Like gold, silver, and a number of commodities, water has also become a commodity that can be traded on stock exchanges, beginning with the American stock exchange.
This step came after planning for the matter last September, and this was due to the spread of fires that caused severe damage to the west coast of the United States.
The water futures contract that was launched is tied to the "Nasdaq Felice California Water Index", launched in 2018, which measures the average price of water.
This means that traders, as well as companies and farmers, can trade water on the American stock exchange, and the watchfulness of this vital substance will not remain constant.
A reaction to the drought that plagued California
California has suffered during the past years from a long drought significantly, which prompted the authorities in the state to take many measures in order to manage the crisis.
Despite the return of the rains, the fire waves caused major damage, including massive water consumption, in addition to massive agricultural campaigns that require a lot of water.
The problem of water scarcity is returning to the fore
Despite the floods, good rainfalls, and snow that invade the United States, European countries, and other countries in the north, the heat waves that rise annually due to pollution and climate change, harm the groundwater and negatively affect the surface water.
This means that not only African countries or some southern countries suffer from this problem, but rather it is a major and growing global problem.
Fresh, clean water is an essential component of a healthy human life, but 1.1 billion people lack water and 2.7 billion suffer from water scarcity for at least one month per year, and by 2025, a third of the world's population may face water shortages.
It is estimated that by 2050, one in four people will not have access to clean drinking water here on Earth, which will be significantly higher than one in ten today.
With this perspective in mind, it becomes abundantly clear how severe the global water crisis is. Clean water is expected to be one of the world's most important resources in a state of scarcity.
Today, there is no country in the world that does not face the problem of declining potable water. Even Switzerland suffers from this situation. This is why voices are mounting calling for focusing on important issues.
Water from insignificant base material to the new gold
Because water is a basic and vital material, it is usually available at a very cheap price, and this is perhaps what made the citizen or consumer deal with it as though it has no great value.
People sow water and even farmers consume a lot of it in an unhealthy way. Despite the development of agriculture and irrigation methods, water waste is still a problem in regions and countries that do not currently suffer from a shortage of this vital substance.
But with their accession to the stock exchange, governments and other countries may take the same step, especially since water desalination projects are increasing and the costs of converting saltwater into fresh is an expensive process.
And it seems that the equation of keeping the price of water constant even in crises and droughts is something that will not remain, and the authorities will raise prices to force consumers to better manage their consumption and avoid waste.
The futures contracts will be financially settled instead of requiring the actual physical delivery of the water, and the contracts will include quarterly contracts through 2022, each representing 10 acres of water.
The contracts will allow investors and farmers alike to bet on future water prices, and the contracts are linked to the $ 1.1 billion California spot water market.
While water will formally join the likes of gold, oil, and other commodities in trading on Wall Street, contracts will be financially settled.
Posts
No comments:
Post a Comment