Last week, Colorado lawmakers filed a bill exploring how blockchain technology could be applied to water rights management.

Now, California is also studying blockchain for use in water rights management, as reported by Cointelegraph. But coming off a severe drought, which saw water restrictions throughout the state, they are facing a far different set of circumstances than Colorado, as water rights in California have always been a highly political issue.

The film “Water & Power: A California Heist” examined how a handful of corporate landowners took advantage of a state-engineered system and gained control of its water, leaving local homeowners with dry wells. Hollywood also has examined the issue with a bit more drama in “Chinatown,” where the California’s water wars and dirty dealing was dealt with by Jack Nicholson and Faye Dunaway.

In a state where agricultural and corporate interests consume much of the available water while restaurants won’t serve a glass for free and residents’ lawns turn brown, blockchain adoption may be looked at warily by special interests and government, all with a vested interest in maintaining a veil over water usage while blaming the little guys for waste.

Here’s a closer look at how the blockchain might be implemented in California to manage water.

IBM, The Freshwater Trust and SweetSense

In California, researcher the Pacific Institute has a nonprofit called The Freshwater Trust. It has already spearheaded a collaboration on water management with IBM and SweetSense. The project amounts to a blockchain-based system that implements Internet of Things (IoT) sensors across water pumps in a major river.

The state has been plagued by severe water shortages since 2006, and suffered drought in nine of these past thirteen years. That’s actually keeping within historical norms, as in the 20th century, the state had five periods of drought, with one lasting nine years and another eight years.

California receives most of its water from systems called atmospheric rivers. These storms drop most of the water the region receives on a yearly basis. On average, between 30 and 50 percent of annual precipitation in West Coast states happens in about three atmospheric rivers.

When too few happen, California is in a drought.

Scientists and engineers will use blockchain and IoT sensors to track groundwater usage in real-time across the Sacramento San Joaquin River Delta. Their aim is to manage the water supply and ease pressures on the water table.

Covering 1,100 square miles, the northern California delta is one of the largest aquifers considered by many to be at a high risk for ecological destruction. It sources water for the southern and coastal areas of the state and supports dozens of endangered species, including around 75 percent of all salmon found in California. Three quarters of the delta is further used for agriculture, and this is responsible for much of the high water demand.

“California is huge for American agriculture, but it’s heavily groundwater dependent,” said Alex Johnson, fund director for The Freshwater Trust, while speaking to Digital Trends. “There are some basins in the central valley that have been so depleted over the last couple decades that they are 20 feet lower in elevation.”

Aquifers in California have suffered from intensive farming and business use. The water table is not just being lowered, making water more scarce, but rain has not replenished the aquifers fast enough. One, or even two, rainy years are not enough; the ground is already sinking in a phenomenon called subsidence, the sudden sinking or gradual downward settling of the ground's surface with little or no horizontal motion.

A market for water

IoT sensors track levels of groundwater pulled up from individual pumps before uploading data via satellite to IBM’s blockchain — with no need for internet connectivity — and then water credits can be granted according to usage. A credit grants its owner the right to extract a set amount of groundwater, but if their need is less, they can sell it as a digital asset.

Conversely, those in need of additional water credits are able to buy from others. This is great if, for example, a farmer chooses to rest their land for a season at the same time a winery realizes it needs extra groundwater during a particularly dry spell. A blockchain system coupled with AI could theoretically recognize opportunities for businesses to trade credits for water and notify administrators and businesses. There is no direct negative effect on the aquifer, if the additional water shares can be bought from the farmer.

Such an open market gives an incentive for businesses and farmers to manage their water use due to the fact that using less means they can sell their credits for a profit. Managing the water supply in this way could prove efficient in a region where already too much groundwater has been drawn.

Using blockchain brings transparency to the system because all records and subsequent amendments can be seen by anyone. Being able to observe the amount of groundwater used by various entities is vital: There is no incentive for an individual to regulate water usage if competitors pay no heed to regulations. If the pilot project is successful, blockchain will be set to play an instrumental role in helping prevent a state-wide ecological disaster looming large for California.

So, how can blockchain help more efficiently manage these artificial rivers and the water they bring?

Beyond water rights database management, water markets and general administration, a blockchain system could make the management of water more efficient while interfacing with automation and AI. For instance, after numerous recent artificial rivers, less than 1 percent of the state is still considered in drought (one year ago, the United States Drought Monitor classified 48 percent of California as being in a drought). Surprisingly, this region is on the Oregon border.

Using trustworthy oracles, an AI-blockchain could theoretically identify changes in conditions ahead of time, suggest contingency plans, and find buyers (in the drought-stricken region) and sellers (in the regions with ample rainfall) for water before the atmospheric storms even arrive. A blockchain logistics system could be implemented as part of a blockchain-based water management system.

The Hyperledger blockchain

IBM, SweetSense and The Freshwater Trust will likely use the Hyperledger blockchain — which is hosted by the Linux Foundation, Ripple, Stellar and Ethereum — for any experiments pertaining to water management. Local and city governments could also partner with R3 on such a critical part of the infrastructure.

There are several reasons why state officials prefer to partner with a blockchain organization focused on enterprise. For instance, Hyperledger, R3 and Ripple have received money from investors and clients, and can afford research and discovery.

Blockchain water banks

Colorado’s Bill 184 says the Pacific Institute should look into water rights database management, the establishment of water “banks” or markets, and general administration with blockchain once it acquires funds.

The experiment is underway in California. And there, the improved management of approximately three to four atmospheric rivers per year is critical — from collection all the way to allocation.

“We will never capture it all, but we need to do a better job of capturing what we can,” Peter Gleick of the Pacific Institute told Fox News.

“The challenge is: How do we capture more of that water to use it so we can use it during dry parts of the year? And cities in California have not historically done a good job of capturing what we call stormwater,” Mr Gleick added.

The article was written by Justin O’Connell.