Business Case Studies & Business Publications

Investing in Water at Fish Springs Ranch...

Debaere, Peter, Er...

Case

Investing in Water at Fish Springs Ranch: Water Flows to Money, and the Money Is in Reno

Debaere, Peter; Erickson, Steven

GEM-0220 | Published February 1, 2024 | 26 pages Case

Collection: Darden School of Business

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Steven Erickson, cofounder of the hedge fund Anbec Partners, is trying to determine whether the all-cash offer D.R. Horton has just made for Vidler Water Resources, Inc. (Vidler) is a fair value for Vidler. Vidler’s most valuable project is the Fish Springs Ranch pipeline, which was developed to supply water to fast-growing Reno, Nevada. Reno is in Washoe County, which shares water from the Honey Lake aquifer with Lassen County, California. This case presents a history of Reno’s water projects, an overview of water regulation and the prior appropriation system in the western United States, and the development of Vidler. There is significant opposition to the Fish Springs Ranch pipeline from California and the Pyramid Lake Paiute Tribe. The case delves into the legal battles and the financial risks and rewards of Vidler’s investments, and ultimately is a discussion of the challenges of investing in water. At the Darden School of Business, this case is taught in the second-year elective, “Global Economics of Water.” It fits in the policy module that deals with pricing water, which is a necessary condition for addressing the current water scarcity challenges, at least in water-scarce industrialized countries. The discussion of Reno follows a session on water markets in Australia, and how these have been installed in response to the ongoing droughts there. Needless to say, the case can be taught on its own; it is especially suitable for classes about the water rights system of the western United States, and more broadly, for those about investing in water.