Wall street is about to start trading water for the first time

[Mary Wilson]

By Rosie Frost
last updated: 25/09/2020 - 18:30

Water shortages could affect around five billion people worldwide by 2050, according to the UN.

The threat of a future where water isn’t readily available is particularly acute in California, US where record temperatures and raging wildfires have wreaked havoc this year.

... A futures contract is an agreement to buy or sell an asset, like water, at a specific time in the future at an agreed upon price. Futures are have historically been traded for things like oil, precious metals or food.

CME is the world’s largest futures exchange and will launch the ability to trade in contracts for California’s water market later this year. Each contract would represent 10 acre feet of water, or the amount of water it takes to cover an acre over land in one foot of water.

For those of us using the metric system, that is the amount it would take to cover 4047 square metres in about 30cm of water. ...

https://www.euronews.com/living/2020/09/25/is-trading-water-the-next-big-thing-on-wall-street

 

[JJackson]

The commoditisation of water is a dangerous step which we discussed in some of the post in this thread
https://flutrackers.com/forum/forum...me-thoughts-mainly-about-water-and-population
California is not the problem but very low income countries who may find the water they have be using for irrigation for generations is now being exported to rich Gulf States or California who can outbid them.

 

[alert]

The commoditisation of water is a dangerous step which we discussed in some of the post in this thread
https://flutrackers.com/forum/forum...me-thoughts-mainly-about-water-and-population
California is not the problem but very low income countries who may find the water they have be using for irrigation for generations is now being exported to rich Gulf States or California who can outbid them.

Is that a problem or a benefit? If a low income country can make more money selling its irrigation water to California than it could using it to grow crops, isn't it better off? It could then take that money and buy food or other necessities elsewhere. It could also potentially divert the labor that is being used for the subsistence farming elsewhere as well for further benefit.

Obviously, there are concerns about property rights and such, but on the whole, I would think this is a boost to developing countries, not an impediment.

 

[JJackson]

In theory yes, in practice not so much. The problem is usually that access to the water in the irrigation ditches and streams has been free to the subsistence farmers as no one has ever questioned whose water it is. Now you get an agricultural business, or soft drinks plant, that wants a lot of water and cuts a deal with some local or governmental authority that assumes the right to sell it. Who knows in whose pocket the money from that deal ends up in but it is never the small scale farmer with the stream running through his farm who now has to compete with a business growing cut flowers for air freight to the European market. If I buy those flowers the couple of % of the price may be nothing to me but would be a substantial cost to the small Kenyan farmer. Large corporations are getting long term leases of large tracts of land in Africa, in the same kind of deal, but the people who lived there for generations, and always thought the land was theirs, are now told they do not have government issued property documents and must move. It is a complicated mess, watch out someone does not try and charge you for the next gulp of air you take - do you have proof of ownership?

 

[bertrand789]

En Australie, il me semble que cela a permis ? des ext?rieurs d'acc?der au foncier.
Dans cette zone am?ricaine, ce sera diff?rent. Ce sera un moyen de voir en pratique, ce que le mod?le ?conomique induit...
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[Emily]

Saudi Hay Farm In Arizona Tests State's Supply Of Groundwater
November 2, 20155:07 AM ET
...
No one we talked to has issue with these corporations coming in and wanting to make money. And the fact that it's going to Saudi Arabia or China, the locals simply didn't care. But what they did care about is that their water tables are falling.

https://gulfif.org/arizona-arabia-alfalfa-lessons-from-the-gulf-for-a-southwestern-water-crisis/

Arizona, Arabia, Alfalfa: Gulf Agricultural Industry Sparks a Conversation in the American Southwest
KSA
U.S. – Gulf Policy
Posted On: March 28, 2019
...
It is mightily important to point out that the Almarai and Al-Dahra companies have followed American law to the letter, however rather than vindicate these companies, this instead indicates that American laws need to be updated in order to contend with the emergence of large-scale multinational agriculture’s role in the Southwestern United States. In order to avoid the same fate as Saudi Arabia, Arizonan lawmakers should enact tiered policies that apply different regulations that distinguish small-scale farms from the immense agricultural operations that benefit from water-regulations that were originally meant to serve the subsistence of Arizona’s frontiersmen.

https://www.youtube.com/watch?v=8ZwBSjBgMXg
Draining Arizona: Mining For Water In The Desert Leaves Residents' Wells Dry | NBC News
152,360 views
•Sep 21, 2019

https://www.azcentral.com/in-depth/...ing-arizona-groundwater-dry-wells/2425078001/

Some wells have already gone dry, leaving families struggling to cope with the costs.

Rodney Hayes’ well went dry in July, as his wife, Nancy Blevins, was washing the dishes. Their pump burned up when the water level dropped, and the two, who live near a giant Saudi Arabian hay farm in Vicksburg, had to look for water elsewhere.

They hauled water, 100 one-gallon bottles at a time, from a friend who lent her tap. They dreamed about getting water back on for even a few hours a day.

“At least we could take showers without going to friends’ houses or truck stops or, you know, pouring water over each other,” he said.

In November, they finally managed to buy a new pump and got water running at their home again. But there's no telling how long it might last.

https://tucson.com/news/science/env...cle_447347ac-cbbb-59b6-883c-b977533c6796.html
Water wells drying up on Tucson's fringes

• Tony Davis
• Oct 25, 2014Updated Feb 17, 2018

 

[JJackson]

Emily probably the best know example of water table change is Coca-Cola's forced closure of its bottling plant in Kerala.
http://www.indiaresource.org/news/2011/1005.html

 

[Mary Wilson]

Water futures meet cool reception

Camilla Hodgson in London
9 HOURS AGO

Water futures are about to hit financial markets for the first time, with the launch of contracts tied to prices in California. But academics and investors fear the derivatives will offer a poor hedge for water users and may end up distorting prices for the vital resource. Developers CME Group and Nasdaq say the contracts will help farmers, municipalities and other big water users to hedge their water costs as the world warms up and droughts become more common. Senior US regulators have welcomed the contracts as a risk-management tool. But critics say the contracts may prove difficult to trade, given the highly localised nature of water pricing and regulation.

https://www.ft.com/content/016174d0-54ed-4806-9538-acbdf073df61

 

[Emily]

I hate to think of water speculation driving up prices the way oil prices were pumped up before the 2008 crash.