It was with great indifference that water ended up on the stock exchange. For more than a year, water has been part of the financial products of the Chicago Mercantile Exchange (CME), one of the main futures markets in the United States, specializing in commodity transactions. This is an important step in the commodification of this indispensable resource, which is thus subject to financial speculation.
The interest of speculators for water comes mainly from the fact that it is increasingly rare, which may seem surprising for a resource that is always found in the same quantity on our planet. But large-scale pollution, global warming and ever-increasing demand are making it less available. And this, more particularly in a California victim of drought, which remains the first supplier of agricultural products in North America.
Farmers in this state must therefore pay much higher costs to obtain water. It was to provide them with more predictability and more transparency that they were offered futures contracts (” future in English), assuring them to pay, for the resource, the price of the day of purchase at the end of the contract a few months later.
Commodification of water
What appears at first glance to be advantageous has serious drawbacks. This situation shows how advanced the commodification of water is in California. This State has established a system of “right to water”, which allows localities which have surplus water to sell it to those which lack it. With costs that vary according to demand and can become very high. Entirely public management of water, outside the commercial sphere, would not have led to such excesses.
The creation of forward contracts for water in no way solves the problem of expenses related to its consumption. By allowing speculation on the cost of the resource, we come to detach its value on the financial markets from real water management. Water thus becomes all the more expensive as it is scarce, its scarcity increasing the profits of speculators while making the resource less available to less fortunate farmers. Not to mention the effects on food prices.
The consequences of such a seizure of water by rich speculators could be dramatic. Remember that in 1991, by making products essential to survival rare and inaccessible, futures contracts and speculation on agricultural products led to food riots in several countries.
One of the worst aspects of this phenomenon is also the precedent it sets. Water was listed on the stock exchange at the instigation of the BlackRock financial group, the largest asset manager in the world. The CME also manages, through Euronext, the Milan, Brussels and Amsterdam stock exchanges. The issuance of futures contracts is backed by the Nasdaq index. Commodified water is therefore found in the webs of big globalized finance, which has every interest in increasing the supply of water-related products.
The right to safe, clean drinking water
In fact, we must take a diametrically opposite direction.
The right to drinking, safe and clean water, recognized by the United Nations, should put an end to the commodification of water despite the pressure exerted by large companies. Financial transactions on water and the listing of water service companies should be prohibited.
But also, to avoid any bad temptation, it is essential that water management — in all its aspects — remains in the public sphere. Quebec, thanks to citizen mobilization, resisted the onslaught of companies that wanted to appropriate this service, such as Veolia and Suez. It is necessary to take shelter from any recidivism and to impose a public model which will be established everywhere in the world.
It is also important that the protection of water is a fundamental issue of the ecological transition, which we must accelerate to combat global warming. The problem of water pollution, more particularly that caused by the exploitation of oil, gas and mines, must therefore be tackled head-on, which could naturally be solved by a considerable reduction in the use of water. hydrocarbons, as recommended by the IPCC. We must also consider limiting agro-industry, which consumes a lot of water through its meat production, among other things.
Water on the stock market does nothing to solve the problems caused by the mismanagement of this precious resource. Quite the contrary, it puts up with it to accumulate ephemeral profits by keeping agricultural activities alive in arid regions where water is insufficient. If you take this path, the serious consequences that will result from it will only increase in the years to come.
So we must mobilize to make this vital issue known. A Change.org petition calling for the removal of water from the Stock Exchange is currently circulating in Europe and has already collected more than 120,000 signatures; in Quebec, nearly 2,400 signatures, but this is only the beginning. A meeting of parliamentarians from several countries will take place on March 22 to make our elected officials aware of the state’s withdrawal from this issue. Asking for the withdrawal or prohibition of the sale of these financial products by our financial institutions and pension funds is another means of taking action. Above all, make this issue of protecting an essential common good known to as many people as possible so that they can act before the rulers appropriate what belongs to all living beings: water.
* Other signatories:
Alain Deneault, professor of philosophy at the Acadian Peninsula campus of the Université de Moncton and author of several books;
Ronald Cameron, political and associative activist involved in anti-globalization movements for 20 years;
Martine Chatelain, member of the Agora des habitants de la Terre, was a teacher for 35 years and campaigned for 17 years for the protection of water within the Eau Secours coalition;
Hélène Tremblay, researcher, author, lecturer, photographer and member of the Agora des habitants de la Terre;
Rébecca Pétrin, General Manager of Eau Secours;
Lucie Sauvé, full professor in the Department of Didactics of the Faculty of Education at UQAM and member of Centr’ERE;
François L’Italien, researcher at the Institute for Research in Contemporary Economics (IREC) and associate professor in the Department of Sociology at Laval University.