Water as an Asset Class Is Here by Willem H. Buiter

The technology and infrastructure needed to create an integrated global market for water and water rights is advancing rapidly, with promising new companies entering the market. Give it another decade, and water and water rights exchange-traded funds will be part of the new normal for investors.

NEW YORK – A little over ten years ago, I predicted the arrival of water as an asset class. I foresee “a massive expansion of investments in the water sector, including the production of clean fresh water from other sources (desalination, purification), storage, shipping and transport of the water”. The result would be “an integrated global freshwater market within 25 to 30 years. Once water spot markets are integrated, futures markets and other water-related derivative financial instruments – puts, calls, swaps – traded on exchanges and over-the-counter [over-the-counter] will follow. There will be different grades and types of fresh water, just as we have light and heavy sour crude oil today. »

In fact, I believed that water would eventually be “the largest physical commodity-based asset class, eclipsing oil, copper, agricultural commodities, and precious metals.”

Ten years later, the future is now – even if it’s not quite what I expected.

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