Imagine being able to complete water trades in minutes, no matter what zone, state or industry you are trading in, or between.
Technology start up, Civic Ledger, says this will be a reality for irrigators if blockchain technology is applied to the water market.
But what is blockchain technology?
Chief executive officer and co-founder, Katrina Donaghy, explained blockchain allowed for an asset to be moved from person A to person B in a way that couldn't be duplicated and was visible to everyone in the market.
"It brings together cryptography, the ability to do peer to peer transactions and a distributed network of computers that are not centrally owned by a government or an industry," Ms Donaghy said. Civic Ledger was one of four companies in 2017 to win funding from the Australian Government to improve the transparency and reliability of water trading information.
"Trading water is complex with 300 water products and 15,000 business rules," Ms Donaghy said. "This keeps a high portion of irrigators out of the market."
Ms Donaghy said Civic Ledger conducted a feasibility study to understand whether blockchain technology and "smart contracts" would solve a range of challenges in water trading, including lack of clarity in market volume and water price.
Policy researcher at RMIT University's Blockchain Innovation Hub, Harry Wetherall, is researching the implications of blockchain for water trading.
He explained smart contracts are decision making protocols that allowed computer code to verify any type of business or legal agreement. "At the moment water trading is slow and following the rules and regulations of water trade is really time consuming," Mr Wetherall said.
"This makes trades expensive because a lawyer or a broker has to take time sorting through a large number of regulations." He said despite the complications of water trading, regulations mostly gave simple yes or no scenarios or were number based.
For example, the water in X dam has to be above Y height for water to be traded in Z zone.
Therefore, the objective nature of water trade regulations made them suited to programming into smart contracts. "If you get a computer to work all those things out with a smart contract it can take only a few seconds," Mr Wetherall said.
"It takes the information it has and starts feeding it through, every time it says "yes" it goes through to the next step." He said speeding up the transference of water would reduce the guessing game for irrigators.
"At the moment the quickest trades are taking place in a handful of days, but interstate trades, trades between zones or moving across industries, that can take up to nine weeks," Mr Wetherall said.
"So when you're making a trade you're trying to guess how much water you will need in the few weeks and it might rain an inch in that time.
"But using blockchain, it takes minutes for the trade to go through, it doesn't matter if you're trading across state lines, water zones, whether it's a public holiday or the weekend." Ms Donaghy said the technology would also allow for a transparent water market, with each trade visible, giving real-time information on prices and volume in the market.
She said in addition, smart contracts allowed regulators to amend water entitlement permits in real time.
Civic Ledger has submitted an expression of interest with the CRC of Northern Australia to conduct a six month trial of Water Ledger in the Mareeba-Dimbulah Irrigation Area in Far North Queensland. Ms Donaghy said they were also in discussions with the South Australian government, meaning blockchain technology could be tested on water markets within the Murray Darling Basin.
"Applying blockchain technology to Australian water markets is a world first," Ms Donaghy said. "We're hoping to run a number of pilots across Australia to test how the technology works in different markets with different regulations."
Publication: The Land