UN Warns New Water Futures May Spark Bubble for Vital Resource

The United Nations said Wall Street’s new water futures risk an essential public good being treated like gold and oil, leaving the market vulnerable to a speculative bubble.

CME Group Inc.’s new contract -- which debuted this week -- could lure interest from hedge funds and banks alongside farmers, factories and utilities looking to lock in prices, said Pedro Arrojo-Agudo, the UN’s special rapporteur on the human rights to safe drinking water and sanitation. That risks a price run-up for a resource that “belongs to everyone” and is a vital tool in combating the Covid-19 pandemic.

“The news that water is to be traded on Wall Street futures market shows that the value of water, as a basic human right, is now under threat,” Arrojo-Agudo said in a statement. “It is closely tied to all of our lives and livelihoods, and is an essential component to public health.”

The new futures contract is linked to the $1.1 billion spot water market in California, the biggest U.S. agriculture market and world’s fifth-largest economy. Supplies face increasing threats from climate change, rising populations and pollution from mining and farming, the UN said.

CME didn’t immediately reply to an email seeking comment.

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