CALIFORNIA WATER FUTURES TRADING?

Last week the Chicago Mercantile Exchange launched California water futures trading. Let's take this as a milestone to re-think our practices as a company, taking care of our community and our environment.

José Luis Ortiz Flores

Last week we were discussing at San Diego County Hispanic Chamber of Commerce (www.sdchcc.org) news that caught our attention: Wall Street began trading for the first time in history water futures. We have heard of gold, oil and other commodities futures, but California Water futures trading? The most basic and essential element for living, water, trading at Wall Street. 

A futures contract is an agreement to buy or sell an asset, like water, at a specific time in the future at an agreed price. In this case, this contract represents 10 acre feet of water in California, or the amount of water it takes to cover an acre over land in one foot of water (the amount it would take to cover 40,468 square meters in about 30cm of water).

And there are some specific reasons this future water contract is related on California: a)This state has had a dry period from December 2011 to March 2019; b)We all have witnessed this year heat and wildfires ravaged the U.S. West Coast; c)California represents the fifth economy worldwide. d)Currently, 40% of water in California is used to irrigate over 3.5m hectares of crops. 

The need for water has to be balanced between supplying people´s homes, energy production and irrigating crops to provide us with food.  According with Euronews, if this isn´t properly balanced or supplies run too low, it has the potential to erupt into violence and water wars could become a real possibility. (https://www.euronews.com/living/2020/12/08/is-trading-water-the-next-big-thing-on-wall-street)

Those who are backing the introduction of water futures argue that buying futures contracts would help businesses who need water to function to manage the risk of climate change, aligning more efficiently supply and demand of this vital resource. The water future contracts were launched at the Chicago Mercantile Exchange (CME) last week, with US$1.1 billion in contracts tied to water prices in California; there were two traders when the market went live last Monday.

On the other hand, experts say treating water as a tradable commodity puts a basic human right into the hands of financial institutions and investors, a dangerous arrangement as climate change alters precipitation patterns and increases water scarcity (https://e360.yale.edu/digest/wall-street-begins-trading-water-futures-as-a-commodity).

These months gave us the opportunity to re-think the way we do things, personally and professionally. We have also thought of a better relationship with our environment, as we saw during 2020 first semester scenes, we haven´t experienced: bioluminescence in some shores we haven´t seen for decades, less usage of automotive transport, animal species taking urban spaces, etc. (https://redintegralis.live/2020/07/05/compliance-ambiental-y-la-nueva-normalidad/)  So, let´s take this water future contract as a milestone to think again of our practices as a company, taking care of our community and our environment.

Nos encantará ayudarte

Dejar un comentario

Tu dirección de correo electrónico no será publicada. Los campos obligatorios están marcados con *

Scroll al inicio

Este sitio web utiliza cookies para mejorar la experiencia del usuario a través de su navegación.


Notice: ob_end_flush(): Failed to send buffer of zlib output compression (0) in /home/redbms/public_html/wp-includes/functions.php on line 5373