Amid fears of scarcity, water is now being traded on Wall Street

Source: Sustainable Week.

Water, the basis of life on Earth, It began trading on the commodity futures market due to the scarcity of this commodity, whose price will now fluctuate like oil, gold, or wheat., CME Group reported.

The Nasdaq Veles California Water Index, ticker NQH2O, is based on a price indicator for California water futures, which today was trading at about $486.53 per acre-foot., a unit of volume commonly 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 increasing scarcity of this resource, along with air, which is essential for life, its arrival on the commodities market will allow..., According to experts, this would lead to better management of future risk associated with this asset.

Farmers, funds, or municipalities can protect themselves or speculate. in response to changes in the price of water.

Serious problems with access to water 

China and the United States are the world's largest consumers of water, and according to the United Nations, 2 billion people live in countries with serious water access problems, while In the coming years, two-thirds of the planet could experience water scarcity and millions of people could be displaced.

The overexploitation of this resource by the primary sector, industry and human consumption, as well as climate change, have led to this resource becoming increasingly scarce.

CME Group: improved management of the risk associated with water scarcity

According to CME Group, The new contracts will allow for better management of the risk associated with water scarcity and 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 water markets.

The contracts are purely financial and do not require physical delivery of water. 

These futures contracts do not require physical delivery of water and are purely financial., based on the average weekly price across the five major basins in California through 2022.

The new index will eliminate the need to rely on a rough estimate of the future price of water., but rather what are the expectations of the main players in this market.

See article in Sustainable Week

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