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THE COLOR OF CLIMATE
Water Is Being Traded on the Stock Market for the First Time
Water Is Being Traded on the Stock Market for the First Time
Some say trading water as a commodity could help mitigate future water crises, but others are highly skeptical
Drew Costley, Feb 11·5 min read
https://futurehuman.medium.com/water-is-being-traded-on-the-stock-market-for-the-first-time-55c02bb616ed
"In 2016, California experienced one of the worst droughts in the history of the state. Over 100 million trees died and billions of dollars in agriculture were lost. Farmers across the state were stuck between a rock and dry place: They needed more water for their crops, but the price of water was higher and more uncertain because of the drought.
Now, despite a powerful recent winter storm that brought rain and snow to California, the state is once again experiencing some form of drought. This is a recurring and growing problem for local farmers, especially in Southern California, as the historically dry state becomes even drier as a result of climate change. And in December 2020, to address the dire need for water, the Chicago Mercantile Exchange recently made a historical move: For the first time, it allowed investors to trade water as a commodity on the stock market. Some say trading water as a commodity will partially help improve California’s water crisis, but others are highly skeptical of the move.
The Chicago Mercantile Exchange partnered with two companies — WestWater Research, a consulting firm that generates the pricing data used for the market, and Nasdaq — to make this possible. These companies say the move will help farmers and water districts in Southern California have more price certainty during dry periods and could help mitigate the state’s water scarcity problem."
Why US investors are now betting on water
At the Chicago Mercantile Exchange, investors are now able to speculate on water prices. This practice, meant to help secure supplies for cities and farmers, has drawn criticism, as Sabrina Kessler reports from New York.
Date 21.01.2021, Author Sabrina Kessler (New York)
Drew Costley, Feb 11·5 min read
https://futurehuman.medium.com/water-is-being-traded-on-the-stock-market-for-the-first-time-55c02bb616ed
"In 2016, California experienced one of the worst droughts in the history of the state. Over 100 million trees died and billions of dollars in agriculture were lost. Farmers across the state were stuck between a rock and dry place: They needed more water for their crops, but the price of water was higher and more uncertain because of the drought.
Now, despite a powerful recent winter storm that brought rain and snow to California, the state is once again experiencing some form of drought. This is a recurring and growing problem for local farmers, especially in Southern California, as the historically dry state becomes even drier as a result of climate change. And in December 2020, to address the dire need for water, the Chicago Mercantile Exchange recently made a historical move: For the first time, it allowed investors to trade water as a commodity on the stock market. Some say trading water as a commodity will partially help improve California’s water crisis, but others are highly skeptical of the move.
The Chicago Mercantile Exchange partnered with two companies — WestWater Research, a consulting firm that generates the pricing data used for the market, and Nasdaq — to make this possible. These companies say the move will help farmers and water districts in Southern California have more price certainty during dry periods and could help mitigate the state’s water scarcity problem."
Why US investors are now betting on water
At the Chicago Mercantile Exchange, investors are now able to speculate on water prices. This practice, meant to help secure supplies for cities and farmers, has drawn criticism, as Sabrina Kessler reports from New York.
Date 21.01.2021, Author Sabrina Kessler (New York)
"Provoking a crisis?
Speculators have triggered food crises before. Between 2008 and 2010, hedge funds bet on rising cocoa prices and thus eventually drove up the price for cocoa beans by a staggering 150%. Financial speculators also contributed to the price of wheat and soybeans soaring in 2007 and 2008, which triggered famine and social unrest in developing countries.
But the Chicago exchange is trying to calm people down, saying the water futures would only be traded regionally and in small quantities and that the majority of all Californian water rights are in the hands of utilities anyway. In addition, it says, it's all about "financially settled contracts," meaning that no water is flowing anywhere, as the only thing that really happens is cash settlements.
This is to prevent investors with large storage capacities from causing an artificial water scarcity in pursuit of profits from rising prices."
The future of water is traded in the stock exchange
09/12/2020, Content by: Paula Sánchez Almendros
https://smartwatermagazine.com/news/smart-water-magazine/future-water-traded-stock-exchange
"And precisely water stress is what made water reach the next level as a universal asset: be traded in the stock exchange.
The Nasdaq Veles California Water Index
At the same level as oil or gold, water scarcity made this precious asset enter the Wall Street markets with a great start, where since December 7 it is traded in the stock exchange, at US$486.53 per acre-foot on its first day, the equivalent of 1,233 cubic metres in the United States.
Water becoming a traded commodity comes as a result of difficult access to water in certain regions, together with the availability of water at different times of the year, something that has led to price fluctuations. Nasdaq, the second largest electronic and automated stock exchange in the United States, realised the situation, and in 2018 it partnered with Veles Water and WestWater Research to launch the Nasdaq Veles California Water Index (NQH20), the first in the state of California."
Premiered Jun 15, 2019
Texas Water Bank
http://www.twdb.texas.gov/waterplanning/waterbank/bank/index.asp
"The Texas Water Development Board (TWDB) administers the Texas Water Bank, which was established in 1993 to facilitate the transfer, sale, or lease of water and water rights throughout the state. A depositor holding a surface water right will enjoy protection from cancellation as specified in 31 Texas Administrative Code Chapter §359.8 (a) of the Water Bank Rules.
Key Aspects of the Texas Water Bank
- Use of the bank is optional, as water rights may be marketed outside of the bank.
- In administering the bank, the TWDB may act to
- serve as a negotiator;
- maintain a registry and serve as an information resource;
- encourage conservation through deposits of conserved water;
- establish requirements for deposits;
- purchase, sell, hold, and/or transfer water or water rights;
- establish regional water banks;
- act as a clearinghouse for water marketing information;
- prepare and publish a manual on structuring water transactions;
- accept and hold donations of water rights in trust for environmental purposes;
- enter into contracts to pay for feasibility studies or the preparation of plans and specifications relating to water conservation efforts or to estimate the amount of water to be saved through conservation efforts; and
- perform other actions to facilitate water transactions.
- Water rights or contractual rights to use water, which may include surface water, groundwater, or water from any source to the extent authorized by law, may be deposited in the bank.
- All water rights or a portion of a water right may be deposited in the bank.
- Surface water rights placed in the bank are protected from cancellation f or 10 years while on deposit in the bank.
- The TWDB may charge as much as 1 percent of the value of the water or water right received into or transferred from the water bank to cover its administrative expenses.
What kind of guarantee does the TWDB’s participation in the bank provide the depositor or buyer of water or water rights?
The TWDB cannot guarantee the presence of water in the state’s watersheds or aquifers. Information on water use for a specific surface water right, however, should be available from the TCEQ.
What is the TWDB’s role in amending a water right to reflect the details of a transfer?
None. The buyer and depositor are required to follow existing procedures for permit amendments with the TCEQ.
Can the TWDB establish regional water banks?
Yes. Banks may be added or removed as necessary. The banks may be reviewed periodically so their operational success can be evaluated.
How have the TWDB, the TCEQ, and the Texas Parks and Wildlife Department coordinated their efforts?
The TWDB coordinated the development of the current rules for operating the Texas Water Bank and Texas Water Trust with the TCEQ and the Texas Parks and Wildlife Department.
How will the bank get buyers and sellers together?
The TWDB has established a registry of depositors, sellers, and potential buyers and attempts to facilitate comminication between interested parties."
Water Banks: Why You May Need One
October 6, 2017, WRITTEN BY Sarah Roubidoux Lawson and Virginia Nicholson
https://www.schwabe.com/newsroom-publications-14792
"Water banks are not new—they have been around a long time. Water banking is a practice used to effectively manage water supplies throughout Western states. Water banking has long been used to solve water issues ranging from allocating water within a water basin to maintaining emergency water supplies during a drought. What is new about water banks is that suddenly rural property owners may be required to find a water bank to be allowed to develop land, at least here in Washington state. Here are the basics on water banking.
Water rights in the United States are divvied up according to two regimes: riparian rights and prior appropriation rights. Western states operate on a prior appropriation regime, where first in time means first in right. Water rights are managed by the state and secured through the issuance of a water rights certificate, which determines the purpose, volume, and place of use for the water. If all or a portion of the water right go unused for a period of years (as determined under state law), the right to the water may be lost.
Reallocation of water may occur where the land on which the water rights certificate has been issued—where the water has been used—changes. For example, consider a property that has historically been used for farming and that has a 100-year-old water right for irrigation, but that is more valuable today for residential purposes than for farming. If the property is converted to residential use, there may be more water available on the property under the certificate than is needed for the new use.
To make efficient use of water, excess water is transferred to a water bank, to be used for other purposes within that water basin. The excess water is transferred to the bank and is then made available to other users for a variety of purposes, including in-stream flows for fish passage, mitigation of groundwater availability, and creation of a water supply during drought years.
Here, we focus on the mitigation of groundwater availability. In Washington, even if you can drill a well, and the well has plenty of water, that does not mean you can use it. Some water basins are “closed,” meaning there cannot be any net effect on water use. But if you can find a water bank in that basin, you can buy a mitigation certificate for your well water use and you will not be denied building permits on that basis.
Under Washington law, water banks are established and managed through the state’s Trust Water Rights Program (TWRP). Through the state’s TWRP, privately held water rights are transferred to the state in trust. Importantly, the holder of the right does not lose any water right volume, or the right itself, by transferring it to the trust. Under a trust agreement with the state, the bank determines the water available to market, the geographic market for the water, the price, and the use."
WATER BANKING
http://www.washingtonwatertrust.org/stream-flow
"Water banks and water exchanges may currently be one of the most talked about topics in the world of water rights and water law in Washington. But, what exactly is a water bank and what do they do? A water bank is an institutional mechanism used to facilitate the legal transfer and market exchange of various types of surface, groundwater and storage entitlements. The exchange leases water from willing sellers and then holds, transfers and exchanges water rights on behalf of willing buyers. Water banks vary in design depending the particular watershed and local water supply needs they were created to serve. They help move water rights from one user to another user. While individual changes or transfers or water rights have been accomplished between users for decades in Washington, water banks are a means to formally move water rights between multiple buyers and sellers.
Typical functions of a water bank may include:
Bourne Water Bank, LLC
https://www.bournewaterbank.com/
"The Bourne Water Bank offers mitigation credits for year-round domestic use in the Teanaway River tributary basin and the mainstem Yakima River in Upper and Lower Kittitas County, Washington. We also provide mitigated water rights (i.e. Water Budget Neutral (WBN) determinations and mitigation certificates) for rural domestic supply in towns and cities surrounding Cle Elum and Ellensburg and others throughout Kittitas County. The mitigation is backed by reliable senior pre-1905 water rights that are suitable for much of the developable county as indicated by the green in the suitability map below. In addition, the Bourne Water Bank has completed individual mitigation suitability analysis to include large portions of the yellow, and even red zones. We also provide full service permitting and transaction services. We are happy to discuss your site-specific mitigation requirements.
Pricing and Fact Sheet
Areas Served and Packages:
The Bourne Water Bank serves the upper and lower Teanaway, mainstem Yakima, and Kittitas Valley with the following mitigation packages.
Upper Teanaway: Indoor only
Lower Teanaway: Indoor + Outdoor (up to 500 sq. ft. of irrigation)
Mainstem Yakima: Indoor + Outdoor (up to 500 sq. ft. of irrigation)
Kittitas Valley: Indoor + Outdoor (up to 500 sq. ft. of irrigation)
Mitigation Price and Fees:
Water Price: $4,500
Administration Fee: $2,600
Recording and Escrow Fees: ~$900
The price of each mitigation package is $4,500. This is the price for the water. Additionally, there is a $2,600 administration fee which includes applying for the water budget natural (WBN) determination, processing the mitigation certificate, and preparing all convents and documents to be recorded with Kittitas County. Recording, escrow, and the water storage and exchange contract fee is the responsibility of the buyer and is estimated at approximately $900."
Climate Change and Water: Rights and Runoff
Feb 1, 2008
Our Global Water Crisis, Explained.
Rainwater harvesting regulations state by state
Water Banks: Why You May Need One
October 6, 2017, WRITTEN BY Sarah Roubidoux Lawson and Virginia Nicholson
https://www.schwabe.com/newsroom-publications-14792
"Water banks are not new—they have been around a long time. Water banking is a practice used to effectively manage water supplies throughout Western states. Water banking has long been used to solve water issues ranging from allocating water within a water basin to maintaining emergency water supplies during a drought. What is new about water banks is that suddenly rural property owners may be required to find a water bank to be allowed to develop land, at least here in Washington state. Here are the basics on water banking.
Water rights in the United States are divvied up according to two regimes: riparian rights and prior appropriation rights. Western states operate on a prior appropriation regime, where first in time means first in right. Water rights are managed by the state and secured through the issuance of a water rights certificate, which determines the purpose, volume, and place of use for the water. If all or a portion of the water right go unused for a period of years (as determined under state law), the right to the water may be lost.
Reallocation of water may occur where the land on which the water rights certificate has been issued—where the water has been used—changes. For example, consider a property that has historically been used for farming and that has a 100-year-old water right for irrigation, but that is more valuable today for residential purposes than for farming. If the property is converted to residential use, there may be more water available on the property under the certificate than is needed for the new use.
To make efficient use of water, excess water is transferred to a water bank, to be used for other purposes within that water basin. The excess water is transferred to the bank and is then made available to other users for a variety of purposes, including in-stream flows for fish passage, mitigation of groundwater availability, and creation of a water supply during drought years.
Here, we focus on the mitigation of groundwater availability. In Washington, even if you can drill a well, and the well has plenty of water, that does not mean you can use it. Some water basins are “closed,” meaning there cannot be any net effect on water use. But if you can find a water bank in that basin, you can buy a mitigation certificate for your well water use and you will not be denied building permits on that basis.
Under Washington law, water banks are established and managed through the state’s Trust Water Rights Program (TWRP). Through the state’s TWRP, privately held water rights are transferred to the state in trust. Importantly, the holder of the right does not lose any water right volume, or the right itself, by transferring it to the trust. Under a trust agreement with the state, the bank determines the water available to market, the geographic market for the water, the price, and the use."
WATER BANKING
http://www.washingtonwatertrust.org/stream-flow
"Water banks and water exchanges may currently be one of the most talked about topics in the world of water rights and water law in Washington. But, what exactly is a water bank and what do they do? A water bank is an institutional mechanism used to facilitate the legal transfer and market exchange of various types of surface, groundwater and storage entitlements. The exchange leases water from willing sellers and then holds, transfers and exchanges water rights on behalf of willing buyers. Water banks vary in design depending the particular watershed and local water supply needs they were created to serve. They help move water rights from one user to another user. While individual changes or transfers or water rights have been accomplished between users for decades in Washington, water banks are a means to formally move water rights between multiple buyers and sellers.
Typical functions of a water bank may include:
- Matching buyers with sellers
- Settng prices
- Handling administrative water rights transfers (in Washington the State Trust Water Right Program is the legal mechanisem used)
- Setting rules and criteria for water bank transactions
- Certifying the validity of water rights"
Bourne Water Bank, LLC
https://www.bournewaterbank.com/
"The Bourne Water Bank offers mitigation credits for year-round domestic use in the Teanaway River tributary basin and the mainstem Yakima River in Upper and Lower Kittitas County, Washington. We also provide mitigated water rights (i.e. Water Budget Neutral (WBN) determinations and mitigation certificates) for rural domestic supply in towns and cities surrounding Cle Elum and Ellensburg and others throughout Kittitas County. The mitigation is backed by reliable senior pre-1905 water rights that are suitable for much of the developable county as indicated by the green in the suitability map below. In addition, the Bourne Water Bank has completed individual mitigation suitability analysis to include large portions of the yellow, and even red zones. We also provide full service permitting and transaction services. We are happy to discuss your site-specific mitigation requirements.
Pricing and Fact Sheet
Areas Served and Packages:
The Bourne Water Bank serves the upper and lower Teanaway, mainstem Yakima, and Kittitas Valley with the following mitigation packages.
Upper Teanaway: Indoor only
Lower Teanaway: Indoor + Outdoor (up to 500 sq. ft. of irrigation)
Mainstem Yakima: Indoor + Outdoor (up to 500 sq. ft. of irrigation)
Kittitas Valley: Indoor + Outdoor (up to 500 sq. ft. of irrigation)
Mitigation Price and Fees:
Water Price: $4,500
Administration Fee: $2,600
Recording and Escrow Fees: ~$900
The price of each mitigation package is $4,500. This is the price for the water. Additionally, there is a $2,600 administration fee which includes applying for the water budget natural (WBN) determination, processing the mitigation certificate, and preparing all convents and documents to be recorded with Kittitas County. Recording, escrow, and the water storage and exchange contract fee is the responsibility of the buyer and is estimated at approximately $900."
Climate Change and Water: Rights and Runoff
Feb 1, 2008
Our Global Water Crisis, Explained.
Aug 28, 2020
California's Water Rights & Wrongs
California's Water Rights & Wrongs
May 11, 2016
Water Rights, Markets and the Environment
Water Rights, Markets and the Environment
Jul 23, 2018
Man Gets Prison Sentence For Collecting Rainwater On His Property
http://yournewswire.com/man-gets-prison-sentence-for-collecting-rainwater-on-his-own-property/
http://yournewswire.com/man-gets-prison-sentence-for-collecting-rainwater-on-his-own-property/
Water security poses a significant threat to business
http://www.eiuperspectives.economist.com/node/15810
The New “Water Barons”: Wall Street Mega-Banks are Buying up the World’s Water
http://www.globalresearch.ca/the-new-water-barons-wall-street-mega-banks-are-buying-up-the-worlds-water/5383274
Improving yields needs to take into account water supplies
Less water for irrigation!
http://www.iwmi.cgiar.org/2016/02/chips-are-down-for-central-asias-potatoes/
Spanish water rights fight raises fears for Ebro delta
http://www.bbc.com/news/science-environment-35502084
Rain-barrel discussion renewed
Proposal would allow for collection, but with caveats
http://www.durangoherald.com/article/20150915/NEWS01/150919776/
A Thirsty Colorado Is Battling Over Who Owns Raindrops
http://www.nytimes.com/2015/06/16/us/a-thirsty-colorado-battles-over-the-destiny-of-its-raindrops-drought.html
It is actually illegal in Colorado to collect the rain that falls on your home
By Jeff GuoMarch 24, 2015
https://www.washingtonpost.com/blogs/govbeat/wp/2015/03/24/it-is-actually-illegal-in-colorado-to-collect-the-rain-that-falls-on-your-home/
http://www.eiuperspectives.economist.com/node/15810
The New “Water Barons”: Wall Street Mega-Banks are Buying up the World’s Water
http://www.globalresearch.ca/the-new-water-barons-wall-street-mega-banks-are-buying-up-the-worlds-water/5383274
Improving yields needs to take into account water supplies
Less water for irrigation!
http://www.iwmi.cgiar.org/2016/02/chips-are-down-for-central-asias-potatoes/
Spanish water rights fight raises fears for Ebro delta
http://www.bbc.com/news/science-environment-35502084
Rain-barrel discussion renewed
Proposal would allow for collection, but with caveats
http://www.durangoherald.com/article/20150915/NEWS01/150919776/
A Thirsty Colorado Is Battling Over Who Owns Raindrops
http://www.nytimes.com/2015/06/16/us/a-thirsty-colorado-battles-over-the-destiny-of-its-raindrops-drought.html
It is actually illegal in Colorado to collect the rain that falls on your home
By Jeff GuoMarch 24, 2015
https://www.washingtonpost.com/blogs/govbeat/wp/2015/03/24/it-is-actually-illegal-in-colorado-to-collect-the-rain-that-falls-on-your-home/
Rainwater harvesting regulations state by state
How to Purchase Water Rights
Co-authored by Jennifer Mueller, JD, Updated: May 1, 2019
https://www.wikihow.com/Purchase-Water-Rights
Co-authored by Jennifer Mueller, JD, Updated: May 1, 2019
https://www.wikihow.com/Purchase-Water-Rights
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