Virtual Water Trading Simulation

Electronic Simulations

CSIRO economists have developed the Australian Knowledge Exchange (AKX) - an online prediction market which aims to forecast water availability.  The AKX has been set up by CSIRO to test whether trading knowledge online can work for water management and decision-making.

The AKX is effectively a prediction market which aims to forecast future events. Traders in the AKX use their knowledge to buy and sell ‘virtual stocks' in an online marketplace. The market price for these stocks represents the consensus forecast of the traders in the market.

In the current simulation study, the researchers are assessing whether traders can combine their knowledge to predict dam levels in the region, in much the same way as stock market traders predict future prices of commodities like oil. Interested people can register online, get $100,000 play money and start trading predictions.

At the end of each month for three months, the trader who has predicted the dam levels most closely will win a small cash prize.

According to CSIRO economist Stuart Whitten:

“The AKX works like a futures market. This study has been set up to find out whether traders can combine their knowledge to predict dam levels in the region, in much the same way as stock market traders predict future prices of commodities like oil."

"We want all sorts of participants to take part in this trial. That includes water managers, end users like farmers and even people with rain gauges or a passing interest in the weather."

“The results will be used to test the effectiveness of knowledge markets as predictive tools for natural resource management."

“And unlike many other markets these days, we can guarantee that no one will lose money trading in the AKX.”

Visit the AKX website...