Los Angeles Times - 02.10.2019

C4 WEDNESDAY, OCTOBER 2, 2019 LATIMES.COM/BUSINESS

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buried as an afterthought,
was any acknowledgment of
the source of at least some
of the Resnicks’ largess.
Although the $750 mil-
lion represents a personal
gift to Caltech rather than a
corporate gift from the
Resnicks’ principal corpo-
rate entity, Wonderful Co.,
they’re engaged through
that company in some argu-
ably unsustainableenviron-
mental practices.
The truth is that Won-
derful’s agricultural enter-
prises are major users of
increasingly scarce water
supplies in California and
elsewhere.
Its Fiji Water subsidiary,
which has been turned into
a lifestyle brand of bottled
water through expert mar-
keting, ships its product
more than 5,000 miles to the
U.S. from a Pacific island
country, a trip requiring the
burning of a great deal of
fossil fuel (a major contrib-
utor to climate change),
even though importing
bottled water to the U.S. is
wasteful and unnecessary.
Wonderful’s almond and
pistachio trees are among
the thirstiest crops in Cali-
fornia, where the availability
of water is likely to shrink as
a result of climate change.
And the Resnicks’ con-
trol over a key supply of
water could make it difficult
for anyone to craft a state-
wide water policy that
weighs their needs against
those of other users.
It would be churlish to
suggest that the Resnicks’
gift to Caltech is devoid of
genuine altruistic impulses;
we should take Stewart
Resnick at his word that
he’s looking ahead to the
world that the present
generation will bequeath to
posterity. But it would be
naive to assume that altru-
ism is the whole story.
The gift speaks volumes
about the benefits that big
donors receive from their
philanthropy, both in this
life and the hereafter, and
about the economics of
billionaire philanthropy
itself. (The $750-million
pledge won’t put much of a
crimp in the Resnicks’ for-

tune, which Forbes has

estimated at $9 billion.)

There’s no reason to doubt

that Caltech will put this

money to good use. Of the

sum, Caltech says $100

million will go toward con-

struction of a building for its

sustainability resource

program, $250 million will

finance research immedi-

ately, and $400 million will

be placed into Caltech’s

endowment, which earns a

typical payout of about 5%,

or $20 million a year.

In announcing the dona-

tion, Caltech President

Thomas F. Rosenbaum

observed that the gift “will

permit Caltech to tackle

issues of water, energy, food

and waste in a world con-

fronting rapid climate

change,” while “letting

researchers across campus

follow their imaginations

and translate fundamental

discovery into technologies

that dramatically advance

solutions to society’s most

pressing problems.” Yet one

benefit that a contribution

on this scale buys its donors

is silence, or perhaps tactful

blindness. Caltech’s an-

nouncement of the gift

identified the Resnicks as

“philanthropists and entre-

preneurs” and mentioned

the name of their company.

But it didn’t specify what

Wonderful Co. actually does,

possibly because irony has

no place in university publi-

city releases. Caltech is

hardly the only institution

to play this game. Consider

the Massachusetts Institute

of Technology, which

flushed the business and

political records of David

Koch down the memory

hole in its obituary of the

right-wing, climate-denying

MIT donor in August.

The motivations under-

lying billionaire philan-

thropy are infinitely varied.

Some appear to be motivat-

ed by a sincere desire to

address problems left un-

solved by governments or

international organizations.

The Bill & Melinda Gates

Foundation, established by

the founder of Microsoft, is

focused on global health

and development issues.

Warren Buffett, who has

pledged to give away virtu-

ally all of a fortune esti-

mated at more than $80 bil-

lion, is focused on reducing

poverty.

But it’s certainly not new

for wealthy families to use

philanthropy to create an

image of themselves for

posterity that may be at

odds with their activities

during their lifetimes. When

the donations are large

enough, the effort generally

works.

The public today thinks

of Andrew Carnegie as the

endower of libraries, uni-

versities and a prestigious

New York concert hall, not

as the tycoon who played a

role in the 1892 Homestead

strike, a labor conflict at

Carnegie Steel’s main plant

that ended with the deaths

of seven strikers and the

injuries of hundreds more.

It’s a fair bet that future

generations will associate

the Resnicks with their

charitable donations to the

Los Angeles County Muse-

um of Art and Caltech.

(They’re also active political

campaign contributors,

almost exclusively to Demo-

crats.)

Among the Resnicks’

businesses, Fiji Water

stands out for its environ-

mental unsustainability.

The couple acquired Fiji

Water in 2004 for their pri-

vately held company, which

was then known as Roll

International and has since

been rebranded as Wonder-

ful Co.

Bottled water is one of

the most wasteful manifes-

tations of our modern

throwaway culture. “There

are plenty of reasons to

avoid bottled water,” cli-

mate expert Peter H. Gleick,

president of the Pacific

Institute and a leading critic

of the industry, told me a few

years ago. “It’s got environ-

mental challenges, it’s in-

credibly expensive, it’s

unnecessary, and it’s not as

well regulated as tap water.”

Transporting water in

bottles to places that al-

ready have access to abun-

dant water — such as most

of the U.S. — is wasteful on a

mindboggling scale.

Fiji Water’s defense, a

spokesman for Wonderful

told me by email, is that

“ocean freight is the most

economical and environ-

mentally friendly way of

transporting goods across

continents.”

That merely raises the

question of why water needs

to be transported from Fiji

to Los Angeles or points

beyond at all. The spokes-

man also said that Fiji is

“committed to achieving

20% recycled plastic by next

year and 100% recycled

plastic by 2025, and we are

also exploring packing

innovations under an in-

credibly aggressive timeta-

ble.” The “challenge of plas-

tics,” the spokesman added,

“is at the top of the list for

researchers at Caltech” who

could be funded by the

Resnicks’ gift.

Of more importance in

local and regional terms are

the Resnicks’ agricultural

businesses, particularly the

growing, processing and

marketing of almonds and

pistachios. The Central

Valley is climatically ideal

for these nut trees but an

atrocious location in terms

of water availability. The

trees require a permanent,

uninterrupted supply. They

can’t be fallowed in times of

drought, like other crops;

without water, they die.

Water experts and envi-

ronmentalists are divided

over whether growing al-

monds and pistachios in

this semi-arid region is a

good idea. By some mea-

sures, it makes good sense

to devote scarce and there-

fore valuable water re-

sources to the highest-value

crops, which include al-

monds and pistachios.

Almonds were the third

most valuable California

commodity in 2018, bringing

$5.47 billion in cash receipts,

according to the state De-

partment of Food and Agri-

culture. Only dairy products

and grapes ranked higher.

Pistachios ranked fifth, at

$2.62 billion.

“Fruits and nuts account

for 45% of the total revenue

of California agriculture, but

consume only 34% of agri-

cultural water, making them

what Ellen Hanak, director

of the Water Policy Center of

the Public Policy Institute of

California, has called “the

only category for which the

share of value is higher than

the proportion of water.”

Wonderful says it plays

only a small role in Cali-

fornia water use: “We use

one percent of California’s

annual agricultural water to

grow food for all of Cali-

fornia and beyond.”

But that still places it

among the top agricultural

users in the state. The com-

pany says it’s “using ad-

vanced strategies like micro

irrigation” and has invested

“over $400 million to inno-

vate and implement new,

more efficient ways to irri-

gate our orchards.”

Growing nuts in an envi-

ronment of scarcity requires

unusual arrangements to

ensure an uninterrupted

water supply, and the

Resnicks have been in the

middle of them. The key

arrangement involves the

Kern Water Bank, a state-

funded project that, in a

highly controversial trans-

action still before state

court, was transferred to a

private entity allegedly

controlled by the Resnicks.

As I reported in 2010, the

water bank, a complex of

wells, pumps and pipelines

outside Bakersfield, was

initially part of the $1.75-

billion bond-funded State

Water Project, which pro-

vides water for 25 million

Californians and irrigates

750,000 acres. In 1995 the

state gave up on the project

and turned it over to Kern

County water authorities.

They promptly ceded it to a

local consortium of public

and private entities, includ-

ing Westside Mutual Water

Co., a subsidiary of the

Resnick-owned Paramount

Farms.

A state judge rejected a

lawsuit aimed at overturn-

ing the transfer in 2014, but

the case is on appeal. No

hearing date has been

scheduled by the state

Court of Appeal in the four

years since the parties’

briefing has been com-

pleted, however.

The water bank’s private

owners have maintained

that they rescued the bank

from a state bureaucracy

that had been unable to

surmount procedural road-

blocks in getting it opera-

tional. Wonderful maintains

that under private control,

the bank is a boon to the

state. “There’s a difference

between using and wasting

water,” the company says.

“The Kern Water Bank

captures and stores water

runoff that would otherwise

go out to sea in wet years to

use in dry years.”

Yet that presupposes

that water running off to the

sea is wasted, which isn’t the

way it’s seen by environmen-

talists and downstream

economies such as the

salmon fishery, which has

suffered from the wholesale

diversion of water to agricul-

tural and residential use.

Indeed, Stewart Resnick

insinuated himself in 2009

into the debate over

whether the severe drought

in the region should be

blamed on environmental

restrictions designed to

help revive fisheries and

river habitats. In a letter to

Sen. Dianne Feinstein (D-

Calif.), Resnick accused

federal agencies of “sloppy

science” in imposing those

environmental restrictions,

which obviously had the

potential to cut into his

agricultural water supply.

He demanded a new scien-

tific study.

The National Academy

of Sciences reported a few

months later that the re-

strictions were, indeed,

“scientifically justified.”

It’s fair, if perhaps impo-

lite, to ask how Caltech

researchers will deal with

issues that could so inti-

mately concern their finan-

cial patrons.

There are no public

indications that the

Resnicks will have a say over

the research portfolio or the

personnel of the program

they’re funding, though

Caltech’s chief communica-

tions officer, Shayna Chab-

ner, told me by email, “the

gift agreement and its de-

tails are confidential.”

What’s left is a question

of balance. When it comes to

environmental sustainabil-

ity and climate change, are

the Resnicks part of the

problem or part of the solu-

tion? Or both?

Keep up to date with

Michael Hiltzik. Follow

@hiltzikm on Twitter, see

his Facebook page, or email

michael.hiltzik

@latimes.com.

The irony of Resnicks’ gift to Caltech

LYNDAANDStewart Resnick, flanking Caltech President Thomas F. Rosenbaum, are giving $750 million for climate change research.

Rich PrughWonderful Co.

[Hiltzik,from C1]