the water token project
The Water Token Project is a cryptocurrency basic income program designed to create a more equitable distribution of water. Outlined as a policy proposal for the state of California, a notoriously problematic and overextended watershed, the Water Token Project uses an array of machine learning algorithms to constantly recalculate the gallon-value of a water token on a monthly basis and sustainably distribute these tokens to corporations and citizens alike.
“Water, water, everywhere,
Nor any drop to drink.”
Samuel Taylor Coleridge
The Rime of the Ancient Mariner
Water covers 71% of the planet, so how can it be scarce? Only 2.5% of the Earth’s water is fresh water, meaning it’s salt-free enough for human consumption. Most of that fresh water—68%—is ice, frozen in Earth’s polar ice caps. 30% is ground water, trapped in underground aquifers. The remaining 2% of that fresh water is surface water—that’s the water in streams, lakes, and atmosphere. Remember the water cycle from grade school, where evaporation creates clouds that fall as rain, over and over again? That’s surface water.
Unfortunately, reality is never as orderly and simple as it appears on a primary school chalkboard. And humans are currently using, polluting and depleting the planet’s fresh surface water far faster than the water cycle can replenish it.
How are we using it? While it’s true that most of us could stand to cut back on the length of our showers, domestic plumbing makes up just 11% of water use. Industrial use—that’s water used for cooling and production processes—takes up another 19%. The remaining 70% is agricultural use, with animal farming the most water-intensive production process by far (due to all the water that goes into producing the food the animal eats and watering the animal itself).
For the most part, we have always treated water as a limitless resource. As a result, we’re experiencing a tragedy of the commons: lack of ownership and responsible allocation has created imminent shortages around the world, starting with the most arid regions—many of which are anticipated to expand as climate change’s effects unfold. On a global scale, the prognosis is clear: our current water use is dangerously unsustainable.
To help governments manage and plan water use, a research team led by Arjen Hoekstra, a professor of water management at the University of Twente, developed the concept of a “water footprint” in 2012. A water footprint looks at both direct and indirect freshwater use, enabling auditors to evaluate the impact of a product’s entire supply chain. The concept’s potential applications are broad, but Hoekstra advocates for the creation of footprint caps for water basins and footprint benchmarks for product categories as a means of structuring and enforcing efficient water use.
While It’s a powerful concept, water footprint assessments have a few key limitations. First, one footprint assessment can’t reveal the tradeoffs associated with key water usage decisions—that would require comparing multiple assessments from before and after policy changes. And second, manual data collection and analysis are time-consuming processes, which makes the creation of multiple comparative studies expensive and unlikely (and also increases the likelihood of human error).
If only there were some way to automate the process, with key data sources constantly flowing into live, predictive models…
Since the 1970s, California’s population has grown at a rate of 1.4% each year, while its water footprint was grown at more than double that rate: 4% each year. The water footprint of the state has long since eclipsed sustainable proportions, currently double that annual flow of the state’s two largest rivers, the Sacramento and San Joaquin. As such, 76% of the state’s water is imported through irrigation and product-embedded water (also known as “virtual water”), leaving the bulk of its agriculture dependent on direct rainwater—a precarious strategy in such an arid state. Additionally, California’s domestic allocation is intrinsically inequitable. Wealthier households use far more water than their low-income counterparts, in part due to their higher consumption of more water-intensive products (like meat).
All signs point to the conclusion that California’s current water valuation paradigm is inadequate, simultaneously disempowering the state’s poorest residents and charting a course for state-wide crisis as climate change’s unpredictable impacts loom. In response, the Water Token Project was formed.
The Water Token Project is a cap-and-trade program for water use in the state of California, coupled with the advanced capabilities of Ai algorithms to predict future value and recommend strategic investments.
Each census-verified household is allotted one water token per resident each month. This virtual currency automatically “pays for the water they use each month. If a household exceeds their water allotment for the month (i.e. “runs out of water tokens before the 31st”), their account automatically buys surplus water tokens from the state’s Water Bank. Conversely, residents who do not use all their tokens each month can sell this surplus via the bank, transforming their unused water as a supplemental income for the household.
The gallon-value of one water token is constantly recalculated by a family of powerful machine learning algorithms, based on a comprehensive array of real-time data sets: meteorological, ground water deposits, economic trends, consumption rates, and more. The token value is designed to create a generous apportionment of water for all private citizens, but can be controlled more strategically in its corporate distribution.
The Water Bank determines how many tokens are invested in businesses each month based on multiple factors: industry benchmarks for water-efficient production in that sector; economic value of a crop or product to state GDP (measured in dollars-per-gallon); and projected growth potential for that business or industry. This level of scrutiny was impossible in the pre-AI era, but thankfully the Water Bank staff are able to lean on the recommendations of a tiered AI network that simultaneously evaluates the state economy and climate on a macro level, specializes in different industries and product categories on an intermediate level, and oversees the inputs and potential of individual businesses on the very micro level.
Commercial allocation of tokens is also delivered with best-practice suggestions for water-efficient production in order to meet the Water Bank’s industry benchmarks, which may at first seem stringent to some companies. Additional counseling is available, especially in some instances where the bank thinks a company or farm may better serve the state by switching to a different product.
In the immediate term, the Water Token Project should increase income for low-income households by enabling them to sell their excess tokens at the water bank and simultaneously increase the costs for excessive domestic water use (causing wealthier households to think twice before installing a second pool). In the medium term, the embedded expense of water tokens will increase the cost of high water footprint-products like meat, causing them to be priced like the luxuries they actually are. In the long term, this effect should use market forces to push Californians toward more water-efficient products and services, and guide the state to a sustainable pattern of water consumption.
How it works
Let’s see the system in action through three examples: the Joneses, a wealthy family; the Browns, a low-income family, and Vynes Vineyards, a small farm. First, here’s their average monthly water consumption:
Normally, the Joneses simply pay more to get more. But in our new system, domestic tokens are allotted per resident—meaning you get one token per person per month. Commercial tokens are strategically invested based on industry production benchmarks and the economic value of the crop or product (measured in $ per gallon), and generally come with production best practices and other suggestions (like an alternative crop to grow for a low-GDP impact farm). Let's see what happens in a month when water tokens are valued at 4,000 gallons:
Everyone will experience either a token surplus or deficit every month. The difference is traded on The Water Bank, a digital marketplace where citizens and corporations can buy and sell unused tokens.
Some businesses will be like Vynes, lucky to already be on the right track from a water efficiency standpoint. But those currently producing a water-inefficient crop or good will get production best practice tips and crop/product alternatives if they've picked a long-term loser. Token allocations will also be practically weaned down so as not to cause an overnight collapse as the company is forced to pivot.
While the benefits of such a system will be immense in the long run, the behavior change demanded in the short term may be frustrating and intimidating for citizens and businesses. Effectively communicating the motivations behind the system through an awareness campaign will be critical in forestalling frustration and resentment.
While the concept of a water-based cryptocurrency began as a loose idea in a sea of speculative sketches, it was exciting to watch as its plausibility and validity continuously rose during the research process. Developing a theory of change map was instrumental in identifying the key assumptions inherent in the proposition worthy of greater exploration.
Once the gaps were identified, it was time to start sketching a prototyping.
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This project also got a write-up on the Products of Design website. Check it out here.