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Water Gamble


AquariusRadar

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Hedging my bets that 22-23 will be a better water year I'll now pretend sale of 1000 acre feet of Cal water on the futures market. Pretend gambling of course-I don't have any water to back up my wager. NASDAQ Cal water index (NQH2O) at todays price 1214.45 X 1000 acre feet= $1,214,450. Betting California gets normal rain 22-23, then the price should fall and I can buy back my contract at a lower price. A profit if the rains come-if not-financial disaster.

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3 hours ago, SnarkyGoblin said:

Wow, is this an index you can actually invest in?

This article doesn't make it clear if selling water futures is permitted. It doesn't say no you can't sell. But one statement in the article makes understanding if you can sell short a little fuzzy. For my pretend sell I'm assuming it's ok to sell without actually having water in hand.

Cal Water trading

https://www.cnn.com/2020/12/07/investing/water-futures-trading/index.html

Edited by AquariusRadar
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46 minutes ago, SnarkyGoblin said:

It seems like a cruel and unusual way to make money. 

Making money off of an increase in water price due to the irreparable harm(short-term) of the environment.

No different than oil.  And I think both are sick and twisted.  Betting on hardship and turmoil.  Like shorting stocks.

If you want to make money the proven way there are really only two ways: 1. S&P index funds 2. Real estate in good housing areas.

Everything else is really just gambling.

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1 hour ago, SnarkyGoblin said:

It seems like a cruel and unusual way to make money. 

Making money off of an increase in water price due to the irreparable harm(short-term) of the environment.

No Snarky. Not an increase in price but rather a decrease in price. Helpful to everyone in California.

And no nowhere. The futures market is not sick and twisted. It allows governments, business, and farmers to lock in and assure beneficial commodity prices.

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2 hours ago, AquariusRadar said:

No Snarky. Not an increase in price but rather a decrease in price. Helpful to everyone in California.

And no nowhere. The futures market is not sick and twisted. It allows governments, business, and farmers to lock in and assure beneficial commodity prices.

Aquarius, I take it you are a business, yes?  If so, that would make sense for the purpose of predictable rates.

This is the line that draws my ire: "At the same time, the new futures market could also invite speculation from financial players, including hedge funds."

Water and oil are not things that should be manipulated by the Wall Street crowd.  The stock market is already a decoupled joke.  Let's not drag water into this realm.

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Hedge funds betting on the weather would have very few investors. A high risk gamble to bet on the weather. Other commodities like corn, oil, etc. have risk as well but well studied factors affecting them have a history the fund can analyze  in order to decide to buy or sell. Those have lots of data and somewhat predictable futures. It would be rare  to have intense drought in the corn belt. Weather is a factor but generally not boom or bust. California weather is a complete unknown and the hedge funds would be idiots to invest in such high risk. And investors know that.

Most investment is by California farmers, municipalities, and business who can deliver/receive water to/from the Cal system. Having a lot of water in New York and thinking one could use that to satisfy a sell contract is meaningless because there is no way to deliver the contract.

As Mr ML mentioned above, the prediction is La Nina and that's why prices are so high. My pretend sell is based on the idea that three consecutive years of La Nina is very rare.

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1 minute ago, AquariusRadar said:

Hedge funds betting on the weather would have very few investors. A high risk gamble to bet on the weather. Other commodities like corn, oil, etc. have risk as well but well studied factors affecting them have a history the fund can analyze  in order to decide to buy or sell. Those have lots of data and somewhat predictable futures. It would be rare  to have intense drought in the corn belt. Weather is a factor but generally not boom or bust. California weather is a complete unknown and the hedge funds would be idiots to invest in such high risk. And investors know that.

Most investment is by California farmers, municipalities, and business who can deliver/receive water to/from the Cal system. Having a lot of water in New York and thinking one could use that to satisfy a sell contract is meaningless because there is no way to deliver the contract.

As Mr ML mentioned above, the prediction is La Nina and that's why prices are so high. My pretend sell is based on the idea that three consecutive years of La Nina is very rare.

Do they though?  The meme stock mania pretty much broadcast how ignorant the average investor is.  And hedge funds looking for ultra high risk/reward portfolios and their associated clientele might probably go for it.  When it comes to potential money gains, many people get stupid and decoupled from reality.

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I satisfied my futures contract by buying back a march contract. What with all the rain and heavy snowpack, I was hoping the futures would go down- way down- to say $600 per acre foot- but everyone seems afraid the snowpack will melt away and the rains have ended and the price seems stuck at this price and bound to go up- forcing me to buy back at a higher price. So I bought the march contract for nearly the same as the spot price. So I made pretend money and more with enough now to water my kumquats and succotash all summer. Of course this is pretend sell/buy. With Cal water, speculation is disallowed because one must have actual water to sell into the Cal water system. If one sells, a buyback is required in the future. If one buys, a sell is required in the future.

Calwaterprice2023.png

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What’s a typical homeowner’s water bill?   

Before You Diagnose Yourself With Depression or Low Self-Esteem,...First Make Sure You Are Not In Fact, Just Surrounded By A$$holes.

“If I owned Texas and Hell, I would rent out Texas and live in Hell.”  Gen. Sheridan 1866

2018 Record Rainfall - 62.65"   Record High Temp. 120.0*F
Record 
Low Temp. - 8.4*F

 

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It varies depending city and amount used. Most water authorities use tiered rates. Don't know exactly how they are used but most likely big users get a discount? At my old place in Lancaster -at the edge of town- the rate is now $30 service fee plus 18 cents cubic foot. I could never keep the bill under $70. Its obvious an acre foot of Cal Water at $600 acre foot (41,280 cubic feet) provides a lot of room for over head costs or maybe profit? for the municipal water company. 0.18 X 41,280= $7000 plus! LA water is cheaper at only about 13 cents per cubic foot. They also use a tiered system so some pay a lot more.

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Ours is calculated a little differently I think.  Probably to confuse us.  1800 cf cost us $84.71 last month.  That's high in my opinion and I live near a large lake.  It will only get worse as resources become stressed further.  I plant nothing but hardy plants and dare them to die!

Texas is water rich with the Edwards Aquifer, however with the heavy influx of new residents that's going to be stressed.   We do need more rain here to fill up that aquifer and the larger lakes. 

Before You Diagnose Yourself With Depression or Low Self-Esteem,...First Make Sure You Are Not In Fact, Just Surrounded By A$$holes.

“If I owned Texas and Hell, I would rent out Texas and live in Hell.”  Gen. Sheridan 1866

2018 Record Rainfall - 62.65"   Record High Temp. 120.0*F
Record 
Low Temp. - 8.4*F

 

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18 hours ago, Andie said:

Ours is calculated a little differently I think.  Probably to confuse us.  1800 cf cost us $84.71 last month.  That's high in my opinion and I live near a large lake.  It will only get worse as resources become stressed further.  I plant nothing but hardy plants and dare them to die!

Texas is water rich with the Edwards Aquifer, however with the heavy influx of new residents that's going to be stressed.   We do need more rain here to fill up that aquifer and the larger lakes. 

Is that water and sewer, or just water?  We pay about $125-130/mo for water and sewer.  It's been a while since I have looked at the details of the billing, but last time I looked, the cost was based on a baseline usage, and then we were charged for anything over that.  We pretty much fall in line with the baseline usage, with is going over July and August from watering the landscaping. 

That price is after we were annexed into the city, when we lived "in the county" it was $150-180/ month.  🤯

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