5 ms·
I suppose that most reactions will be against this, but it should however fix the "tragedy of the commons" problem where water is overused when it is cheep but
by Faaak 6y ago
I suppose that most reactions will be against this, but it should however fix the "tragedy of the commons" problem where water is overused when it is cheep but still used when it's not.
It's a good financial incentive to better your installations.
- mmanfrin 6y ago> It's a good financial incentive to better your installations. No it is not. The cost of water is so tiny compared to anything else on earth humans make that every single country on earth should be able to provide it to their citizens. This is not a problem the market needs to solve. This has been solved since prehistory, and some of the first non-religious constructions celebrated in human history are waterworks. This is a solved problem. All futures do is allow traders in faraway places make money off of a substance every human on earth ought to have a fundamental right to.
- pseingatl 6y agoSolved? If you mean by energy-intensive, billion dollar solutions, you are correct. Look at the UAE, Saudi Arabia; no rivers, no lakes, and the aquifers were long ago exhausted.
- sideshowb 6y agoSolved? Um. why then are there droughts currently, and why are they projected to increase under all plausible climate change scenarios? Like you though I'm uncomfortable with the idea of a futures market
- emteycz 6y agoThe same was said about food and toilet paper.
- kortilla 6y agoIt’s not a solved problem. The Colorado river is oversubscribed and people are more or less fucked because we didn’t think paying for water in a bidding system was a good idea so now farmer Ted gets priority to grow his Almonds in the California desert for free while people in Nevada can’t get enough just to drink from the Colorado.
- adrianN 6y agoRight now the cost of water is tiny in many regions because we deplete fossil water reservoirs without properly accounting for the externality.
- Aerroon 6y agoThe cost of water might be tiny if you're drinking it, but it's not tiny when you're using it to grow food or use it for other industrial processes. One almond kernel requires 3-4 days worth of drinking water to grow. Also, humans in many places are using groundwater that's thousands of years old. In those places we can't observe any effect humans have had, because we're effectively tapping into reservoirs that predate human usage of that water. Eventually that's going to run out.
- paulluuk 6y agoI think people are afraid that instead of "tragedy of the commons", this will turn into "tragedy of the anticommons". e.g. a solution to global water shortages might be possible, but if it's not profitable then it won't happen. https://en.wikipedia.org/wiki/Tragedy_of_the_anticommons https://en.wikipedia.org/wiki/Tragedy_of_the_anticommons
- eru 6y ago(Futures) markets work for basically every other commodity they've been tried. So the presumption is that they'll work here too to allocate scarce resources fairly and efficiently.
- chr1 6y agoMost people misunderstand how the futures work. This fee podcast explains well why it is a useful tool and not a fraud as many think https://fee.org/shows/audio/words-numbers/a-game-of-risk/ https://fee.org/shows/audio/words-numbers/a-game-of-risk/
- iSnow 6y agoFutures have nothing to do with better management of a resource, it's strictly a bet traders can place. If you are in favor of financial instruments to steer demand, a simple tax would work. Creating water futures is completely tone-deaf. All it will cause is outrage and a backlash, a lot like trying to patent human genes.
- Faaak 6y agoI don't really see the relationship between futures and patent on human genes.. However, futures are NOT only for traders as you suggest. Of course, a residential home will not use them, but when you become a big player in the field (see an Almond farm for example), then your water usage starts getting important and you can use these products. Take a look at potato futures for example, they're used and useful. Some farmer's cooperatives don't hedge their prices and had some very bad news this year with covid and the impossibility to sell their yield.
- konschubert 6y agoWhy do people eat less potatoes during covid?
- eru 6y agoPeople are eating more at home and less in restaurants. Shifts in diet are plausible. (Just speculation. And potato prices might have changed for reasons independent of covid.)
- lend000 6y agoMost water in the region isn't used for drinking -- there's plenty for that. Example use case: almond farmer buys 0.5% of the current capacity of the reservoir at the now liquid market price, with delivery 6 months from now. Instead of having cyclical "rushes on the reservoir" for the remaining farming allotment of water in the reservoir whenever capacity gets low (or just unexpected bouts of no water coming out of the faucet, when transparency into reservoir levels is poor), resulting in less efficient water practices/ruined crops, liquid futures provide farmers with stability and actionable planning. If an almond farmer buys futures delivering a million gallons of water each quarter, he can expect that water to be saved and available when the crops need it, and can plan crops around that. Other side effects: prices will be more transparent, liquid, and consistent across the region. Possible bonus: the financial incentive will potentially improve the quality of drought modeling in the region. Imagine future weather computers that use the futures price as an input.
- einpoklum 6y agoLike the "tragedy of the commons", it is artificially caused by concentration of power in the hands of the few. People were well able to coordinate use of the original commons; and if it weren't for belligerent ruling classes and corporate-commercial interests, the people of the world could have handled the water issue reasonably well to day.