[0]: https://www.businessinsider.com/harvard-california-vineyards...
edit: correct dates.
I wouldn't gave guessed they would be that close, but it bodes very well for inexpensive energy / improvements in desalination technology being a source of water.
[1] https://www.eco-business.com/news/hyflux-to-produce-worlds-c...
Interestingly, there is a theoretical floor to the amount of energy invested per unit of water desalinated, and we're apparently quite close to it. From here, our best hopes for improvement are to use waste heat or solar thermal energy to desalinate water.
In the meantime as long as it continues, the situation be taken advantage of by those who know how to find holes in the system for concentrated private gain.
The market mostly seems to work fine. Henry Hub is somewhat arbitrarily picked as the most canonical price point. And then a lot of price discovery occurs in robust "basis" markets (i.e. region-specific contracts).
And we're about twenty years into a drought.
In general, by the time something gets to being turned into financial instruments like this, the actual step from whatever state it was in prior to a regulated, standardized, liquid, public contract is generally good. Light is an excellent disinfectant.
Markets quite often do not help usher in eras of rationale and logic. A lot of that goes out the window when "there's money to be made".
"It was an Achaemenid ruling that in case someone succeeded in constructing a qanat and bringing groundwater to the surface in order to cultivate land, or in renovating an abandoned qanat, the tax he was supposed to pay the government would be waived not only for him but also for his successors for up to 5 generations"
120 gallons of water for an egg 4000 gallons of water for a bushel of corn 11000 gallons of water for a bushel of wheat
That is..2 lbs or baked bread is 1000 gallons of water.
You are wearing 650 gallons of water if you were wearing a cotton shirt.
And wait for this: 135000 gallons of water for a ton of alfafa(which btw we exported cheap to China during California drought because it was cheaper to send that in empty shipping containers going back than truck it to a California dairy farms)
In some parts of the world water is literally free, you only have to pay for the connection. Whereas in others there's a shortage and people have to resort to clever engineering, like Israel with desalination or Libya with the Great Man-Made River project. In both of those cases the problem would be trivial if global transportation costs were zero.
Even with oil it is a thing - there's a different spot price and different forward curve at each tradeable terminal. For example the recently famous negative prices (and the monster contango) were observed only in Cushing, OK; other ports were always > 0. With water the difference would be much larger.
"4. What is the Nasdaq Veles California Water Index?
Nasdaq and Veles Water have partnered with WestWater Research, LLC, the leading economic and financial consulting firm in water trading, to develop the Nasdaq Veles California Water Index.
This index was launched by Nasdaq in October 2018 and tracks the price of water rights transactions (leases and sales) across the five largest and most actively traded regions in the state of California, including surface water and four adjudicated groundwater basins. NQH2O utilizes WestWater’s WaterlitixTM database as the source for the underlying data."
https://www.cmegroup.com/education/articles-and-reports/nasd...
It's based on an acre of California water one foot deep and cash-settled so that, you see, nobody must deliver or receive actual H2O.
Crude oil (like almost all other commodity futures) is also traded based on local physical benchmarks, WTI at the Cushing, Oklahoma storage facility for the price you see quoted for U.S. oil.
I wonder if it will help the farmers in the region hedge their production and also would it improve price discovery. The open interest will tell us.
PS. Cushing (the terminal for west texas intermediate) is in Oklahoma.
https://www.theguardian.com/us-news/2019/mar/25/california-w...
Western Washington has a massive excess of water but can't use this technique to "send it" anywhere... the clay-heavy soil isn't much good for industrial-scale crop production (aside from trees of course).
It's a big hoax, like all cash-settled futures.
Wall Street doesn't mind that.
Also, fun to see the expected seething at anything related to finance here :)
I also wonder how a futures contract with instant liquidity interplays with standard water bills, which as far as I know are billed at rates that get adjusted yearly at most (at least here in LA).
A farmer can sell their crop before it has grown to improve cash flow, chocolate companies can buy cocoa that they will need next year so they have a predictable price and these guys sit in the middle.
I’m saying Wall Street banks are the kinds of investors to sell delivery contracts and then find a way to gather water cheaply and actually deliver it (for a nice profit). Banks aren’t always just middlemen.
Water rights are bonkers-crazy.
