Water trades on Wall Street. How could affect it to the building sector?

Few weeks ago water began to trade on the Wall Street futures market, based on the Nasdaq Veles California Water Index (NQH2O). To be precise, what started to trade is not the water itself but the rights of its use. For example, if a factory A does not have to use all its water consumption rights it can sell the market to a factory B because the surpluses can be sold in the market.

The United States, which has a similar climate to Spain, in much of its territory, the periods of water scarcity are more frequent and longer in time. To better manage the shortage and ensure future supply, this type of market has developed in the United States. According to Gonzalo Delacámara, director of Water Economics at the IMDEA Institute, in his statements in EL PAÍS “Markets of rights of water uses can be a tool for conservation, if used properly. In theory, what they’re doing is creating incentives for people to be more efficient because surplus water rights of uses can bring them to market. “

Then. How can it affect the building sector that water is starting to trade? The developer or owner of buildings with high water consumption such as hotels or some type of industry will be more interested in consuming less water than he is entitled to, first to lower costs and second to be able to sell the consumption rights he has not used.

The actions to be more efficient in water consumption, could be divided into three fields. The first is the efficiency of water-consuming appliances (faucets, showers, more efficient appliances and controlled irrigation). The second is the reuse of gray and/or rainwater for garden irrigation and toilet discharges, industrial refrigeration. The third is consumption control to generate awareness and leak control. With the application of 3 one building can reach more than 50% savings compared to the consumption of buildings that does not include these measures.

The demEAUmed.eu project monitored the water consumption of a 440-room hotel. Consumption during the high season (spring and summer) was 128 m3 / day and in the low season 67 m3 / day (autumn and winter). Tying a total of 35,587.5 m3 per year. Considering that the price per m3 in Spain is € 2.2, the cost of dry water is 78,292.5€ / year. With savings measures, consumption could be reduced by up to 50%. With efficient water-consuming appliances, water consumption can be reduced by 35%. With the recycling of gray water, consumption can be reduced by at least 20%. Finally, with leak control and continuous monitoring, approximately 5% of consumption can be saved. Therefore, the price of the bill could be reduced to 39,146.25 €/year compared to hotel without measures of water savings.

If we take into account that with the CPI, the price of water is set at 1.2% annually for 50 years, it would reach 1,227,209 €, as can be seen in the following graph. The pay back period of the investment required (CAPEX) would be less than 8 years.

If the water market is going to be similar to the coal market, unused water consumption rights can be sold on the market. Therefore, if only 50% of the rights have been consumed, the sale of the remaining 50% can bring an additional benefit to the achieved savings that is even more interesting to the application of low consumption measures. In addition, the pay back period of the investment would be less than 8 years.

At GBM we have a team of professionals who are waiting to help you in reducing the water consumption of your building.


  • On 22 de December de 2020