Unleashing Blockchain’s Potential for Environmental Applications
By: Mit Ide
Tags: World Economic Forum, Bitcoin, Blockchain, Climate Change, Digital Economy

Unleashing Blockchain’s Potential for Environmental Applications

World Economic Forum cites 8 ways the infrastructure might tackle environmental challenges

Credit: Steve Simpson

By Irving Wladawsky-Berger

In mid-September, the World Economic Forum (WEF) released Building Block(chain)s for a Better Planet, a report that examined how blockchain technologies could be harnessed to address serious environmental issues, better manage our shared global environment and help drive sustainable growth and value creation. The report outlines some of the world’s most-pressing environmental challenges and highlights eight blockchain-based game changers that could lead to transformative solutions to these pressing problems.

The WEF report includes a short blockchain tutorial. Blockchain is essentially “a new, decentralized and global computational infrastructure that could transform many existing processes in business, governance and society.” Blockchain technologies promise to significantly improve the efficiency and security of business transactions and data sharing among participants in a global ecosystem, such as supply chains, financial services, and similar complex applications involving multiple institutions.

But, the hype surrounding blockchain, can tempt solution designers to try to use it for applications that it’s not suitable for. The report recommends that designers first consider three key questions:

Will blockchain solve your actual problem; is a distributed architecture vital to your solution?

Have you built the right ecosystem of stakeholders; do they understand and trust how blockchain is being used?

Can you acceptably manage the downside risks or unintended consequences, e.g., scalability, performance, implementation risks?

Before discussing potential blockchain-based applications, the report highlights some of the environmental issues these applications might help address.

“The majority of the world’s current environmental problems can be traced back to industrialization, particularly since the ‘great acceleration’ in global economic activity since the 1950s,” notes the report. “While this delivered impressive gains in human progress and prosperity, it has also led to unintended consequences… research from many Earth-system scientists suggests that life on land could now be entering a period of unprecedented environmental systems change.” These include:

Natural disasters: “In 2017, the world suffered 710 geophysical, meteorological, hydrological and climatological ‘natural-loss events’ — almost triple the number it suffered in 1980,” causing around $330 billion in damages, as well as the displacement of 23 million people. The 2018 California wildfires are a case in point.

Climate change: “Today’s greenhouse gas levels may be the highest in 3 million years, rising to 412 parts per million in May 2018,” leading to extreme storms, rising sea levels, coastal inundation, droughts and heatwaves.

Water security: “The world’s demand for water has grown by around 1% per year. By 2030, we may fall 40% short of the amount of fresh water needed to support the global economy as pollution and climate change affect the global water cycle.” Water scarcity is already a problem for almost 2 billion people.

Clean air: “Around 91% of the world’s people live in places that fail to meet World Health Organization (WHO) air-quality guidelines.” Close to 7 million people die annually from health issues caused by air pollution.

Ocean health: “The chemistry of the oceans is changing more rapidly than at any time in perhaps 300 million years, as the water absorbs anthropogenic greenhouse gases. The resulting ocean acidification and warming are leading to unprecedented damage to fish stocks and corals.”

Biodiversity loss: “The Earth is losing its biodiversity at mass extinction rates. One in five species on Earth now faces eradication; this will rise to 50% by the end of the century unless we take urgent action.” Deforestation in the Amazon Basin, for example, could lead to an 8% drop in rainfall by 2050, which could further impact our atmospheric systems.

The report lists over 65 blockchain use-cases that are particularly relevant to each of these six environmental challenges. They range from distributed grid management for improved clean power, to the transparent monitoring and real-time traceability of supply chain transactions. The majority of these use-cases are still in the concept or pilot phase, with only a handful in production.

It further proposes eight key game changers, — areas where blockchain, in combination with other advances technologies could disrupt existing business models and lead over time to truly transformative solutions. Let me discuss three of these game changers.

“See-through” supply chains

Supply chain applications will likely be among the earliest commercial blockchains in production. The infrastructures and processes of supply chains are significantly less complex than those in financial services, healthcare, and other industries Their objectives are relatively straightforward: increase the speed, security and accuracy of financial and commercial settlements; track the supply chain lifecycle of any component or product; and securely protect all the transactions and data moving through the supply chain. Blockchains ability to record all transactions flowing through a supply chain creates an immutable record of a product’s origin, with the potential for full transparency and traceability from source to store. There are already a number of experimental applications under way.

“Looking into the future, blockchain has the potential to connect all stakeholders in a global supply chain — from the workers in factories through to logistics, the retailers, consumers, investors, NGOs, and regulators — under one platform. A platform that provides the data, traceability, transparency, control or compliance mechanism that the given user needs would be a truly transformational proposition for workers in the informal economy and consumers alike.”

Automatic disaster preparedness and humanitarian relief

Earlier this year I attended a conference at Northeastern University in Boston sponsored by the Global Resilience Institute, a research and educational initiative to advance the resilience of individuals, communities, economies and societies around the world by strengthening their capacity to adapt to an increasingly turbulent world. A key theme throughout the conference was that, as the frequency and scale of natural and man-made disasters increase, an effective response requires a comprehensive effort that matches the complexity of the increasingly interdependent systems and networks we all rely on.

Experimental blockchain solutions for disaster preparedness are starting to be developed. “Blockchain could underpin a new shared system for multiple parties involved in disaster preparedness and relief to improve the efficiency, effectiveness, coordination and trust of resources,” notes the WEF report.

“A well-designed system could enable a wide range of actors to share crucial information automatically in the event of a disaster through smart contracts. This could, for example, mobilize emerging resources more quickly and effectively, redirect supply chains automatically, and enable relief agencies to better coordinate their efforts in response to emergencies.”

Decentralized and sustainable resource management

Every four years, the National Intelligence Council (NIC) develops a global trends report looking out 15 to 20 years to provide a framework for strategic conversations within and beyond the U.S. government. Global Trends 2030, released in December of 2012, identified the growing food, water and energy nexus in combination with climate change as one of the four overarching megatrends that are expected to shape and transform the world over the next few decades. All around the world, swelling urban populations and billions rising out of poverty and joining an expanding middle class are increasing pressures on critical resources. Furthermore, changing weather conditions are putting additional pressures on food and water resources.

“Blockchain can underpin a transition to decentralized, clean and more resource-efficient energy and water systems at scale. Platforms could collate distributed data on these resources (e.g. household-level water and energy data collected with smart sensors). This is a game-changer because often decision-makers in the systems — both centralized authorities and retail-level users — are making decisions with only partial information. Blockchain-enabled platforms could overcome this and enable more informed decision-making and even decentralized decision-making about the management of those resources or the broader system. This could include traceability and verification of renewable energy sources, peer-to-peer trading, dynamic pricing and better demand-side balancing.”

Blockchain is still in its early stages of development and deployment. Its capabilities have been often oversold, as is the case with just about all promising technologies, e.g. AI in the 1970s, and the Internet in the late 1990s. But, as the WEF report argues: “If it truly lives up to its promise, this new global computational architecture could rewire commerce and transform how society operates, becoming one of the most significant innovations since the creation of the internet. The opportunity to harness this innovation to help tackle environmental challenges is equally significant.”