In California, climate change gives rise to a new commodity
IN OUR MOMENT OF RABID FOR SALE-ISM, it would be easy to react to the announcement that even the future of water in California is for sale with a glib of course it is. As of December 7, the availability of water in the state can be bet on or against by way of what’s called a futures contract, which allows investors to make a claim on the future price of water. These are tied to the Nasdaq Veles California Water Index, which measures the volume-weighted average price of water, meaning that investors, farmers (read: agribusiness owners), and climate change onlookers can profit off of growing water scarcity. As droughts worsen, investors will be able reap the benefits of the realities of climate change.
Those titillated by the prospect of making climate change profitable call this move an innovation—water is the only substance on earth to exist in a liquid, solid, and gaseous state; now, with its rebranding as a commodity, it will exist as all four: magic! (Yes, water was subject to speculation and market forces before the establishment of a futures index, but this is a marked change, making water a peer to gold and crude oil.) This, though, is not why investors and market rubberneckers are gleeful about the so-called solution of water futures. They claim that the revolution of water trading is a way to hedge price risks—not the risks produced by the very ability to make money off of the loss and degradation of water, but those posed by a warming atmosphere. A water futures index proposes that climate change is a self-made and ineluctable eventuality, while sidestepping the correct accusation that climate change is, in part, caused by the same forces that give rise to a water futures index.
In truth, water was for sale long before December. In 2015, the total value of water rights leases and sales in California vaulted to nearly $800 million at the height of the worst drought in five hundred years. Commodity futures trading itself has existed in the United States since the mid-1800s, ostensibly to stabilize the grain market by allowing farmers to sell their crops in advance, for set prices and on specified delivery dates. These “forward” contracts evolved into more standardized “futures” contracts in which the only negotiated feature was the price, opening up the market to speculation, and enabling agribusiness to balloon its profits and monopolize power for top industry producers, in turn contributing to climate change.
Corn, soybeans, milk, cattle, and wheat have all already been subject to futures trading; they are also components of a nation-wide agricultural operation that’s responsible for approximately 80 percent of the country’s consumptive water use. Over half of the grain grown in the United States goes toward feeding the livestock that we eat (and all of it is making us sick), yet 30 percent of that meat product goes uneaten while, at the same time, Feeding American estimates that in 2020, over fifty million people were what the federal government considers to be “food-insecure.” Trading water is not an aberration, but the logical endpoint of our for-sale system. But gambling on the future of our water supply is not something that we as a human species, nor the planet we’re briefly occupying, can withstand.
Water is also fundamentally about land, and land has been tied to money and profit as long as there has been a United States of America. As part of the ongoing settler-colonial project in California, an effort in whose early stages cattle ranchers played a crucial role, Native tribes living northeast of what is now the Los Angeles area were coerced in 1939 into a “land swap” that forced them onto reservations in the Owens Valley, where they had no right to the water under the soil. The move made them dependent on the LA Department of Water and Power, which had quietly bought up the water rights to feed the growth of the nearby city. Even the state’s earliest municipalities recognized that water retained more value than the land it was both born from and gave life to. To be sure, the “cost” of land continues to rise—in part because of industrial agricultural processes that increase land scarcity. Blame can also be attributed to real estate investment trusts like the Gladstone Land Corporation, which believes that “a lower supply of arable land will lead to higher profitability for most farms, and will lead to steady appreciation of value and rental growth.”
Perhaps the first words uttered in this nation were “how much?” Inherent to the asking of this question is the understanding that anything can be had or possessed, and that any holder is moveable at a certain price. “Water belongs to everyone and is a public good,” argued Pedro Arrojo-Agudo, a United Nations special rapporteur on the human rights to safe drinking water and sanitation, in a statement about the opening of the first water futures market. “You can’t put a value on water as you do with other traded commodities.” Oh, but you can. “Had there been water futures” during previous years of unprofitable climate change, the Wall Street Journal cheerily explained, “a farmer who bought summer-dated futures at the prevailing price months earlier could have pocketed big profits when drought hit and prices soared. Those gains could then be used to offset the higher cost of buying actual water.” In their scenario, water futures are merely like water on layaway.
As offered up by the WSJ, the “farmer” is a phantasm, an apolitical Americana do-gooder, someone who works hard to feed people and whose work in turn is subject to the unpredictable whims of the weather. Never mind that it’s Big-Ag crushing the small farmer, not the previous inability to bet on water, what these futures indexes will allow is for speculators with no connection (other than their stomachs) to farming to play with water futures. As with most other riches traded and hedged on the stock market, the individuals who’ll likely see a return on investment are those with the greatest capacity to invest. Yet the majority of small farmers in the United States don’t turn a profit, and in 2019, nearly six hundred family farms filed for bankruptcy — that’s almost a hundred more than the year before. In California, bankruptcy filings saw close to a forty percent increase.
Meanwhile, the water futures of many Californians remain uncertain. Despite a 2012 law that codified every Californian’s right to water, this guarantee exists in name only: at least one million people in forty-one of California’s fifty-eight counties currently lack access to water that abides by all state and federal safety standards. In rural communities like Lanare and Lindsay in the San Joaquin Valley, the groundwater is so polluted by chemical runoff from local farming operations that residents have to purchase bottled water out of pocket. The communities impacted by chemical runoff are often the same ones suffering from unbearable wildfire seasons—drought’s fraternal twin—which grow longer and more destructive with each passing year. The property damage and acres burned during each wildfire season are painstakingly measured, valuated by insurance companies, and hand-wringingly treated as inevitable by politicos; they also tend to receive mass media coverage, while other toxins produced by wildfires are given less attention. Toxic volatile organic compounds (or VOCs) like benzene and styrene can seep into water supplies after wildfires, and municipalities often struggle to adequately invest in testing and treatment. Across the state, 1.6 million residents have “water debt”; at least 150,000 residents owe more than $1,000.
Water futures usher in a new arena in which the fight for the planet—and for ourselves—will be fought, and we should heed those who have long warned us of waters’ fate. Indigenous water protectors told us that water was life as they risked their own to wrest oil pipelines from the land, and young people, now leading protests and demonstrations against climate profiteers like BlackRock, have made the connection between climate health, human health, water access, and water integrity—despite having had a fraction of the time to read the research as our elected officials.
It should stand as a warning to all of us that a water futures index was created in the first place, that the promise of money can worsen a future-defying lack of care for land and human life. Wall Street hedge funds and financial firms, gluttonous for the peoples’ suffering, pose an additional threat to water access by furtively gobbling up water rights in dry, arid communities in the west. Quickly, after we get through our rounds of course they are, we should look for new opportunities for organizing and building where previously we did not see them. Regardless of how many millions there stand to be won from the futures market, there are millions more Californians who want their water free and clean than there are water traders.https://thebaffler.com/latest/a-bleak-future-for-water-levy-uyeda