Water is being traded on Wall Street.
To be more precise, the Nasdaq Veles California Water Index, with the ticker NQH2O, will be traded on NASDAQ.
NQH2O seeks to track the spot rate price of water rights leases and sales transactions across the five largest and most actively traded regions in California. Water entitlement transactions from the surface water market and four adjudicated groundwater basins - the Central Basin, the Chino Basin, the Main San Gabriel Basin, and the Mojave Basin Alto Subarea - are included in the index.
The price indicator is at around $490 per acre-foot. An acre-foot is a measure commonly used in the USA for water. It’s the volume of water required to cover one acre of land (43,560 square feet) to a depth of one foot. In metric, an acre-foot is 1,233 cubic metres. So, 40 cents per cubic metre.
That’s doubled in the last year. Scarcity is value. Except in networks in which case it’s the number of nodes; think about fax machines.
These futures contracts don’t actually require water to be physically delivered. They’re purely financial, based on the weekly price averaged across California's top five watersheds.
Still, it will be an interesting new measure to track to understand the future value of water.