Trading water on Wall Street

1. The new liquid gold

Water has been added to the Futures market.

H2O is being traded along with oil, Gold.

Water hits Wall Street tickers.

US firm launches contracts for California Spot water.

2. Water, now a commodity

The trade began on Dec 7, 2020

California Spot water market is worth $1.1 billion.

3. Will you bet on water prices?

Water prices in California has doubled in one year.

2/3 of the world may face water shortage by 2025.

Full story:

Water is the new oil or a new gold.

Because water has joined both oil and gold on the Wall Street. It is now officially being traded.

Why water?

Climate change: water shortage.

The price of water has gone up across the world. In California it has doubled in one year. Recent droughts, wildfires, have made matters worse.

An American company, called CME group has added water to the Futures Market.

Futures market?

An auction market, where you buy and sell today for delivery in the future. The price is set today, but the commodity is delivered future. This kind of trading is done for oil and gold. Now, water too.

An American company has launched contracts related to California Spot water. The announcement was made in September, just after the wildfires and the trade began in Dec 7, 2020.

 

The price of water future in California traded at $486.53 per acre foot. The index is based on prices in California’s major river basins. This market in California worth $1.1 Billion.

So, the water in California is a commodity, traded commodity, and an asset. Going forward, the price of water will fluctuate like Gold or oil and investors will be able to bet on the future of water prices.

What is it for people of California?

People favorable to this move say, this will clear uncertainty around water prices. It will help farmers and authorities budget for water and also allow better management.

People against this move say, water should not be made tradable commodity, because it puts basic human needs under the control of financial institutions.

An expert compared it to betting on the suffering of others.

And does it mean for those who are not in California?

It is an indication for all of us. This is what the future holds. It may be a matter of time, water hits markets around the world. Two billion people live in countries plagued with water problems.

Nearly 2/3 of the world may face water shortage by 2015. So, everyone, industries, households, farmers will feel the pinch. So it is safe to make water a tradable commodity or is there any better approach to security of water?

It is also said, the next war will be fought for water. We can only hope, it doesn’t come to that.