A blockchain-based water market that aims to level the playing field for farmers could go live in far north Queensland by the middle of this year, after a successful pilot that showed a drastic reduction in the time taken to execute trades.
The partnership, led by the federal government-backed Cooperative Research Centre for Developing Northern Australia (CRCNA) and Brisbane-based start-up Civic Ledger, aims to improve transparency in the fractious and opaque national water market and provide greater certainty to agriculture investors.
The new blockchain-based market comes nearly two years after a report on the Murray Darling Basin called for “a single authoritative platform” to counter the suspicion between the states, irrigators and environmentalists over who bears the brunt of dwindling water supplies across the country.
“It’s like thousands of tiny marketplaces operating at the same time,” Katrina Donaghy, chief executive officer of six-year-old Civic Ledger, said.
“We’ve been able to show how a distributed ledger can capture all the necessary information about these markets and bring them into one transparent place that’s designed from the bottom up.”
By mid-2022, the group expects 1000 farmers across the Mareeba-Dimbulah Water Supply Scheme to be established on the platform, which is designed to show real-time water prices from licensed sellers. The district has a total of 204,424 megalitres in water entitlements.
The partnership also involves FNQ Growers, which represents farmers, and advisory firm Inclusive Growth Partners.
As it stands, water markets are currently run by multiple operators with different rules and difficult-to-access data, and growers are rarely shown the actual price they are paying for water.
An intermediary industry of water brokers, who attempt to connect buyers and sellers, has sprung up, inflating costs for drought-stricken farmers who have few avenues for negotiation.
The partnership follows a pilot program in 2020 that was to determine whether blockchain technology, which powers a distributed ledger, was the right tool to improve transparency in Australia’s water markets.
“We’re removing the double-spend on these real-world assets so we can account for how much water we have, how much water we’re sharing, and how much we’re using,” Ms Donaghy said.
Irrigators in the Atherton Tablelands tested the new Water Ledger platform throughout 2020, and the company claimed it had reduced trade times from months to days.
Previously, it could take months to get trade approval from the market operator, whereas trades on the blockchain take seconds and the last traded price was published in real-time.
Blockchain is an emerging way for industries and governments to make and verify transactions, streamlining processes and reducing the potential for error and fraud.
Using smart contracts, Water Ledger can capture the metadata around water licences – who has them and their allocation – and then automates the tracking of licences, trades, order books and historical transactions.
Anne Stuenzner, chief executive of the Cooperative Research Centre, pointed to the need for investment security and certainty across northern Australia, which has been undermined by opaque water trading amid the prolonged drought.
“Our aim is for water markets that implement transparent governance frameworks and support the sustainable economic development of northern Australia,” she said.
“The CRCNA and Civic Ledger are working together on the rollout of Water Ledger in the [Mareeba-Dimbulah irrigation area] as ‘a strategic research test-bed’ that has applicability across northern Australia for real-time continuous water accounting and grower-led trading.”
Cassian Drew, managing partner of Inclusive Growth Partners, said: “We expect new economic opportunities to be developed in northern Australia through enhancing water market governance and participation.
“Our place-based investment and governance platform will support growers, Indigenous Australians and investors to create and participate in new opportunities enabled by Water Ledger and the work of FNQ Growers and the CRCNA.”
Moving the Mareeba-Dimbulah Water Supply Scheme on to Water Ledger is expected to be completed during the second quarter of 2022, and the project’s results are to be published at the end of the year.