summer water shortages.
Amid a changing climate, a population boom in Washington and churning development, Peterson’s client plans to buy, lease and sell water in a privately operated water market of its own creation. Crown’s activities here are unprecedented in scope for a private firm.
The company’s aggressive pursuit of water could put it in the vanguard.
Or it could all evaporate.
Ongoing negotiations between the U.S. and Canada over the Columbia River could shift flows, potentially draining demand.
Crown has faced regulatory scrutiny from the state Ecology Department. And in emails, some officials privately expressed concern over Wall Street influence on water markets.
Some critics fear business models like Crown’s could lead to speculation or consolidation.
“We’re potentially allowing a marketplace to develop here that could be pretty destructive in the future,” said Paul Jewell, a policy director for the Washington State Association of Counties. “With a growing population and growing need for water, we’re going to be beholden to private interests with a profit motive for something that’s supposed to be a public resource.”
Meanwhile, the company’s attempt to buy water from a local family farm partnership in the Methow Valley riled nearby residents, ranchers and farmers, who were concerned that selling the water downstream would permanently end its use in their community and that their lifestyles might dry up.
“If you start selling your water off, you’re going to lose agriculture and that is losing your character, I believe,” said Craig Boesel, a Winthrop cattle rancher whose family homesteaded the land in 1889.
Wall Street and water
Peterson hails from Wenatchee, where the town’s namesake river meets the Columbia
After leaving for college in Seattle and law school in Portland, Peterson returned to Wenatchee as a small-town attorney who took on “pretty much anything that walked into the door.”
The market led him to water law. He soon began to view Washington’s arcane system as inefficient and wasteful.
“Washington state is way behind” among Western states, Peterson said.
For years, he’s eyed the 1,200-mile Columbia River, the irrigation superhighway of Central Washington, as an opportunity.
The valleys alongside the Columbia grow each year a cornucopia of high-value crops: apples, wine grapes, cherries and hops among them. When irrigated, Washington cropland is among the most valuable in the country, according to the United States Department of Agriculture.
Petrus Partners, a Manhattan-based investment firm, controls Crown West Realty. The company’s founders have reported at least $298 million in investment offerings under the Petrus name, according to U.S. Securities and Exchange Commission filings. The company’s website says about half of its capital comes from “retired partners of Goldman, Sachs & Co.” and that its real estate arm was founded to “capitalize on distressed investment opportunities following the collapse of the housing bubble.”