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2020 was significant for many reasons. It was a year that many of us would rather forget. The impacts of the COVID-19 pandemic, along with numerous political and social controversies, are still being calculated.

An important development near the end of 2020 slipped by, unnoticed by most: Wall Street began trading water. 

The commodity trading of water is big. However, it’s perhaps understandable why this milestone was not widely reported. For the large number of people who live in proximity to the Great Lakes or other large abundant water resources, water is plentiful. We use as much of it as we want, when we need it, at a pretty reasonable cost. Buying and selling water hasn’t seemed like a big deal.

In some jurisdictions in North America and around the world however, water is a different story. Clean, fresh water is becoming increasingly scarce. In regions like California, water scarcity is a mounting issue that needs to be addressed. It should be of no surprise that the American water market is dominated by contracts in California estimated at $1.1 Billion US.

Growing numbers of us are increasing our consumption of water. Reinforcing this trend, agricultural demands for water are building in the west and in areas of central North America. It all adds up to more and more stress on water resources.  Having a market price on a resource in high demand can limit its usage. More specifically, appropriate pricing of water can limit its waste.

Pricing the environmental impacts of using commodities can be an incentive to use those commodities more responsibly and wisely.   

Canada has put a price on carbon. The end goal is to reduce the greenhouse gases produced from burning fossil fuels. Carbon prices will speed up Canada’s adoption of new technologies and reduce the energy wasted by Canadians.

The idea of trading a commodity so critical to life as water, does not sit well with many people. We certainly can’t transition away from using water altogether. Safeguards to ensure access to sustainable, clean, safe water will still need to be part of the water management equation.

We can all most definitely do a better job managing water use. Putting a price on water will draw to the attention of consumers how much water they use. It can be just the signal they need to take control of their consumption of this valuable commodity. 


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