Metro Vancouver is unique in that the region uses water from the mountains contained in Seymour, Capilano and Coquitlam reservoirs. Think of that~we do not take advantage of rain water, ground water, or fresh water from rivers for any water sources.
While we are lucky in that our water supply is vast and with prudent conservation should last through a dry hot summer, according to Elizabeth Elkin at Bloomberg, “Almost two-thirds of the world’s population is expected to face water shortages by 2025. “
According to the CME Financial Derivatives exchange Wall Street is going to commence trading in futures contracts estimating California’s water supply. The purpose of commodifying water is to allow “big water consumers” such as almond growers and municipalities to hedge against price increases.
But this also suggests water, will become scarcer with climate change and more torrid temperatures.
With estimates of two billion people (there’s about 7.9 billion on the planet) already living with potable water scarcity, futures will be a hedge instrument for food and agricultural producers, and of course, cities.
In California, 40 percent of water is used for agricultural production, and now water users can hedge future price risk. The cost of the water market in California is 1.1 Billion US dollars annually.
Balancing water costs with the price of growing food will be a major hit to consumers in the future, and also speaks to Metro Vancouver’s ability to grow as much edible products regionally for local markets.
In the 19th century gold was an important resource on the coast, and oil became the 20th century gold with discoveries in Alberta. But water, essential for life will the 21st century must have resource, with potential shortages becoming the latest investment portfolio.
Images: doityourself.com, ensia
I’m still surprised that most of the region doesn’t bill by usage. It is the best way to reduce usage. Ideally, there should be flat rate (basically no additional charge above current tax rate) for usage under a set amount and then billed higher with a tiered system for anything above that. While we don’t have a shortage, there are costs on both the upstream and downstream processing.