Saturday, May 10, 2008
Water and the Futures Market
A friend emailed to let me know that a gallon of bottled water in Cleveland, Ohio, was priced at $2.87/gallon at the local supermarket.
Cleveland, for God's sake...sitting adjacent to the biggest supply of available fresh water in the world.
The current price-per-gallon of bottled water at the Safeway in Cottonwood, Arizona, is $1.69!
The State of Arizona must feel secure in the thought that its water supply will never run out, deluded in Phoenix by the available water in nearby Roosevelt Reservoir and its little satellite ponds.
The fragile success of the Central Arizona Project has had it's desired effect: Lawns, gardens and golf courses are watered, there are no municipal usage restrictions, supermarket prices remain low, people turn the tap and get the expected result.
Water use in this arid region will not change until the price begins to make use uncomfortable for the casual consumer. Price has had this effect at the gas pump (Oil is currently $126/barrel -- Gasoline $3.60/gallon at the pump.) and use is down by an estimated 7% and dropping.
If oil and water respond the same to usage prices, I'll make a foolish wager:
Water, like oil, will be traded on the futures market and, similar to the current discussion about carbon emissions, water credits will be accumulated or spent by towns and regions to satisfy current needs or future requirements.
A "Sustainability Index" is already being traded on the Dow Jones Exchange.
Skeptics should make a point of reading Charles Bowden's, Killing the Hidden Waters, first published in 1977 and updated with a new Introduction in 2003. Without giving away the journey, the basic point Bowden makes is that we are using water resources faster than they can be replenished and his subhead to Introduction (2003) is, "What I Learned Watching the Wells Go Down".