The expansion of permanent cropland and continuing growth of urban communities are increasing demands on California’s limited water resources. These conditions are driving innovation to improve water risk management due to volatile hydrology. Urban agencies and Central Valley farmers regularly transact in a water market that is under new competitive pressure as participants manage this new normal. To provide greater market transparency, WestWater Research and Nasdaq have developed the NQH2O index which provides a weekly snapshot of California water prices. Market participants rely on the index as an informational tool to understand current prices in California’s spot water market. In addition, farmers are beginning to acquire futures contracts settling against the index to offset the financial risks of water market price volatility. In this presentation, WestWater staff will introduce California’s water market, the NQH2O index, and the new risk management tool of water futures contracts.