Water, perhaps the most precious natural resource, prompts feelings of insecurity for certain geographical areas and raises questions as to best practices for its management, especially as climate change, droughts, pollution and population growth create ongoing water scarcity. California struggles with management decisions that impact not only the state but also the rest of the country as the state ranks first in national agricultural receipts, accounting for 13.5%. Water shortages drive farmers to seek water from others with easier access, but in times of scarcity often prompted by droughts farmers experience colossal price hikes making farming, for some, a cost prohibitive venture.
This perpetual struggle has prompted an ongoing search for mitigating strategies. Such strategies have included crop insurance and water trading, “where families with senior water rights could sell some of their water to newer farms [which encourages] farms to conserve more water.” The latest strategy toward water management began in December 2020 when water was listed as a commodity on the Chicago Mercantile Exchange, allowing farmers to lock in the price of water at current rates to buy later.
According to Justin Stoler, an associate professor in geography and sustainable development at the University of Miami, water futures are not a solution to the issue of water management and should only be used in the short term. While water futures may provide security should conditions threaten farmers’ revenues, others can also buy water futures which could drive the price up, instilling concern that certain entities will ultimately control water availability and pricing. To this point Stoler stated, “It may be okay to trade other products that can be substituted with alternatives, but when it comes to agriculture, water has no substitute.”
 Tannen, Janette Neuwahl. “Should Water Be Traded as a Commodity?” University of Miami News and Events, 8 Mar. 2021, news.miami.edu/stories/2021/03/should-water-be-traded-as-a-commodity.html.
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