The Future of Water Rights in California: Water Futures Trading
Willis Hon authored the article, “The Future of Water Rights in California: Water Futures Trading?” (subscription required) for the Daily Journal. In the article, Willis examines the Chicago Mercantile Exchange's (the “Merc”) move to allow trading of water futures through a new futures contract on the Nasdaq Veles California Water Index in December of 2020.
The contract tracks the price of water rights leases and sales transactions across the five largest and most actively traded regions in California. This new development allows market participants to hedge against the future price of that commodity in order to manage financial risk.