Water Futures Become New Trade Commodity

Wall Street officially began trading water as a commodity like oil or gold on Tuesday, with the nation’s first water market launched on the Chicago Mercantile Exchange on Monday with $1.1 billion in contracts tied to water prices in California.

Wall Street officially began trading water as a commodity like oil or gold on Tuesday, with the nation’s first water market launched on the Chicago Mercantile Exchange on Monday with $1.1 billion in contracts tied to water prices in California.

The water market allows hedge, funds, municipalities and even farmers to hedge bets on the future price of water and water availability in the American West, pointing out there were two trades when the market went live on Monday. 

The  new trading scheme was announced in September, prompted by the drought and wildfires in the region.

“Climate change, droughts, population growth, and pollution are likely to make water scarcity issues and pricing a hot topic for years to come. We are definitely going to watch how this new water futures contract develops,” RBC Capital Markets managing director and analyst Deane Dray told Bloomberg during an interview.


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