The ethics and economics of trading water futures – Interlochen

by | Apr 29, 2022 | Financial

Ninety percent of North America’s surface freshwater is in the Great Lakes. So every now and then, the Great Lakes are proposed as a solution to drought in the American West. There’s been speculation about piping water to Idaho, Phoenix or Las Vegas.But some say the more immediate danger is commodifying water, including trading water on a futures market.“I think water is a human right, and I don’t think we should be speculating or trading in human rights,” said Dave Dempsey, author of “Great Lakes for Sale.”Dempsey has more than 35 years of experience as an environmental policy analyst, working for the Michigan Environmental Council, the Great Lakes Fishery Commission and the International Joint Commission.Dempsey published “Great Lakes for Sale” in 2009, but he released an updated edition last year in reaction to recent diversions of Great Lakes water in Wisconsin.“That’s a taste of what’s to come,” Dempsey said. “And these diversions are legal under the compact if they’re within Great Lakes states,” adding that such legal diversions are a concerning loophole in the Great Lakes Compact.Dempsey said that a new market for trading California water futures through the Chicago Mercantile Exchange Group is another troubling development that prompted the book’s updates.But some economists say the trading of water futures is nothing to fear.“My view is not necessarily that they’re good or bad,” said Heidi Schweizer, an assistant professor of agricultural and resource economics at North Carolina State University. “It’s a financial instrument that has a specific purpose, and people are only going to use it if they think it might help them manage risk in some way.”Schweizer …

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