Online stock market game may help predict eco disasters
13 Dec 2008, 1252 Hrs

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London, Dec 13 An online stock market game could be used to forecast the availability of water, as well as predict eco disasters more accurately than the best computer models used by environmental scientists.

According to a report in New Scientist, the online market has been developed by a team from the government agency CSIRO Sustainable Ecosystems in Canberra, Australia, and the University of Karlsruhe, Germany.

Known as the "Australian Knowledge Exchange", the online stock market works by giving traders 100,000 Australian dollars play money and 1000 stocks in each of five reservoirs in New South Wales.

The stocks pay out each month according to the level of the dam. If the dam is full, they are worth 100 dollars. Traders can profit by buying stocks for less than their final value, or by selling them for more.

CSIRO's Stuart Whitten said that if the market proves to be a better predictor of water levels than existing computer models, it could help manage other environmental issues such as animal extinctions and bushfires.

The developers' ultimate goal is ambitious: for online markets to influence the government's environmental policy.

"This approach has huge potential in the environmental sector where there is a lot of uncertainty," said Josh Donlan of Cornell University in Ithaca, New York, and Advanced Conservation Strategies, a Utah-based NGO.

Although anyone can become a trader, the team's ideal players would be farmers, weather forecasters, people who live close to reservoirs, and computer modellers.

The market currently has about 50 traders, and the team hopes at least 50 more will join.

If the market predicts water levels better than computer models, it could even influence environmental policy.

According to Donlan, the market's real value will come from the wide-ranging knowledge of investors.

For example, when it comes to biodiversity, rather than rely solely on the IUCN Red List of Threatened Species, which may not account for all regional variations, markets that capture local knowledge could give a more accurate prediction of the size of bird populations. (ANI)

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