Water trading on Wall Street means world’s most vital resource as a basic human right under threat, UN warns
Wall Street has begun trading water as a commodity, like gold or oil.
The world’s first water market launched on the Chicago Mercantile Exchange this week with $1.1 billion in contracts tied to water prices in California, Bloomberg News reported.
In reaction, Pedro Arrojo-Agudo, the UN’s Special Rapporteur on the human rights to safe drinking water and sanitation, said trading water futures like oil or gold is expected to leave the market vulnerable to a speculative bubble.
“The news that water is to be traded on Wall Street futures market shows that the value of water, as a basic human right, is now under threat. It is closely tied to all of our lives and livelihoods, and is an essential component to public health.”
“You can’t put a value on water as you do with other traded commodities,” said Arrojo-Agudo, pointing to the importance of having access to water in the fight against the COVID-19 pandemic.
“Water belongs to everyone and is a public good. It is closely tied to all of our lives and livelihoods, and is an essential component to public health.”
Water now a commodity
The market allows farmers, hedge funds, and municipalities to hedge bets on the future price of water and water availability in the American West.
The new trading scheme was announced in September, prompted by the region’s worsening heat, drought, and wildfires fueled by climate change.
Proponents argue the new market will clear up some of the uncertainty around water prices for farmers and municipalities, helping them budget for the resource.
But some experts say treating water as a tradable commodity puts a basic human right into the hands of financial institutions and investors, a dangerous arrangement as climate change alters precipitation patterns and increases water scarcity.
“My first reaction when I saw this was horror, but we’ve also seen this coming for quite some time,” said Basav Sen, climate justice project director at the Institute for Policy Studies.
“What this represents is a cynical attempt at setting up what’s almost like a betting casino so some people can make money from others suffering.”
“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 develop,” said RBC Capital Markets managing director and analyst Deane Dray, as quoted by Bloomberg.
“Water is indeed a vital resource for the economy – both large and small-scale players – but the value of water is more than that. Water has a set of vital values for our society that the market logic does not recognize and therefore, cannot manage adequately, let alone in a financial space so prone to speculation,” said Arrojo-Agudo.
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