Besides which, this is about farmers buying water by the acre-foot, not residential drinking water. It's also about trade within a watershed or water system, because moving large amounts of water for farming in any other way isn't economical.

Cities are always going to be able to outbid farmers, in some cases by buying farmland for the water rights. The worst-case result of that is that some farmers in dry areas go out of business and more food is imported.

Food is a global market, water isn't. It's easier to import food than water since it's much lighter for the price.

Many crops that are water intensive are exported. Almonds, for example. There’s no need to import food due to water shortages, only to prevent farmers from exporting our water by way of these (very profitable) water intensive exports.

To your point, municipalities are most definitely going to need to buy out farmers to prevent water resource depletion. They should do so whenever market conditions value these rights at a discount (“buy low”).

https://www.npr.org/sections/money/2015/07/22/425392169/epis...

> Food is a global market, water isn't. It's easier to import food than water since it's much lighter for the price.

Exactly. These futures are a local market much closer to weather futures than fungible markets like crude oil or soybeans or even natural gas to a lesser degree, exactly because it's uneconomical to transport regular water over large distances. So these futures markets have little to tell us directly about anything other than local conditions in California. They allow local farmers to trade risk with other market participants such as speculators or the sellers of the water.

I also expect there's a lot of "oh no evil finance people profiteering out of water!", which is of course a gross misunderstanding of what futures are.

Futures are useful if you're a farmer: it helps you precommit to a certain price of water to be paid in the future. You might pay more than you would if the price goes down, but also less than would if the prices goes up. It's basically insurance.

In other words, in volatile markets it creates predictability. Farmers use futures for selling their produce. If we didn't have futures farmers would have no way to plan for the next year until they sold everything at the end of the year, which is very impractical. Instead they lock in their revenue and upgrade, repair, buy or sell equipment based on that. Since water is now a volatile resource it makes sense to do the same with that and lock in part of their expenses.

> That's the development. Adjust your outrage accordingly.

Maybe folks are outraged that water is being bought and sold to begin with, but this is the first time they are hearing about it?

No different from ski resorts trading snowfall futures