Durable insufficiency of water resources, destroying economic value without damaging any asset and failing the four conditions an insurance contract requires of a peril.
Flood possesses the four properties an insurance contract requires, a date, an identifiable cause, a discontinuity between before and after, and observable physical damage. Scarcity fails each: nobody can name the day water became insufficient, it arises from a compounding of deficient rainfall, abstraction and administrative decisions, Tuesday's position resembles Monday's for years, and the plant cutting output for want of water is intact at the moment it loses its revenue. A difficulty without equivalent is added: an aquifer is a common-pool resource, so that the loss indemnified for one insured arises in part from the conduct of other insureds in the same book. The losses are not merely correlated, they are mutually caused, and insuring the scarcity of a common resource amounts to subsidising its over-use.
For want of a datable claim, California did not wait for a policy: it built a water rights price index and a regulated futures contract.
water scarcity, stress hydrique, rareté hydrique, pénurie d'eau