Thursday, December 28, 2006
After my diatribe the other day, I started thinking seriously about the future of obtaining water on this planet. I'm curious how come we haven't yet seen a futures contract on the delivery of water come into existence. I imagine that someone in the wonderful world of derivatives has considered or maybe even tested such a concept. Maybe water is still too plentiful for this to work now? However, I have the distinct feeling that such a futures contract is not too far off on the horizon, say within 10 years. As water becomes scarcer, Wall Street will inevitably find a way to monetize and hedge that scarcity. Financial engineering at its best!