As much of the west experiences drought conditions a new tool is available for farmers to hedge water price risk. That tool is the Nasdaq Veles California Water Index. This opens up an interesting conversation about how or even if water should be priced. Here’s Veles CEO Lance Coogan.
Coogan… “Where water is ostensibly free, you get a lot of wastage. And I think that's a very important thing because there's a general group that think that water shouldn't be priced. But actually water should be priced, because it costs a lot of money to get it somewhere. And somebody's got to pay for that. And if you're getting it for free, the government's paying, so people are paying it via tax. Somebody is paying for it. You're paying for it anyway, but in a different form.”
Coogan says once appropriate prices are assigned to water, innovation becomes incentivized.
Coogan… “By bringing in financial products. You start to make that system, technology and the financial products start to bring those prices down and bring this solution to people where they need it. Let's make it more efficient. Let's let the technology innovators and the financial innovators come in and bring the prices down so everybody can get the water that they deserve. That's what should be happening.”
Learn more about the Nasdaq Veles California Water Index on the Nasdaq websites.