Water, the basis of life on Earth, began this Monday to trade on the commodities futures market of Wall streetDue to the scarcity of this good, the price of which will now fluctuate like oil, gold or wheat, reported CME Group.
The Nasdaq Veles Califonia Water Index, with the “ticker” NQH2O, is based on a price indicator of water futures in California that this Monday was trading at about $ 486.53 per acre-foot, a measure of volume normally used in the United States equivalent to 1,233 cubic meters.
The price of water in California has doubled in the last year according to this indicator and with the greatest shortage of this good, together with air, key to life, the arrival of raw materials on the market will allow, according to experts, ubetter management of the future risk associated with this asset.
Farmers, funds or municipalities they will be able to protect themselves or to speculate before the changes in the price of the water.
According to CME Group, the new contracts will allow better management of the risk associated with water scarcity and carry out a better correlation between supply and demand in the markets.
Although the index is based on prices in California’s major river basins, where water scarcity has increased, this value can be used as a reference for the rest of the world in the water markets.
These futures contracts do not require physical delivery of water and are purely financial, based on the pweekly average strong among California’s top five watersheds through 2022.
The new index will avoid having to resort to a estimation “by eye” of the future price of water, but what are the expectations of the main players in this market.
China and United States They are the world’s main consumers of water and, according to the United Nations, 2 billion people live in countries with serious problems of access to water, while in the next few years two thirds of the planet could experience water shortages and millions of people will be displaced.
The excessive exploitation of these resources by the primary sector, industry and human consumption, as well as climate change, have led to this resource becomes increasingly scarce.