Markets
Why this matters: You asked about water as a safeguard, which is partly a financial question. This module answers whether water is investable, and specifically whether Great Lakes land is a play on western scarcity.
| File | What’s in it |
|---|---|
01-water-as-an-asset.md | Why water resists financialization, what actually trades, the NQH2O index and CME futures, equities and funds, buy-and-dry economics |
02-great-lakes-thesis.md | The pipeline-to-Phoenix thesis, killed on legal, physical, and economic grounds, with the energy math shown |
The conclusion, stated up front
There’s a real water market in the West, built on prior appropriationprior appropriationThe western US rule. Whoever first took water and put it to use has the strongest claim, no matter where their land sits. The shorthand is "first in time, first in right." rights that can be severed from land and moved with government approval. Returns there come from permitting outcomes, not from commodity prices.
There’s no water market in Wisconsin, by design. Riparian rightsriparianThe eastern US rule, and Wisconsin's rule. If your land touches a lake or stream, you get reasonable use of that water, shared with everyone else whose land touches it. The rights come with the land and generally cannot be sold separately from it. are appurtenantappurtenantLegally attached to the land. An appurtenant right travels with the property when it sells, and you cannot peel it off and sell it on its own. to land, the Great Lakes CompactcompactA binding agreement between states that Congress approves. Once approved it becomes federal law and overrides conflicting state rules. The Great Lakes Compact is one. blocks export, and the public trust doctrinepublic trust doctrineThe state holds navigable waters and the land beneath them for everyone, and cannot sign that away. Wisconsin's version is written into the state constitution and is among the strongest in the country. blocks privatization of the resource.
So your Wisconsin land is a personal supply security asset with a slow, diffuse macro tailwind. It’s a good thing to own. It’s not a trade.
Nothing here is investment advice.
In this module
Water as an asset class
You have a finance background, so you'll want to know whether "water" is investable and how. The short answer is yes in the West, barely, and mostly through equities and land rather than through water...
The Great Lakes pipeline thesis, run to ground
"Eventually they'll pipe Great Lakes water to Phoenix, so lakeside land is a call option on western scarcity" is a common thesis. It fails on 3 independent grounds, any one of which is sufficient...