Water was first traded on the U.S. Wall Street Stock Exchange (New York).
It is noted that plans to trade futures for water became known in September this year. Then, the U.S. West Coast was economically significantly affected by forest fires and heat. These contracts, in turn, are aimed at protecting large water consumers, including farmers.
According to Bloomberg, futures are tied to the Nasdaq Veles California Water Index, which became effective in 2018. It determines the weighted average price of water.
Managing director and analyst at RBC Capital Markets Dean Dray believes that climate change, drought and population growth can make water scarcity and its pricing a hot topic for the coming years.
CME’s Head of Equity Indexing and Alternative Investment Products Tim McCourt recalled that currently two billion people live in countries where water is a problem, and in four years, nearly two-thirds of the world could face water scarcity.