Why is it called Water Rewards?

People who buy Water Rewards pre-pay their water bills. They get a discount when they pay for their water. The discount is a Reward. Those who consume less water get more Rights to Buy Water Rewards. The extra Rights to Buy is a Reward for consuming less of the Commons.

If people get a discount won’t the Water Authority make less profit?

The Operating Costs to supply water are one-third the price of water.  Repaying loans with water costs one-third as much as repaying loans with money.  Because it costs less the water authority can give a higher return to investors and at the same time make a higher profit.

Who benefits from the reduction in profits?

All loans reduce profits. With Loans the reduction benefits the financiers. With Water Rewards the reduction benefits the customers as they finance the infrastructure.

Is it necessary to account for depreciation?

Depreciation is used to build a fund to replace the asset depreciated. With Water Rewards the Water Authority asks the Water Rewards Coop to pre-pay for asset replacement when needed and only when needed. It removes depreciation from the Profit and Loss so increasing profits.

Can the Water Authority issue more Water Rewards than needed for Water Infrastructure?

The Water Authority can accept as many Water Rewards pre-payments as the cash flow of payments will support. Typically the value of pre-payments is set to the total asset value of the Water Infrastructure. The Water Rewards Coop can use the extra funds to invest in other community infrastructure.

Are Water Rewards a security?

Water Rewards are pre-payments for water. They only apply to purchasing water. Contract Law rather than Securities Law covers the operation of Water Rewards.  When a Water Reward is sold it ceases to have discounts added and ceases to be inflation adjusted.  Its value can only be realised by using it to pay for water.  That is why it is not a currency and why it is not a security.

Does the Co-op need a financial license?

The Co-op does not need a financial license to operate Water Rewards because Water Rewards are not a financial product like money or shares or units. Water Rewards are nothing more than a pre-payment with existing money for water delivered in the future.

What if the discounts reduce the profits so that there is not enough money to pay for the Water Authority operations?

If the Water Authority makes a loss in one year because too many Water Rewards reduced the cash input it can cover the loss by selling replacement Water Rewards. It is fiscally responsible because new Water Rewards are a replacement of Water Rewards, not an addition.

Are Water Rewards expensive to operate?

All the rules and regulations for Water Rewards are in the app that each person gets. The app has low running costs. The costs are much lower than the cost of transaction fees and loan establishment fees.

Does it change the Water Authority Operations?

The only change to the Water Authority Operations is to allow invoice payment with Water Rewards.

What impact does it have on the ACT Government Budget?

The ACT will receive higher profits from sales of water.

What are the benefits for buyers of water?

Buyers of water pay less because they get a discount. The return on investment can be set to be twice as much as commercial inflation-adjusted investments.

Is it socially equitable?

The Co-op can provide more Rights to Rewards to low-income people or to people who have difficulty paying water invoices.  The Co-op can supply more Rights to people who consume less water so Rewarding sustainability.

What are the immediate benefits to the ACT?

The ACT Government will have $100M+ extra profit from the Water Authority to spend on running government services. There will be $3 Billion in Capital available for other infrastructures such as hospitals, roads, education, public transport, and renewable energy.

Why is the Discount Rate set at 10%

The Discount Rate can be set at any figure to make it an attractive investment.  The discount is returned to the customers so does not affect the price.  The price of water is set by the ICRC.

If this is such a good idea why isn’t it operating elsewhere?

Water Rewards generates distributed money through the use of the Water Rewards application. Distributed money costs less than centralised money created with money loans. Until recent advances in computing, communications and software technology it was expensive to scale distributed money. It has been technically possible for the past ten years, but it disrupts existing financial systems, and financial systems are difficult to change.

Isn’t a money loan from a bank just the same as a money loan of a prepayment from a Co-op Member?

No.  The Co-op is a community. The community gets the benefit from the actions of the Co-op members. The Co-op community as a whole does not repay the loan nor does it pay interest. How much each individual shares in the benefit depends on the Co-op rules for distribution. Think social insects. How much benefit does an individual bee get from doing a task like feeding Queen Bee? With a Water Rewards Co-op, the community as a whole does not pay interest or repay any loan money. Those costs are avoidable costs for the community.

What Economic Theories explain Water Rewards?

The closest theories that explain Rewards come from the broad church of Evonomics.  Water Rewards is an instance of a complex adaptive system where autonomous entities co-operate to achieve a given outcome. In this case, it is the economically sustainable exploitation of a natural resource.  Most economic theories are based on the idea of free-markets setting the price for a goods or service.  With Water Rewards the economic idea is for a finite resource to provide the greatest value to a community for the least cost.

2 thoughts on “Water Rewards FAQ

  1. Hi Kevin
    I wanted to login to ACT water rewards Co-op following your letter in C Times 25/1/17 but found only a Facebook option – I don’t have an account. Is there an internet option?


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