How Prediction Markets Could Help Save the Great Barrier Reef

Example Use Cases of Prediction Markets

Prediction markets are an invaluable prognostic tool that collates expert insight through a system of financial incentives to surface and aggregate salient information about the likelihood of a given outcome or event.

Gnosis’ prediction market platform is uniquely positioned to drive innovation in a range of applications that are pertinent to both global and local economic systems — including finance, insurance, and price discovery. The Gnosis platform also provides the underlying incentive mechanisms for more advanced applications of prediction markets, such as distributed and market-based governance protocols.

The range of use cases for prediction markets is vast, and the purpose of this series is not to cover each in detail, but rather to highlight a few instances in which prediction markets might prove particularly beneficial. Enjoy the read!

Fifteen kilometers from Australia’s Northeastern coastline lies the world’s largest system of coral reefs: the Great Barrier Reef. It’s home to tremendous biodiversity, with more than 1,500 species of fish, 411 types of hard coral, and 30 species of marine mammals. The Great Barrier Reef is widely considered to be one of the seven ‘natural wonders of the world.’ But, with the reef’s future in peril, seven may soon shrink to six.

Despite regulatory protections against immediate anthropogenic forces like fishing and commercial shipping, the delicate ecosystem of the Great Barrier Reef has suffered greatly from global climatic forces. A recent publication from the Proceedings of the National Academy of Sciences estimated that the reef has lost upwards of half its coral cover since the mid-1980’s.

Rising ocean temperatures have been especially pernicious. Coral, the marine invertebrates that give reefs their kaleidoscopic brilliance, derives most of its food and energy from a symbiotic relationship with algae. When coral is subjected to unusually high temperatures — as has increasingly been the case — they expel algae in a destructive process called ‘coral bleaching.’ The end result of this process is a graveyard of pale, coral-shaped structures; an aquatic vacuum once occupied by the healthy bustle of tropical fish, urchins, and sea turtles.

As ocean temperatures trend upward, the prevalence of coral bleaching has increased dramatically; 2016 and 2017 have been two of the most destructive years on record for coral ecosystems. In response to the growing threat of bleaching and a slew of other threats that face the Great Barrier Reef, the Australian Government recently launched their ‘Reef 2050 Long-Term Sustainability Plan’ — a public initiative guided by an ‘Investment Framework’ which ‘determines investment priorities for the future’ and ‘establishes current investments in Reef protection.’

The Reef 2050 plan is quite comprehensive, yet its implementation could be fine-tuned through the inclusion of an ocean temperature forecast for waters surrounding the reef. Such a forecast could help direct conservation efforts and mitigate the risk of coral bleaching outbreaks.

While many NGOs have considered and predicted rising ocean temperatures on a global scale, ocean warming is not a uniform process, and it would be imprecise to use average or global estimates in order to best serve the interests of a localized habitat.