February 6, 2019
NASDAQ Introduces California Water Index
In response to the increasing uncertainty of water prices and diminishing supply of water in the western U.S., NASDAQ has developed the first water pricing index for the state of California. The index benchmarks the price of water by setting a weekly rate in California. By creating a price index, water rights may become a tradable financial instrument. This differs from traditional water indexes, which track companies who extract and deliver water in western states.
Along with Veles Water and WestWater Research, NASDAQ hopes this system will help to make water a more accessible commodity and diminish the confusion over fair pricing for water. Climate change effects have increasingly been felt in the drier western U.S., especially when it comes to acquiring necessary water rights for building, business development, or expansion. Without a set pricing index, many buyers are at the whim of the market and their own knowledge in determining if the cost of a water right is fair. – Author: Lucy Infeld