How blockchain enables trust in water trading

9:09 am
November 30, 2023

**Summary:**
The Australian water trading market has faced challenges such as slow processing, ambiguity, and a loss of trust, leading to reduced water quality and environmental flows. In response, Arup and IBM have proposed a blockchain-enabled water trading platform as a solution to increase trust, transparency, and validation of market participants. By implementing distributed ledger technology, the platform aims to address issues of transparency, incomplete information, and lost opportunities in water trading markets. The proposed methodology seeks to be tested in the real water trading market to improve accountability and transparency within the Murray-Darling Basin.

**Blockchain Innovation to Improve Trust in Water Trading**

Australia’s leadership in water rights trading has encountered numerous challenges, including slow processing, ambiguity, and a loss of trust in the market. These issues have adversely affected water quality and environmental flows, signaling the need for a more effective and transparent solution. In response, leading organizations Arup and IBM have undertaken a pioneering initiative to propose a blockchain-enabled water trading platform to address these challenges.

The use of blockchain technology is envisioned to increase trust, transparency, and validation of market participants in the water trading market. By implementing distributed ledger technology, the proposed platform aims to provide a comprehensive and immutable record of all trades, ensuring transparency and enabling market participants to audit the blockchain at their convenience. Additionally, the blockchain solution is expected to eliminate the problem of incomplete information and foster trust through the buy-in and unanimous agreement of all participants.

The proposed methodology by Arup and IBM does not only meet the recommendations made by the ACCC and the DCCEEW’s reports but also focuses on achievable solutions without the need for new policy agreements. It seeks to improve market architecture and trade processes, aiming to steer the water trading market in the right direction.

Moving forward, the proposed methodology will undergo testing in the real water trading market, particularly in inter-valley trading scenarios where trade occurs across state borders. The team aims to establish a viable trading platform for the Australian water markets, ultimately improving accountability and transparency within the Murray-Darling Basin.

The complete discussion paper on how blockchain technology can improve accountability and transparency within the Murray-Darling Basin can be downloaded [here](https://www.arup.com/-/media/arup/files/pdf-downloads/arup-ibm-enabling-trust-in-water-trading.pdf).

**FAQs**

1. **What is the purpose of the blockchain-enabled water trading platform proposed by Arup and IBM?**
The platform aims to increase trust, transparency, and validation of market participants in the water trading market by utilizing distributed ledger technology.

2. **Why is there a need for improved accountability and transparency in the Australian water markets?**
Challenges such as slow processing, ambiguity, and a loss of trust have impacted water quality and environmental flows, necessitating a more effective and transparent solution.

3. **How will the proposed methodology be tested?**
The proposed methodology will undergo testing in the real water trading market, focusing on inter-valley trading scenarios where trade occurs across state borders.

4. **Where can I access the complete discussion paper on blockchain technology and its potential impact on the Murray-Darling Basin?**
The discussion paper can be downloaded [here](https://www.arup.com/-/media/arup/files/pdf-downloads/arup-ibm-enabling-trust-in-water-trading.pdf).


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