UN Warns New Water Futures May Spark Bubble for Vital Resource
(Bloomberg) -- 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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