Water futures will begin trading on Wall Street starting this week amid fears the natural resource may become scarce.

The contracts will be launched by CME Group Inc, which ensures that futures will help water users manage risk and better align supply and demand.

Water futures will begin trading on Wall Street starting this week amid growing fears that this natural resource may be in short supply in most of the world, Bloomberg reported Monday.

This week, the US company CME Group Inc will launch contracts related to California spot water, a market of 1.1 billion dollars. According to the company, futures will help water users manage risk and better align supply and demand.

The contracts, the first of their kind in the U.S., were announced in September, when the country’s west coast was devastated by heat and wildfires. According to Bloomberg, they are intended to “serve as protection for California’s largest water consumers against rising prices and as a scarcity indicator for investors around the world. “

Futures will be financially settled, rather than requiring the actual physical delivery of water, and will be based on the Nasdaq Veles California Water (NQH2O), a reference index established for water prices in that North American state.

CME Group did not identify potential market participants, but noted that the exchange received news from California agricultural producers, public water and utility agencies, as well as institutional investors such as asset managers and hedge funds.

“2 billion people now live in nations plagued by water problems, and nearly two-thirds of the world could face water shortages in just four years“said CME Group Global Head of Equity Index and Alternative Investment Products Tim McCourt.” The idea of ​​managing the risks associated with water is certainly gaining in importance, “he stressed.

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