The price of water is affected by local factors, short term events, regional policies and national and governmental use of exit fees and taxing, which deny the possibility of establishing an integrated price of water.

The UN and the World Bank, as well as virtually every other major international body involved in global economics, has become acutely aware that the supply of fresh water is limited while global demand is ever on the increase. Not only this, but the governments and landowners responsible for stores of fresh water have traditionally opted to invest in industries that underestimate the importance of this vital resource.

Water is squandered in production processes, even those as basic as the manufacturing of T-shirts, because a definite value is not attributed to it.

The only truly effective method of protecting the supplies we have is to turn water into a financial asset.

The fiscal benefits include the use of fresh water as recognised collateral. This means that states, or any private group, in possession of large quantities of fresh water can now ascribe a value to their asset and use it against loans.

Financial institutions wishing to invest in commodities (or hedge against inflation) will be able to add water to their portfolio. In addition, they will be able to invest in an asset that is ultimately more stable than specific commodity markets by looking at water not only as a commodity in its own right but as a denominator representative of all agricultural stock - a commodity index.

A blockchain is essentially a sophisticated ledger of transactions that is duplicated across a network of computers. Each block in the chain contains different transactions, and each time a new transaction occurs on the blockchain a record is recorded onto a ‘block’ and updated to each member’s ledger. Distributed Ledger Technology (DLT) refers to a decentralised database that uses techniques in cryptography to maintain the integrity of the database. This is why blockchains are considered to be ‘immutable’.

Blockchains are so secure and reliable that blockchain transactions are admissible as evidence in an increasing number of jurisdictions. We at Aqua-Index believe that businesses should rely on this type of security and reliability for all their data. Data can be encrypted, only the business can decode it. The indelible data should be backed up and should be sufficient for all legal purposes. Blockchain data need not be indexed or efficient to access, it only needs to be accessible to external indexing. Accounts and transaction data remain private.

Post Bretton Woods, major economies have transitioned away from asset-backed money to fiat money. Unlike representative money, bitcoin and other digital currencies do not necessarily embody the same characteristics as traditional stores of value. Tokenised water (like tokenised precious metals) can fill this gap and allow investors to return to asset-backed money.

Additionally, tokenised assets can benefit from efficiencies enabled by blockchain technology. A single, distributed, decentralised, transparent and programmable ledger enables:

• More seamless data transmissions.
• Independence from intermediaries.
• Greater accessibility.
• Lower costs and investment thresholds.
• Quicker settlement times (transfer velocity).
• Greater divisibility at no cost.
• Perfect fungibility.
• Transferability (versus the physical good).
• 24/7/365 tradability allowing for liquidity during unexpected market events outside of traditional trading times.