Water Traded on Wall Street
Published in La Nación
(Argentina) on 14 December 2020
by Roberto Fermín Bertossi (link to original)
First and foremost, water has been, is and will be an essential and irreplaceable basic element for all life: human life, cellular and microbial life on Earth, plant life in crops, and animal life including livestock and wildlife. Lives that sustain one another! In an astonishing event last Monday, water began trading on the futures market as a commodity, due to how scarce it is. The price of water will now fluctuate like the price of petroleum, gold or wheat, CME Group reported.*
The Nasdaq Veles California Water Index, with the ticker name of NQH2O, is based on an indicator of prices of water futures in California which, on Monday, Dec. 7, traded at $486.53 per acre-foot — a measure of volume normally used in the United States, equivalent to 1,233 cubic meters.
According to CME Group, the new contracts will allow better management of the risk associated with water scarcity and bring about a better correlation between supply and demand in the markets.
Even though the index is based on prices in California’s main river basins where water scarcity has increased, this value can be used as a reference for the rest of the world in water markets.
Futures contracts do not require physical delivery of water and are purely financial, based on the weekly price averaged across California's five main basins through 2022.
The new index will avoid having to appeal to an eyeball estimation of the future price of water, but instead will allow people to consider the expectations of the principal actors in this market.
China and the United States are the major consumers of water in the world. According to the United Nations, 2 billion people live in countries with serious water access problems, while in the next few years, two-thirds of the planet could experience water scarcity, and millions of people could be displaced due to water issues.
On Dec. 22, 1992, the U.N. General Assembly adopted Resolution A/RES/47/193 declaring March 22 World Water Day. On July 28, 2010, through Resolution 64/292, the General Assembly explicitly recognized the human right to drinking water and sanitation, reaffirming that clean, potable water and sanitation are essential to ensuring all other human rights.
Given that universal access to potable water is a human right, unreasonable use of this natural resource (second only to air in importance for humans) combined with a lack of control or absence of regulation, have caused a tremendous drop in natural reserves or aquifers, incentivizing scandalous commercialization of this supreme human right; anxiously and troublingly compromising and straining current and future intergenerational physical life needs.
Incidentally, a 2012 documentary, based on the well-known book “Blue Gold: The Fight to Stop the Corporate Theft of the World’s Water” by Maude Barlow and Tony Clarke, demonstrates how the planet is rapidly and dangerously reaching a global water crisis, while the quintessential source of life becomes part of a global market and becomes a matter of economic, political, diplomatic (and military?) dispute.
It is no coincidence then, that in his special farewell message on March 22, 2016, World Water Day, U.N. Secretary-General Ban Ki-moon proposed a joint global adoption of bold measures to tackle the inequality of potable water and sanitation head on as a goal and guide to making the 2030 Agenda of Sustainable Development effective.
As Umberto Eco suggests, we knew very well how to destroy countries and cities, villages and civilizations, but we still don’t have precise ideas on how to reconcile the collective well-being, the future of young people, the overpopulation of the world, and the longer life expectancy for everyone, developments for which drinking water and sanitation are simply vital, essential, and irreplaceable.
Anticipating and warning about the financial over-commodification of water committed in California and in the face of growing stress on water supplies, and given unprecedented scenes of scarcity and depletion, is something which has caused an urgency among all humanity to find a way to thoroughly start reversing the process, taking joint and cooperative control of our common human commitment to intergenerational solidarity and all that concerns the best and most rational use of the drinkable water still available.
Finally, from a solidarity perspective about the universal destination of goods and humanitarian “sharing,” hopefully, in time, we will become aware cooperatively, rather than speculatively, of the irreplaceable vital function that the natural resource known as drinking water serves. We will become aware of that if we spend too much time trapped by ignorance, waste, recklessness, corruption and negotiation. And we will learn the importance of water when, in extremis, we are one of the last generations that cannot afford to make this mistake ever again.
*Editor’s note: CME Group is a leading derivatives marketplace.
The author is a CoNEAU professor and university researcher, and an expert in cooperativism.
The Nasdaq Veles California Water Index, with the ticker name of NQH2O, is based on an indicator of prices of water futures in California which, on Monday, Dec. 7, traded at $486.53 per acre-foot — a measure of volume normally used in the United States, equivalent to 1,233 cubic meters.
According to CME Group, the new contracts will allow better management of the risk associated with water scarcity and bring about a better correlation between supply and demand in the markets.
Even though the index is based on prices in California’s main river basins where water scarcity has increased, this value can be used as a reference for the rest of the world in water markets.
Futures contracts do not require physical delivery of water and are purely financial, based on the weekly price averaged across California's five main basins through 2022.
The new index will avoid having to appeal to an eyeball estimation of the future price of water, but instead will allow people to consider the expectations of the principal actors in this market.
China and the United States are the major consumers of water in the world. According to the United Nations, 2 billion people live in countries with serious water access problems, while in the next few years, two-thirds of the planet could experience water scarcity, and millions of people could be displaced due to water issues.
On Dec. 22, 1992, the U.N. General Assembly adopted Resolution A/RES/47/193 declaring March 22 World Water Day. On July 28, 2010, through Resolution 64/292, the General Assembly explicitly recognized the human right to drinking water and sanitation, reaffirming that clean, potable water and sanitation are essential to ensuring all other human rights.
Given that universal access to potable water is a human right, unreasonable use of this natural resource (second only to air in importance for humans) combined with a lack of control or absence of regulation, have caused a tremendous drop in natural reserves or aquifers, incentivizing scandalous commercialization of this supreme human right; anxiously and troublingly compromising and straining current and future intergenerational physical life needs.
Incidentally, a 2012 documentary, based on the well-known book “Blue Gold: The Fight to Stop the Corporate Theft of the World’s Water” by Maude Barlow and Tony Clarke, demonstrates how the planet is rapidly and dangerously reaching a global water crisis, while the quintessential source of life becomes part of a global market and becomes a matter of economic, political, diplomatic (and military?) dispute.
It is no coincidence then, that in his special farewell message on March 22, 2016, World Water Day, U.N. Secretary-General Ban Ki-moon proposed a joint global adoption of bold measures to tackle the inequality of potable water and sanitation head on as a goal and guide to making the 2030 Agenda of Sustainable Development effective.
As Umberto Eco suggests, we knew very well how to destroy countries and cities, villages and civilizations, but we still don’t have precise ideas on how to reconcile the collective well-being, the future of young people, the overpopulation of the world, and the longer life expectancy for everyone, developments for which drinking water and sanitation are simply vital, essential, and irreplaceable.
Anticipating and warning about the financial over-commodification of water committed in California and in the face of growing stress on water supplies, and given unprecedented scenes of scarcity and depletion, is something which has caused an urgency among all humanity to find a way to thoroughly start reversing the process, taking joint and cooperative control of our common human commitment to intergenerational solidarity and all that concerns the best and most rational use of the drinkable water still available.
Finally, from a solidarity perspective about the universal destination of goods and humanitarian “sharing,” hopefully, in time, we will become aware cooperatively, rather than speculatively, of the irreplaceable vital function that the natural resource known as drinking water serves. We will become aware of that if we spend too much time trapped by ignorance, waste, recklessness, corruption and negotiation. And we will learn the importance of water when, in extremis, we are one of the last generations that cannot afford to make this mistake ever again.
*Editor’s note: CME Group is a leading derivatives marketplace.
The author is a CoNEAU professor and university researcher, and an expert in cooperativism.
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