It is well known that there is no life without water and that it is a significant resource - the value of water, it can be said, is difficult to estimate. However, that it can become a commodity has recently been confirmed on Wall Street, where it was traded for the first time.
Namely, trading in the California water market, worth more than a billion dollars, was initiated on the world's largest derivatives exchange. It is very possible that water will be traded in the future, but at this point it is a derived value, to protect against risk.
He points out that water is currently on the stock exchange as a financial instrument, ie fjucers, which means that it has been traded for three months.
"Water is a kind of derivative, such as a gasoline derivative, and the price of gasoline also depends on the price of oil. With fjucers, you have the right to take the goods in the end or not. Since water is not taken, it is a hybrid instrument that should be a commodity. but it is financial. It is a deliberate derivative - some live and some do not, but it protects against risks, "said Musabegovic.
Water is bought on the stock exchange by giving a certain amount of money - a down payment, and the value is in the contract concluded on the stock exchange.
They imagined it to be in acres - a measure of the surface of the earth. Ten acres is an area of about four hectares, whose water depth is about 30 centimeters. That amount of water is a contract. For fjucers, the contract is a unit of measure, as for apples, a kilogram. The contract gives you the right to buy or sell that amount of water for some delivery in the future.
For now, farmers in California are interested in trading in water on the stock exchange.
Droughts are frequent in California due to climate change, and when there is a drought, the price of water rises. The stock market is based on supply and demand, if supply is higher, the price falls, if demand is higher, the price rises. If it is a dry year, the demand is high and the price will rise.
It is, therefore, a stock exchange product at the beginning of its century. Currently, the water market on the stock exchange is relatively small, and how much it will be globally accepted remains to be seen.
Water is the future because, in addition to agriculture, people are also users of water.
Today, waters also contain more and more different substances that appear as a result of human activity, and the increase in the number of inhabitants, intensive development of industry, agriculture, medicine, pharmacy ... also contribute to that.
When it is said that there will be a shortage of water in the 21st century, that is actually only partially true. Water cannot disappear unless it is released into space, and the amount of water on Earth does not change because it is constantly circulating in nature. The real truth is that there is not enough water of good quality, ie water that can be used for certain purposes in a simple and cheap way.
Climate change is further contributing to changes in both water quality and quantity in an area.
Droughts, floods, high temperatures accompanied by large evaporation of water can lead to temporary and even permanent supply disruptions. This does not mean that a country, such as California, which is otherwise a dry region, and which wants to become an agricultural giant in the production of certain agricultural crops, should be taken as an example of water problems. So, the situation is not great, but for now it is not tragic either. In that light, the appearance of water on the stock market only means that another toy has appeared on the economic market, and it does not announce a catastrophe. However, we will see how it will end.
Limited resource, water is an important factor in the economy and in all areas, but it has limited capacity.
There is 72 percent water in the whole country, but only one percent of it is water that we, as humanity, can use. It is a limited resource that will become inaccessible to a huge number of people with climate change. This is a pilot project that will show what the trend will be.