No. Water is already bought and sold for money in California. Now a company allows for people to make bets on how those prices are expected to change. That's the development. Adjust your outrage accordingly.
https://www.bloomberg.com/news/articles/2020-12-06/water-fut...
Cities are always going to be able to outbid farmers, in some cases by buying farmland for the water rights. The worst-case result of that is that some farmers in dry areas go out of business and more food is imported.
Food is a global market, water isn't. It's easier to import food than water since it's much lighter for the price.
To your point, municipalities are most definitely going to need to buy out farmers to prevent water resource depletion. They should do so whenever market conditions value these rights at a discount (“buy low”).
https://www.npr.org/sections/money/2015/07/22/425392169/epis...
Exactly. These futures are a local market much closer to weather futures than fungible markets like crude oil or soybeans or even natural gas to a lesser degree, exactly because it's uneconomical to transport regular water over large distances. So these futures markets have little to tell us directly about anything other than local conditions in California. They allow local farmers to trade risk with other market participants such as speculators or the sellers of the water.
Futures are useful if you're a farmer: it helps you precommit to a certain price of water to be paid in the future. You might pay more than you would if the price goes down, but also less than would if the prices goes up. It's basically insurance.
Maybe folks are outraged that water is being bought and sold to begin with, but this is the first time they are hearing about it?