SBIR Phase I: R&D for Water Efficiency, Management and Markets Utilizing Distributed Ledger Technology

The broader impact of this Small Business Innovation Research (SBIR) project will provide a significant improvement in economic incentives for water rights holders to conserve and efficiently deploy their water. One of the greatest struggles facing the Western States is the disincentive for water rights holders to efficiently manage their water. If holders don’t use the entirety of their water each year, they risk losing the unused portion back to the State.

Commercially, despite a billion-dollar demand for seasonal leasing of water—which would satisfy annual use requirements—water holders have no place and little ability to market and lease their unused water. This approach using the proposed distributed ledger technology (DLT), allows holders to track and log their water rights information on its platform.

In turn, water users will finally have access to information that traditionally informs other property transactions—title history, water usage, comparable transactions, and localized pricing. With that information, our customers populate a marketplace where short-term and long-term transactions can be quickly and easily transacted. In sum, by creating the tools and interfaces to digitize water rights and enable simple-to-execute water transactions, DLT will power water markets and drive efficient water use throughout the West.

This SBIR Phase I project proposes to research and develop a unique combination of distributed ledger (DL) tokenization and a decentralized distributed file system (DDFS) to produce a robust digital twin of both physical water rights and usage, as well as the associated legal materials and data. DL tokens represent the legal quantity of water that has been granted to the user by the government.

DDFS allows the storage of key information pertaining to the water rights—including title and use history—in a public, immutable manner, anchored in the DL transactions. This approach provides a level of trust, transparency and provenance for water that is currently absent in the United States. The current state of the market—makes it impossible for the average water owner and manager to have any insight into the value of their water assets.

Water-specific marketplaces backed by DL and DDFS allow both buyers and sellers the ability to view, vet, and transact water assets efficiently and with minimal cost. This first phase of research and development will establish the requisite infrastructure to populate those marketplaces.

This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.