World.- If you do not believe, but this Monday the water began to be quoted in the commodity futures market due to the scarcity of this good, the price of which will now fluctuate as oil, gold or wheat do, CME Group reported today.
The Nasdaq Veles California Water Index, with the NQH2O ticker, is based on a California water futures price indicator that now traded at about $486.53 per acre-foot, a measure of volume normally 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 greatest scarcity of this good, together with the key air for life, the arrival in the commodity market will allow according to experts better management of future risk linked to this good.
Farmers, funds or municipalities may protect themselves or speculate against changes in the price of water.
According to CME Group, the new contracts will enable better risk management associated with water scarcity and better correlation between supply and demand in markets.
Although the index is based on the prices of California’s major river basins, where water scarcity has increased, this value may be used as a benchmark for the rest of the world in water markets.
These futures contracts do not require physical water delivery and are purely financial, based on the average weekly price between California’s top five basins until 2022.
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The new index will allow us not to have to resort to an «eye» estimate of the future price of water, but to what are the expectations of the main players in this market.
China and the United States are the world’s leading consumers of water, and according to the United Nations 2 billion people live in countries with severe water access problems, while in the coming years two-thirds of the world could experience water scarcity and millions of people being displaced.
Excessive exploitation of this resources by the primary sector, industry and human consumption, as well as climate change, have led to this resource becoming increasingly scarce.