Is a water crisis looming in Latin America?

The stock exchange of life

For the first time in history, the Chicago Mercantile Exchange (CME) will speculate on the future prices of the vital liquid for the human being. Over the next few years, investors, businessmen and governments around the world will be able to buy securities listed in acre-feet that will serve to quote future water prices.

Although this mechanism will not affect daily life in the first five years of stock market operation, it is a preamble for future water prices to be defined in the United States, so that in the event of drought or shortages, the monetary reference to which will resort to commercialize the liquid will be the speculation indices that are had at that time.

Although currently there has only been talking of securitizing water in the United States, it should not be overlooked that different stock exchanges in the world will be tempted to implement this mechanism, since having success in a specific market, the imitation in order to make exponential gains.

The water situation in Latin America

Given this scenario, it is worrying for many countries in the region that water prices are defined in the northern country since most economies and international trade are highly dependent on the US market. Therefore, the best alternative to measure the impact of these types of decisions in our region is by analyzing our water reserves and addressing the potential threats of shortages.

Thus, the best way to analyze this situation is by observing the percentage of water reserves that have been used in Latin American countries, through the Water Stress index of the World Resources Institute. This index measures a scale from 1 to 5, the latter being a total use of the water available in the country; some countries in the region are often in the red, as they may be managing their water resources poorly or there may be little water availability.

Read also: How have other Latinamerican countries handled natural disasters?

Chile and Mexico are positioned as countries where water resources have been used the most, through a 3.98 and 3.86 of Water Stress respectively; the corresponding percentages of these two countries show that they have used more than 70% of their water reserves.

Guatemala, Peru, Venezuela and Cuba maintain an average of 2.12 of Water Stress, while the Dominican Republic, Haiti, El Salvador, Ecuador, Argentina and Bolivia have between 1.75 and 1.15 of water stress.

The countries that have used less than 19% of their water reserves are Costa Rica, Brazil, Colombia, Belize, Honduras, Panama, Nicaragua, Paraguay and Uruguay, the latter two using 0.2% of their water resources.

Is a water crisis coming?

In a first visualization, it is observed that the countries with more advanced economic development indices have used their water resources to a greater extent; however, this is not understood as a worrying scarcity of water resources. In the case of Mexico, an International Treaty signed with the United States has allowed it to supply the entire northern region with water; However, as it is not considered a national reserve, it is not considered as part of the water stress index.

In Chile, however, the situation is different, poor water management by the authorities and the increase in agricultural activities have made use of national water resources, placing this country with the greatest stress in the region.

The rest of the Latin American countries should not trust that their water stress index can save them from future speculations on the price of water since most of them maintain questionable peace indices and free trade agreements that would allow the insertion of private interests and foreigners in water control.

Given this scenario, it is time for the region to use the different multilateral cooperation mechanisms to design a plan that fully enforces Goal 6 of the 2030 Agenda, either through new regulatory frameworks and the design of public policies that make a real structural change in the management and use of water.