He added: “The market would say that water is worth much more to urban population.”
Those interested range from financial ventures to university gifts to investor groups, including at least two in Colorado led by former governors. T. Boone Pickens, the Texas oilman who died in 2019, was an early evangelist of water buyers. Another proponent is Michael Burry, the hedge fund manager portrayed by Christian Bale in ‘The Big Short’, who earned more than $ 800 million in the mid-2000s.
Matthew Diserio, president and co-founder of hedge fund Water Asset Management, called the U.S. water industry “the largest emerging market on earth” and “a billion-dollar market opportunity.”
WAM, based in New York and San Francisco, invests heavily in water-related businesses, and one of its core businesses is the collection of water rights in arid states such as Arizona and Colorado. Since leaving the government, Eklund has become WAM’s legal adviser and public figure.
“They make water a commodity,” said Regina Cobb, the Arizona woman in Arizona who represents Cibola. “That’s not what water is meant for.”
Private investors want to bring in or strengthen existing elements of Wall Street for the water industry, such as futures markets and trading that takes place in milliseconds. Most would like to see the price of water, which has long been stagnant by utilities and governments, rise sharply.
Traders can take advantage of volatility, whether due to drought, deficient infrastructure or government restrictions. Water markets are called a “paradise for arbitrage”, an approach in which professionals trade and access information for profit. The situation was compared to the energy markets of the late 1990s, in which companies like Enron made money from deficits (some of which seem to have been designed by traders themselves).
Many consider the compact to be a protection that separates the river from the market.
The negotiating states will focus on restoring the Colorado River stream, which has been so reduced in use that from 1998 to 2014 it did not even reach its natural end in the Gulf of California. But they will also look at rebalancing water levels in Lake Powell and Lake Mead, two federally owned reservoirs that contain water to use in the event of an extreme drought.