5 ms·

Futures 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 de

by iSnow 6y ago

Futures 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 ago
I 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 ago
  Why do people eat less potatoes during covid?
  - eru 6y ago
    People 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 ago
Most 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.
- CaptArmchair 6y ago
  > Most water in the region isn't used for drinking -- there's plenty for that. I live in a densely populated region of the world where water tables have lowered due to droughts over the last couple of years while rain diminishes. Groundwater is pumped by farmers over the summer, further lowing water tables to a point where water companies sound the alarm: if the water table lowers below a certain level, water stops coming out of the household water taps. This literally happened this summers in a few municipalities. People didn't have access to clean water for basic hygiene, cleaning and drinking. You might think "what's so bad about that? They can just buy bottled water, or install a storage tank?" Well, this is a public health concern. The big reason why diseases raged so easily in the past in the Western world - and still is in the rest of the world - was/is the lack of public access to clean water. Diseases such as Cholera are directly attributed to poor sanitation and lack of clean water. Privatizing water sounds good in theory, but if the price of drinking water increases to prohibitive levels for less fortunate groups in society, you will also see an uptick in public health crises. The associated costs are - once again - deferred to the public (e.g. healthcare costs)
  - kortilla 6y ago
    Water for drinking takes up a tiny fraction of uses. If this all becomes and open market, tons of wasteful crops like almonds will get wiped out way before drinking water is a noticeable expense
    - Aerroon 6y ago
      To put some numbers to this: >The water footprint of California almonds averaged 10,240 liters per kilogram kernels (or, 12 liters per almond kernel) [0] The average human needs about 2.7-3.7 liters of water a day or roughly 1,000-1,350 liters per year.[1] [0] https://www.sciencedirect.com/science/article/pii/S1470160X17308592 https://www.sciencedirect.com/science/article/pii/S1470160X1... [1] https://www.nationalacademies.org/news/2004/02/report-sets-dietary-intake-levels-for-water-salt-and-potassium-to-maintain-health-and-reduce-chronic-disease-risk https://www.nationalacademies.org/news/2004/02/report-sets-d...
kortilla 6y ago
> it's strictly a bet traders can place. It’s a way for people who need water for processes to lock in prices. If you’re genuinely curious about why futures are useful, look into “commercial hedging”. It’s used by both suppliers and consumers to reduce price uncertainty (think of a farmer being able to buy water for the whole year).

by iSnow 6y ago

Faaak 6y ago

I 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 ago
Why do people eat less potatoes during covid?
- eru 6y ago
  People 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 ago

Most 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.

CaptArmchair 6y ago
> Most water in the region isn't used for drinking -- there's plenty for that. I live in a densely populated region of the world where water tables have lowered due to droughts over the last couple of years while rain diminishes. Groundwater is pumped by farmers over the summer, further lowing water tables to a point where water companies sound the alarm: if the water table lowers below a certain level, water stops coming out of the household water taps. This literally happened this summers in a few municipalities. People didn't have access to clean water for basic hygiene, cleaning and drinking. You might think "what's so bad about that? They can just buy bottled water, or install a storage tank?" Well, this is a public health concern. The big reason why diseases raged so easily in the past in the Western world - and still is in the rest of the world - was/is the lack of public access to clean water. Diseases such as Cholera are directly attributed to poor sanitation and lack of clean water. Privatizing water sounds good in theory, but if the price of drinking water increases to prohibitive levels for less fortunate groups in society, you will also see an uptick in public health crises. The associated costs are - once again - deferred to the public (e.g. healthcare costs)
- kortilla 6y ago
  Water for drinking takes up a tiny fraction of uses. If this all becomes and open market, tons of wasteful crops like almonds will get wiped out way before drinking water is a noticeable expense
  - Aerroon 6y ago
    To put some numbers to this: >The water footprint of California almonds averaged 10,240 liters per kilogram kernels (or, 12 liters per almond kernel) [0] The average human needs about 2.7-3.7 liters of water a day or roughly 1,000-1,350 liters per year.[1] [0] https://www.sciencedirect.com/science/article/pii/S1470160X17308592 https://www.sciencedirect.com/science/article/pii/S1470160X1... [1] https://www.nationalacademies.org/news/2004/02/report-sets-dietary-intake-levels-for-water-salt-and-potassium-to-maintain-health-and-reduce-chronic-disease-risk https://www.nationalacademies.org/news/2004/02/report-sets-d...

kortilla 6y ago

> it's strictly a bet traders can place. It’s a way for people who need water for processes to lock in prices. If you’re genuinely curious about why futures are useful, look into “commercial hedging”. It’s used by both suppliers and consumers to reduce price uncertainty (think of a farmer being able to buy water for the whole year).