Embedded Water Derivatives

Abstract

There are different approaches to deal with the impending scarcity of water: conservation, recycling, or making water a tradable commodity and letting market forces decide. Water trading is already becoming more common than we realize. Water has become a commodity. This is a slow process, but it is imminent and quite soon we will be observing more and more derivatives built on this commodity and traded through public exchanges and brokers. Since transporting water is impractical for both political and physical reasons, food is the way to invest in water -the water embedded in food. The aim of this research project is thus; to develop a new derivative product that derive its value from the quantum of water embedded in commodities.