Currently, if a farmer wants to know what water will cost in California six months from now, it’s kind of a “best guess,” Patrick Wolf, senior manager and head of product development at Nasdaq, said in an interview. The futures will allow market participants to see “what is everybody’s best guess,” he said.

CME declined to identify potential market participants, except to note that the exchange has heard from California agriculture producers, public water agencies, utilities as well as institutional investors like asset managers and hedge funds.

Allowing the market to make an educated guess about a future commodity price is (theoretically) how a futures market is supposed to work but we know damn well the "institutional investors" with no skin in the game are probably going to throw this off attempting to make a profit while screwing over the municipal planners and farmers who actually need the damn water and accurate information about its future scarcity. Participating in derivatives markets when you have no stake in the outcome other than whether the price goes up or down, especially when you or your corporation is rich enough to exogenously influence that outcome, is about as ethical as insurance fraud.