CME's First Water Futures Contract Is Coming With West on Fire
Comment of the Day

September 18 2020

Commentary by Eoin Treacy

CME's First Water Futures Contract Is Coming With West on Fire

This article by Elizabeth Elkin for Bloomberg may be of interest to subscribers. Here is a section:

“It’s really a unique mechanism for investors themselves and California to be able to at the very least understand and price the risk and potentially hedge the risk of water price volatility,” said Carter Malloy, founder and chief executive officer of AcreTrader, a farmland investing platform.

“The crucial thing is right now we have very little visibility” on what water prices will look like in the future, he said.

Water preservation and distribution could become increasingly attractive as investors like Jeff Ubben, who recently launched Inclusive Capital Partners, look to tackle problems ranging from environmental damage to food scarcity through their funds.

Climate advocates have warned in recent years for the potential of water wars as competition increases between needs from agriculture, energy and growing cities. Food production in particular could be vulnerable as drought makes it increasingly difficult to grow crops in many parts of the world and farmers balance water and land needs with protecting forest in places like Brazil’s Amazon.

“Food is going to be a flash point” in the world going forward as climate change makes production more challenging, Carter Roberts, chief executive officer of World Wildlife Fund, said in an interview at the Bloomberg Green Festival this week.

Eoin Treacy's view

A couple of the other directors at the Nevada Trust Company sit on the board of Ducks Unlimited. It’s a conservancy group run by hunters and aims to protect as much wetland habitat has possible. Water rights and abeyance agreements are the bread and butter of the organisation.

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