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Water is life. But as the world warms up it's also increasingly becoming a commodity. For example, the NASDAQ Veles California Water Index Futures was launched in 2020, allowing investors, farmers, and municipalities to bet on the forward cost of water in California and hedge against any price rises. Australian farmers are also trading water in a $1.4bn market and allocations from the sprawling Murray-Darling river basin. Landholders are free to use or sell their parcels of river water, the value of which rises or falls according to the price of crops and whether any rain is forecast.
Critics of these financial models say that clean water is an essential human right and should be paid for by the state. They also believe that speculative trading could distort water prices for everyone, meaning some people may struggle to afford it. Others believe that putting a price on water and encouraging private models of ownership will ensure its conservation.
One of the biggest experiments in water privatisation has taken place in the UK. In 1989, the government sold off the entire water system of England and Wales to limited companies. More than 30 years later that system is being criticised across the political spectrum. Chief executives have been awarded hefty pay packages, shareholders generous dividends. And investment and infrastructure has not kept pace with population growth, leading to sewage flooding and pollution failures.
Just 14 per cent of rivers meet the minimum European standards for water quality, for example. The largest market for investors may be in providing new technologies such as desalination or recycling plants. Desalination plants can be costly investments because they use a lot of energy to run. But the global industry wants to power a fifth of new desalination plants using renewable energy between 2020 and 2025.
Other innovations include the seawater greenhouse, which uses seawater and solar power to create cooler, more humid conditions for greenhouse cultivated crops in arid regions. Half of the world's population is expected to be living in water stressed regions by 2050. The race for water has only just started.