Managing Water for Long-Term Farmland Performance

Water is one of the defining inputs in agricultural production, but long-term resilience depends on more than securing access to the resource. Effective water management requires continuous operational oversight—from irrigation scheduling and infrastructure optimization to groundwater stewardship and long-range planning. Together, these practices help support crop performance, resource sustainability, and the long-term value of the underlying farmland asset.

In our previous article, Beyond Water Rights, we explored how water availability and long-term supply are evaluated during the acquisition process. Equally important, however, is what happens after a property is acquired. Managing water is an ongoing operational discipline that requires balancing crop needs, infrastructure, changing environmental conditions, and evolving regulations over the life of an investment.

To explore these operational considerations in greater depth, we spoke with Bryan David, Investment Associate at FarmTogether. Bryan holds a Master of Environmental Management from Duke University with a concentration in Water Resources Management, as well as an MBA from UNC Kenan-Flagler Business School with concentrations in Corporate Finance and Sustainable Enterprise. His interdisciplinary background in water resources and finance informs FarmTogether's approach to evaluating long-term water resilience, groundwater sustainability, and operational risk across farmland investments.

Operational Water Management Is a Continuous Process

Irrigation management is a continuous process that requires balancing crop needs, weather conditions, soil characteristics, and seasonal variability. Experienced farm operators adjust irrigation applications throughout the growing season based on changing field conditions, drawing on a combination of real-time data and years of operational experience managing the property.

Advances in monitoring technology have significantly expanded the information available to operators. Soil moisture probes provide detailed measurements beneath the surface, while weather forecasts and irrigation software help estimate crop demand. As Bryan explained, these technologies have enhanced—not replaced—the judgment of experienced operators. While software can recommend when and how much to irrigate, experienced operators continue to validate those recommendations through direct field observation—walking orchards, inspecting soil conditions, and looking for signs that water is being distributed as intended. Data informs decision-making, but effective irrigation management and stewardship still depends on pairing technology with practical experience.

Together, these inputs enable more informed irrigation decisions that support crop performance while minimizing unnecessary water applications, operating costs, and demand on shared water resources.

Every Farm Requires a Different Water Strategy

There is no universal framework for irrigation management. Every property—and often every individual production block—requires its own strategy.

Water demand varies by crop, soil type, local climate, and stage of the growing season. A vineyard develops deeper root systems that access moisture well below the surface, while citrus and nut orchards depend more heavily on consistent irrigation. Even within the same crop, water requirements evolve as trees progress through flowering, fruit development, and harvest.

Bryan recalled a recent visit to FarmTogether's Knights Landing Almond Orchard in Sutter County, California, with operator Lee Smith of Liberty Land Management, where they walked the orchard shortly before harvest. Although July typically brings some of the year's highest temperatures, Lee pointed out that the almond hulls had already split—a sign that the crop had reached maturity. At that stage, the trees naturally begin taking up less water, allowing irrigation to be reduced even as evapotranspiration remains seasonally high. Continuing to irrigate at peak summer levels would provide little benefit, with excess water simply pooling beneath the drip lines rather than being absorbed by the trees. This example illustrates why effective irrigation depends not only on weather conditions, but also on understanding crop physiology and adjusting irrigation as a crop moves through its growing cycle. Excess irrigation can also increase the risk of hull rot, reducing yield.

Crop development is only one variable operators must consider. Soil characteristics also fundamentally influence irrigation strategy. Sandy soils retain and drain water very differently than clay soils, requiring different irrigation timing and application rates to achieve the same agronomic outcome. In practice, those differences may exist within a single property, where adjacent production blocks—or even a few rows of trees—can have different soil profiles and drainage characteristics that require operators to adjust irrigation accordingly.

Elevation, irrigation pressure, and system design also influence how uniformly water reaches each tree. Successful water management is therefore not simply about supplying water, but about delivering the appropriate volume, at the appropriate location, and at the appropriate time.

Better Data Is Transforming Water Management

Technological innovation has transformed agricultural water management over the past decade. As Bryan noted, the public availability of OpenET has been one of the most significant advances in agricultural water analysis across the western United States. During FarmTogether's underwriting process, Bryan utilizes OpenET, a satellite-based platform that estimates crop evapotranspiration—the amount of water plants lose through evaporation and transpiration—to model historical water demand across a property.

Rather than relying on a single snapshot in time, the investment team analyzes multiple years of evapotranspiration data to evaluate how water demand has changed over time. Historical water use is compared against expected crop demand, average growing conditions, and dry-year scenarios to better understand whether a property's available water resources remain sufficient under a range of conditions. This independent analysis also helps validate historical pumping records and assess whether long-term water resources appear sufficient to meet projected demand.

After acquisition, monitoring shifts from underwriting to operations. Operators continue tracking water use through pump meters, energy consumption, operational reporting, and AgMonitor, where available, to monitor groundwater extraction and surface water deliveries. OpenET data can also be utilized to monitor ET rates on a daily basis, keeping pace with changes in weather and climate conditions. Together, these tools provide ongoing visibility into irrigation performance, helping operators identify changes in water use over time while supporting more informed operational decisions.

Groundwater Has Become Increasingly Important

While advances in technology have improved water management, California's regulatory environment has also fundamentally changed how investors evaluate groundwater.

Bryan explained that the implementation of the Sustainable Groundwater Management Act (SGMA) has made groundwater sustainability a much more significant consideration during underwriting. Groundwater Sustainability Agencies now monitor aquifer conditions more closely than ever before, using satellite data and local measurements to better understand groundwater use and reduce long-term overdraft.

As a result, the focus of underwriting has evolved. Rather than evaluating whether groundwater is available today, investment teams must assess whether it can remain a reliable resource over decades of ownership. This analysis requires understanding not only current groundwater conditions, but also how basin management plans, projected pumping allocations, and long-term aquifer health may affect future water availability.

For long-term farmland investors, groundwater is no longer simply a backup source of irrigation—it has become a critical component of a property's long-term resilience.

Water Infrastructure Is as Important as Water Supply

One of the most important lessons from Bryan's work is that evaluating a property's water profile extends well beyond determining whether water is available. The infrastructure responsible for delivering that water can be just as important as the water source itself.

That principle became especially clear through FarmTogether's evaluation of a prospective avocado orchard acquisition in Santa Barbara County.

Case Study: Looking Beneath the Surface

At first glance, the property exhibited many of the characteristics the investment team seeks in a potential acquisition. The location was attractive, the orchards were productive, and initial due diligence suggested the property had strong long-term potential. As due diligence progressed, however, a series of interconnected challenges fundamentally altered the team's assessment of its long-term water profile.

Unlike farms situated over large, connected aquifers, the property sat on fractured hillside bedrock. Instead of drawing from one substantial groundwater basin, its wells relied on numerous small, isolated pockets of water that recharged much more slowly. Existing wells experienced significant drawdown as groundwater levels declined, and equipment failures had become increasingly common because pumps were operating at greater depths than originally intended. As water levels dropped, pumping became both more mechanically demanding and more expensive, raising questions about the long-term reliability and economics of the property's groundwater supply.

To better understand the situation, FarmTogether commissioned additional hydrogeologic analysis. Working alongside hydrogeologists and well-drilling specialists, the team evaluated potential long-term solutions for the property's water supply. The analysis indicated that developing a replacement production well would likely require drilling to at least 1,800 feet—a technically feasible solution, but one that would materially increase both capital expenditures and the long-term operating costs associated with groundwater extraction.

Delivery Infrastructure Is Part of the Water System

Groundwater availability was not the only concern. The property's steep hillside topography also created irrigation challenges. Maintaining consistent pressure across the grove proved difficult, making it harder to distribute water evenly. Even if additional groundwater could be developed, significant infrastructure investments would still be required to deliver that water efficiently across the property.

As Bryan explained, evaluating a property's water profile requires assessing the entire delivery system—not simply the source itself. Wells, pumps, pressure, topography, irrigation design, and long-term operating costs all influence whether water can be delivered reliably throughout the life of an investment.

Ultimately, FarmTogether elected not to proceed with the acquisition. The decision reflected the combined impact of groundwater uncertainty, infrastructure limitations, and the long-term economics required to address those risks. Although solutions existed, they fundamentally changed the property's risk profile and long-term investment economics. Together, these factors no longer aligned with the investment criteria established during underwriting. The experience reinforced an important principle that applies across every investment the firm evaluates: long-term farmland performance depends on understanding the entire water system—not simply the existence of a water source.

Stewardship Beyond Production

Effective water management extends beyond supporting agricultural productivity. It also represents responsible stewardship of one of farming's most valuable natural resources. Applying more water than a crop requires provides little agronomic benefit while increasing pumping costs, energy consumption, and demand on shared water resources. The objective is not simply to conserve water, but to manage it in a way that supports both long-term crop performance and the sustainable use of finite water resources.

This philosophy underpins FarmTogether's investment process—from evaluating prospective acquisitions using satellite-derived data and groundwater analysis to partnering with experienced operators who combine advanced technology with decades of field expertise. Whether assessing long-term water resilience during underwriting or optimizing irrigation after acquisition, water management is viewed not as a one-time diligence exercise, but as an ongoing operational discipline that supports resilient farmland performance throughout the investment lifecycle.

As climate conditions, regulatory frameworks, and agricultural technologies continue to evolve, successful farmland investing will increasingly depend on understanding not only where water comes from, but how effectively it can be managed over time. Long-term performance is shaped not simply by access to water, but by the discipline, expertise, and operational stewardship required to use it responsibly throughout decades of ownership.