Water; scarcity and the trade in futures

[fucthest8]

I don't see this referenced anywhere in this forum, apologies if it is, or should be somewhere else. The Gamespot thread reminded me.

Michael Burry, the hedge fund manager who was the first one to spot the opportunity in the sub-prime mortgage disaster, went on to focus on investing in three things: water, gold and farm land. At the end of the very entertaining (surprisingly, I expected it to just make me angry*, but it was brilliantly well done, but that's another thread) film about the sub-prime thing "The Big Short" there was a little statement about him now focusing on water and I - and I'm sure a lot of other people watching it - said "well, that's alarming"

Well, here we are. In case you missed it, trading in water futures started back in December admittedly in quite a limited way

This, surely, is the very best indicator that global warming is very real; when capital starts to put bets on an outcome of it. Frankly, even if it's not due to global warming, increasing shortages of water seem like it should scare the fuck out of us. Burry apparently has been quoted saying "Fresh, clean water cannot be taken for granted. And it is not—water is political, and litigious." I'm not going to lie, it seems such a big deal that I have a hard time really considering it.

This thread is for people much cleverer than me to discuss whether or not this is really something to worry about, just or a good opportunity for someone with a few quid to make a killing, or one of those things that are so far out of the average person's control that you might as well just carry on as normal.

*it did make me angry, but not just

 

[stdP]

I've not examined Burry's position on this yet, but I did wonder if his living out on the East Coast might have had something to do with it - California's been having droughts for years now, and they've been hoovering up groundwater from aquifers faster than it can be replaced (which also makes them less able to hold water in the future as the sediment settles).

Droughts in California - Wikipedia

en.wikipedia.org

There's certainly plenty of money already riding on this sort of thing though - one of the most obvious would be the rapidly rising cost of insurance against varying forms of extreme weather. Notwithstanding the silly amount of property build on flood plains, when those actuarial tables say that was a once-in-a-hundred-years flood, and then you get three in 25 years, it's obvious something's awry...

 

[Pickman's model]

2hats

 

[yield]

Reminds me of this thread. Commodities traders caused starvation and malnutrition for 200 million people

Food, warmth, shelter all financialised. What next sunlight and clean air?

 

[hegley]

This thread is for people much cleverer than me to discuss whether or not this is really something to worry about, just or a good opportunity for someone with a few quid to make a killing, or one of those things that are so far out of the average person's control that you might as well just carry on as normal.

You might be interested in this: The fight to stop Nestlé from taking America's water to sell in plastic bottles - not quite the same as trading it directly on a commodity exchange, but pretty scary regardless.

 

[not-bono-ever]

end times.

chicago merc flogging it - one of the shittiest thing is that once the idea is rolled out, it can be expanded to fit an region or water source very quickly. doesnt make any more water tho

Nasdaq Veles California Water Index (NQH2O) futures - CME Group

The Nasdaq Veles California Water Index (ticker symbol: NQH2O) tracks the spot price of water rights leases and sales across the five largest and most actively traded regions in California.

www.cmegroup.com

 

[Dogsauce]

Maybe ‘Global Britain’ can lead the world in exporting rain, it’s one thing we’re not short of.

(written as I’m drying out in the staff bog)

 

[dylanredefined]

Rich countries could always build desalination plants powered by wind or solar. The poor will just die as always.

 

[Yuwipi Woman]

I've been following some of this, but my focus has mostly been on farmland. Its amazing how much farmland is moving out of the hands of small farmers and into the hands of large landowners. Its become the investment of choice for a lot of coastal hedge funds and its driving up the cost of land into the stratosphere. At one time you could buy dry-land crop acres for less than $1,000 an acre. There's still a few places like that but they are quickly vanishing. Irrigated land goes for multiple times what dryland brings. I've seen irrigated acres sell for upwards of $30,000 an acre. Saw a story the other day, which only slightly surprised me. It appears that Bill Gates is the largest owner of farmland in the US. He holds almost 245,000 acres. Land ownership inequality should be as big of an issue as wealth inequality.

When you think of Bill Gates, you probably think tech, not farmland. And yet, as The Land Report recently revealed, the former CEO of Microsoft (NASDAQ: MSFT) is the biggest owner of farmland in the United States. Bill Gates and his wife Melinda own a whopping 242,000 acres across 18 states. The land is held by Cascade Investment, the holding company the Gates family uses for a variety of investments.

Large and very large farms, which number almost 200,000, produce 63% of agricultural products in the U.S., but there are over 1.9 million small family farms across the country. As much as 70% of farmland is expected to change hands within the next 20 years....

The second-largest landowner is the Offut family, who own 190,000 acres in their potato farming empire. Third are Stewart and Lynda Resnick, whose Wonderful Company empire includes pomegranate products, oranges, and pistachios. They are followed by the Fanjul family, who own a sugar empire in Florida. The final member of the top five is the Boswell family, producers of tomatoes and cotton.

While these holdings sound massive, they are small compared to large land holdings that include timberlands and ranches. In Land Report's Top 100 list, Bill and Melinda Gates only rank 49th, while Jeff Bezos of Amazon (NASDAQ: AMZN) comes in 25th and Ted Turner ranks fourth. Top honors go to John Malone, who owns 2.2 million acres of land that includes ranches in Wyoming, Colorado, and New Mexico.

Why Bill Gates Is The Biggest Owner of Farmland (msn.com)

There's a lot of conspiracy theories that revolve around Bill Gates. I don't think buying up large tracts of land that's used to grow our food is going to help alleviate the fears that fuel those theories.

 

[NoXion]

Maybe ‘Global Britain’ can lead the world in exporting rain, it’s one thing we’re not short of.

(written as I’m drying out in the staff bog)

Ever since I was introduced to the concept of a continental hydrology*, i.e. a network of canals, pipelines, and reservoirs used to re-distribute water and efficiently manage its usage across an entire continent, I've always thought that the British Isles has needed a scaled-down version of the same idea. An insular hydrology, perhaps?

It could also tie into the energy grid, using the gravitational potential energy of the water in high-altitude reservoirs to drive turbines, kinda like at Dinorwig but more ambitious.

(*A concept for which I wish I had saved the page for, as I can't seem to find it any more)

 

[zahir]

Ever since I was introduced to the concept of a continental hydrology*, i.e. a network of canals, pipelines, and reservoirs used to re-distribute water and efficiently manage its usage across an entire continent, I've always thought that the British Isles has needed a scaled-down version of the same idea. An insular hydrology, perhaps?

It could also tie into the energy grid, using the gravitational potential energy of the water in high-altitude reservoirs to drive turbines, kinda like at Dinorwig but more ambitious.

It's already been thought of: Grand Contour Canal - Wikipedia

The Grand Contour Canal in England and Wales was intended to enhance and upgrade the British canal system, but was never built. This canal was proposed in 1943, and again ten years later, by J F Pownall . Pownall observed that there was a natural 'contour' down the spine of England, around the 300 ft level that connected several of the most populated areas. He put forward the idea that this contour could be used to define the course of a large European sized canal which contained no locks except at its entry and exit points. It would also serve as a water grid capable of distributing domestic water supply around England as need arises.

 

[two sheds]

Not totally relevant to the thread but ...

Mars, Nestlé and Hershey to face child slavery lawsuit in US

Chocolate companies are among the defendants named in a lawsuit brought by former child workers in Ivory Coast

www.theguardian.com

oh dear

Nestlé said that the lawsuit “does not advance the shared goal of ending child labor in the cocoa industry” and added, “child labor is unacceptable and goes against everything we stand for. Nestlé has explicit policies against it and is unwavering in our dedication to ending it. We remain committed to combatting child labor within the cocoa supply chain and addressing its root causes as part of the Nestlé Cocoa Plan and through collaborative efforts.”

others commented too