When thinking about the world’s most valuable resource, many might go straight to gold or oil… maybe even Bitcoin some day.
But the world’s most valuable resource is and has always been water. Nothing on earth survives without water and as a business, it’s relatively stable.
Regardless of what the economy is doing, we need a certain base amount of water. Creating, pumping, moving and pricing water will be valuable in a world where we are increasingly hit over the head with talk of climate change.
About two-thirds of the water used in the U.S. goes to agriculture. The rest is bottled or earmarked for home consumption and industrial use. In all, we use about 300 billion gallons of water a day, which points back to the fact that water is indeed the world’s most valuable resource.
That’s about 600 million bathtubs full of water every day, and that makes a case for finding a way to invest.
Of course, before you can invest in something, you have to gauge a price for it. This is called “price discovery,” but how do you put a price on the world’s most valuable resource?
There was no agreed-upon national price until recently. Water is a local or regional market if you have enough pipelines or irrigation canals. But there is no national distribution pipeline for water like there is for oil, natural gas and even electricity.
This means water can be super cheap in some places and super pricey in others. So just this month, the Chicago Mercantile Exchange launched its first-ever futures contract for water on the Nasdaq Veles California Water Index (NQH20).
The futures contract is based on the California water market, so it’s based on a regional price. But what it does is provide a baseline, an official “benchmark” for the price of water. Having a benchmark allows companies, utilities, regulators and other players in the market to have a better handle on their own local and regional prices.
This is a huge deal. Something like this has never existed before. And it will help push along the idea of investing in the world’s most valuable resource in a bigger and fast-growing marketplace.
Check out my short video for my stock pick to play this emerging market, and let us know what you think in the comments below.