Water: Correlation
Prices it moves with, and why
The California water index (NQH2O) prices surface and groundwater rights traded in California. It is set by rainfall, snowpack, drought rules and how much farms, chiefly orchards and vineyards, need to irrigate in a given season.
Market price World Bank Pink Sheet: California water (NQH2O index) $/acre-foot · monthly, Oct 2018 to Oct 2026What its price moves with
Selected linkWater and Maize
Monthly changes 0.05 little or none correlation 12-month changes 0.55 moderate correlation Last 5 years 0.13 monthly changes Lead or lag −1 mo Water tends to lead by 1 month (r 0.22) Price function, Oct 2018 to Sep 2026 Water ≈ 0.0710 × (Maize)1.62 R² 0.44 On this fit, a 10% higher maize price goes with a 16.7% higher water price over the long run. Units: $/acre-foot and $/mt.Chart: Water and Maize prices rebased to 100 at Oct 2018, log scale
Both prices rebased to 100 at Oct 2018, on a log scale so equal percentage moves look the same size.Chart: Water price against Maize price, monthly, log scales, with fitted line
Each dot is one month; paler dots are older (2018), darker dots recent (2026); the ringed dot is the latest month. The dashed line is the fitted price function. Both axes are logarithmic.Rain and snowmelt fill both the reservoirs behind hydroelectric dams and the supplies that farms bid for. In a drought, California hydro output falls just as water prices jump, so cheap hydropower and cheap water tend to arrive in the same wet years.
Not enough overlapping price history to measure.Crop prices guide what irrigation is worth to growers, so farm incomes feed into water bids. The link is loose: monthly moves barely correlate (0.05) but yearly changes correlate at 0.55, as both respond to seasons and weather rather than to each other.
little or none co-movement month to month · 96 months Show chartsChlorine and caustic soda disinfect and condition drinking water, so treatment costs rise with them. The index for this chemical group shows a modest tie, monthly moves correlating at 0.28 and yearly moves at 0.42, mostly a shared US inflation backdrop rather than direct cost pass-through.
weak co-movement month to month · 96 months Show chartsMoving water through canals and pumping groundwater uses a lot of electricity, so power costs set part of the delivered cost of water. The rights index, however, prices scarcity rather than delivery, and shows almost no relation to the industrial power index (0.04 monthly).
little or none co-movement month to month · 96 months Show chartsHow to read these numbers
Correlation of monthly changes (the number in the coloured pill) compares how much each price moved, month by month, since 2006 or the first month both series exist. It runs from −1 to +1: near +1 the two usually rise and fall in the same months, near 0 there is no link, and a negative number means they tend to move in opposite directions. Above 0.7 is strong, 0.4 to 0.7 moderate, 0.2 to 0.4 weak.
12-month changes compare year-on-year moves, which shows whether two prices share the same cycles even when the month-to-month noise differs.
Price function is a straight-line fit of the two prices on logarithmic scales: price ≈ k × (partner price)β. β is how much this price moves, in per cent, for a 1% move in the partner over the whole period, and R² is the share of the variation the fit explains. Two prices that both drift up with inflation can fit well without any real link, so read it together with the monthly correlation.
Lead or lag checks whether the monthly correlation is clearly higher when one price is shifted by 1 to 6 months.
Correlation is not cause. The reasons on each card explain the economic link; the numbers show how strongly it has shown up in prices. Proxy series are US producer price indexes or related prices and can blur the real link.
Data: World Bank Commodity Price Data (Pink Sheet), October 2026; US Bureau of Labor Statistics producer price indexes, IMF primary commodity prices and US EIA prices via FRED, Federal Reserve Bank of St. Louis, retrieved November 2026. Calculations by this site.