Qatar – Water as an asset class is here

Qatar – Water as an asset class is here

Just over a decade ago, I predicted the arrival of water as an asset class. I foresaw"a massive expansion of investment in the water sector, including the production of fresh, clean water from other sources (desalination, purification), storage, shipping, and transportation of water." This would result in"a globally integrated market for fresh water within 25 to 30 years. Once the spot markets for water are integrated, futures markets and other derivative water-based financial instruments – puts, calls, swaps – both exchange-traded and OTC [over-the-counter] will follow. There will be different grades and types of fresh water, just the way we have light sweet and heavy sour crude oil today." In fact, I believed that water would eventually be"the single most important physical-commodity-based asset class, dwarfing oil, copper, agricultural commodities, and precious metals." Ten years later, the future is now – though not quite what I expected. In December 2020, the Chicago Mercantile Exchange Group created the first futures market in water. Cash-settled water futures with a maximum contract period of two years are now traded on the CME Globex electronic trading system. I view this development as somewhat premature. For futures markets (and markets for other derivatives like put and