What is water trading?

Contaminated tap water.

Water trading refers to the purchase and sale of water rights and entitlements. Although long done through informal agreements, water trading has become a real type of financial market in the 21st century, where buyers can trade derivatives, buy short or long term and follow other more common financial trading schemes in the 21st century. foreign exchange or stock market. Critics of the water trade warn that allowing what was once a primary means of ensuring equal access to water to become a profit haven and skyrocketing prices could put low-income families at risk of losing much-needed water resources.

Trading in water quality provides incentives for companies to improve water quality.

Many experts suggest that Australia has the most advanced water trading system in the world. The southern continent’s scarce water resources led to the first private agreements to buy or share water rights across the country. If a stream ran through a person’s land, neighbors could pay to use the resource, thus ensuring a relatively fair division of resources and allowing entire regions to be enriched, rather than just a lucky few with direct access. In 1994, water rights were separated from land rights to facilitate trade. Much business now takes place between government and commercial companies, rather than between private citizens.

Water rights and entitlements can be bought and sold at a profit.

In California, the water trade in the southern half of the state has always been a controversial topic. Farmers in the wide valleys of central California receive water at a subsidized rate in order to facilitate the necessary work of providing food and livestock through agriculture. Southern California, with several large cities and a long-running drought history, often poses an interesting conundrum for farmers who receive low-price water: in some cases, it is much more profitable for farmers to sell the water to suppliers. of the city than to actually plant crops.

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The water trade can also sometimes be related to an environmental concept known as the water quality trade. This is a means of encouraging companies to improve water quality based on established regulations. Water quality trading refers to the use of quality credits that can be traded between companies with high pollution abatement costs and others in the same watershed. Companies that have low-cost means of reducing pollution are paid to do so by companies that have high costs of reducing pollution, generating revenue for the seller and cost savings for the buyer.

The water trade, and even the water quality trade, remains quite controversial in some areas. While critics of the trade suggest that markets should not play dice with one of the few things absolutely necessary for human survival, critics of the water quality trade argue that allowing polluters to pay smaller companies is, at best, an interim solution. Despite these serious criticisms, the trade in water rights and pollution credits seems to be gaining in popularity every year.

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