The new on Wall Street: speculating with water | Pr …

Near two billion people live in countries with problems of access to drinking water and two-thirds of the world could face shortage difficulties over the next four years. The data are shocking and sound alarm bells in both health and production.

Water tops the list of essential natural resources for the reproduction of life and also tops the list of resources to which biggest short-term availability issues.

The financial system is closely monitoring these structural changes and moving forward by incorporating new hedging instruments. Wall Street caused a sensation last week with the launch of the first water futures derivatives. They will be listed with those of petroleum, gold and commodities such as soybeans.

Among investment funds, it has long been believed that the lack of natural resources will be one of the great difficulties of the world economy. Some of the economists who generally make long-term forecasts mention that the next big crisis will not be a black swan but a green swan.

These statements are simply meant to show that there will be no unexpected collapse due to a financial bubble, like the one that occurred in 2008 with the collapse of Lehman Brothers. Tensions will come environmental and climatic issues.

Cash consulted the Asuma environmental cooperative what this means and how the launch of water futures should be interpreted. The answer was as follows:

“The financialization of water shows the geopolitical dispute over a resource which, due to changes in land use and its irrational use characterized by overexploitation and contamination, is increasingly rare and aggravates an unprecedented global environmental and health crisis ”.

The interdisciplinary team of Asuma added that “it is still early to understand the impacts of this fact, but this allows us to affirm that at the local level the public policies guaranteeing sustainable and equitable use, and national sovereignty in water matters ”.

In Argentina, for example, 70 percent of the surface is arid or semi-arid. Climate change is making this problem worse.

Vintage time

Investors, following the pandemic, have become more inclined to listen to alerts on future environmental adversities. Resilience has become the buzzword in the reports of international organizations.

In this period, the climate launch of water futures.

At the moment, they are designed for almond growers, power companies and others major water users on the west coast of the United States can operate with less price uncertainty.

These are sectors with large difficulties in covering your costs due to price fluctuations product of lack of water. To get a feel for this, California has experienced drought issues for the past eight years, and in September wildfires devastated the West Coast.

The future of water will have a price tied to the evolution of the California spot water market valued at around $ 1 billion. The contracts sell for about $ 500 per acre foot (each acre foot equals 1 million liters).

The price of these contracts will start to be the benchmark for global investment funds interested in speculation not only with the availability of water, but also with climate change, droughts, population growth and pollution.

Wear of nature

he the power of technology cannot be underestimated in this debate. This is the lesson of the last 300 years of history. Human innovation has succeeded, for example, in increasing the productivity of fields to enable sustained population growth and the recent elimination of major famines.

The development of technology could be just as effective in sweeping away climate damage accumulated over the last centuries. But the deepest problem remains unresolved: the use and allocation of resources.

The last documental del naturalista David Attenborough It is a pearl to continue to reflect on this point. It’s called “A Life on Our Planet”, it has wonderful images of nature and presents shocking data on the wear and tear that humans have placed on the land and oceans.