No standardized unit
An acre-foot's value depends on its location, timing, and the seniority of the right behind it. There's no common unit to list and trade, the thing every liquid market takes for granted.
A marketplace for water
Markets for the world's most critical resource.
Water is scarce and badly allocated. Hydraux is building the market infrastructure to trade it safely and transparently, starting in California's groundwater basins.
Constraint engineScreening
60 AFSELL · ALLOCATION
Sub-basin A · Parcel 14 → Parcel 31
- Consumptive use ET-VERIFIED
- Return flows PRESERVED
- Environmental flows CLEAR
- Seniority NO INJURY
- Basin balance WITHIN SGMA
Settled to ledger0x····
Illustrative trade
The problem
Scarce water, and no market to move it.
The water that remains in the West is badly allocated. One grower fallows a field for lack of water while a neighbor sits on a surplus they won't use. Both would gain from trading, but moving water means bilateral deals, legal review, and months of delay, so it rarely happens.
1,200yrs
The West's driest stretch in at least twelve centuries.
Nature Climate Change
~2MAF
Of groundwater overdraft in the San Joaquin Valley each year, pumped beyond what the aquifer replenishes.
PPIC
40Mpeople
Rely on the Colorado River, where demand has outrun supply.
US Bureau of Reclamation
The dysfunction shows up in the price. In a dry year, water can clear under $100 an acre-foot in one Central Valley district and above $2,000 in another within the same region. A working market closes that gap.
<$100One district
$2,000+Same region
20× spread
$50$250$1,000$3,000/AF
Why this is hard
You can't just put water on an exchange.
Markets move oil, power, and grain with ease. Water resists them, for three reasons.
Every trade has third parties
A field consumes only part of the water it diverts; the rest returns to the system, where others rely on it. Sell more than the consumed share and the water comes out of someone else's supply.
A century of senior rights
Water rights are a layered system of seniority and overlapping claims. Any valid trade has to respect that structure and the basin's physical limits at once, or a third party is harmed.
Water needs a market that understands water.
The approach
Built for the physics and the law of water.
Growers trade in the allocations they already hold. Around that, Hydraux provides three capabilities an ordinary exchange cannot.
Market design
Built to clear thin markets.
Water markets are thin: in any season only a handful of participants trade. Hydraux uses smart-market mechanisms from decades of market-design research to match counterparties and surface a fair price even when liquidity is low.
Blockchain
Trust without a middleman.
Water markets fail on trust: neighbors doubt each other, and few trust an agency to keep the books. Hydraux records every allocation and trade on a shared, immutable ledger no single party controls, so ownership is clear and the full history is auditable.
Constraint engine
Safe by design.
Before a trade clears, the constraint engine screens it against the basin's hydrological constraints, return flows, environmental flows, and seniority, using satellite measurement data. Any trade that would harm another user is trimmed or blocked, on every trade.
Efficient like a market, trustworthy like a public record, safe by design.
The architecture, end to end
Measure → Screen → Match → Settle01
Measure
Hydrological model
A basin model built on satellite evapotranspiration data quantifies consumptive use at the field level.
02
Screen
Constraint engine
Each order is tested against the no-injury rule: return flows, environmental flows, seniority, basin balance.
03
Match
Market design
Smart-market mechanisms clear thin markets through a continuous order book and periodic call auction.
04
Settle
Ledger + smart contracts
Cleared trades settle on an immutable ledger, updating allocations with a full audit trail.
How a trade clears
Every order is screened before it settles.
The no-injury review that normally takes months runs on every order, in seconds. A trade either clears in full, is trimmed to the safe maximum, or is blocked. Pick a scenario.
01 · Order posted#4102
60AF
Sell · groundwater allocation
02 · Constraint engineScreening
03 · Outcome
…
Waiting on the engine.
Ledger
- 0x8f2c#4099 · 40 AFSettled
- 0x1ad7#4100 · 25 AFSettled
Illustrative scenarios. Quantities, parcels, and thresholds are examples, not live data.
Who it's for
Built for both sides of the basin.
A district adopts Hydraux to run the market; its growers use it to trade.
Water districts · GSAs
A market your basin can run, and trust.
Demand management, no-injury enforcement, and a public record, without adding staff or months of review.
- 01
A demand-management tool for SGMA
Helps bring the basin into balance, with far less economic disruption than fallowing.
- 02
The no-injury rule, enforced automatically
The case-by-case review that normally takes months happens on every trade, in the background.
- 03
Less administrative burden
Standardized, auditable transactions replace bilateral deals, legal review, and manual accounting; the platform integrates with existing allocation systems.
- 04
Price discovery for the basin
A continuous order book and periodic call auction surface a visible price for water, instead of figures known only to a few brokers.
- 05
A transparent, tamper-proof record
Every allocation, trade, and constraint check is written to a shared ledger, auditable by the district and its stakeholders.
- 06
A shadow-market pilot, no risk
Run it on live allocations, prices, and constraints with nothing binding and no money moving. See how the market performs with your growers before you commit.
Growers · landowners
Your allocation, working for you.
Sell what you won't use, buy what you need, and see the price in the open.
- 01
Get paid for water you won't use
Earn on this season's unused allocation, instead of leaving its value on the table.
- 02
Secure water through a dry year
Carry a crop through a dry year, without a drawn-out negotiation.
- 03
A visible price, in the open
See what water actually trades for in your basin, instead of guessing or relying on a broker.
- 04
No middlemen, no months of waiting
Post an order and let the market find your counterparty and clear the trade.
- 05
Protected by design
Every trade is checked against the basin, so a deal can't take water you depend on.
- 06
Your allocation, your call
Trade in the units you already hold; you decide what to buy and what to sell.
Where we start, where we're going
Groundwater first. Surface water next. Then the world.
We start with California groundwater, where the state's groundwater law has, for the first time, given growers defined, measurable allocations, the foundation a market needs.
Groundwater
California basins where allocations and measurement already exist.
Surface water
The older, more tangled system of rivers and canals, where the same engine extends.
Global water
Stressed basins worldwide, most with no market infrastructure at all.
Why now
The conditions are finally right.
Measurement exists.
Satellite data now quantifies water use at the field level, making it possible to define a fair, tradable unit and screen trades against measured hydrology.
Policy creates participants.
SGMA is assigning quantified allocations down to individual landowners for the first time, creating thousands of potential counterparties where there were none.
Scarcity is acute.
Drought and record-low surface allocations are pushing demand onto groundwater and forcing agencies to find flexible tools.
Where we are
Testing the mechanism before anything binds.
The first version is a shadow market: it runs on live allocations, prices, and constraints, but no water or money changes hands, so a district can see it work before committing.
- PrototypeThe market and its constraint engine run end to end.
- Pilot in development with California water districtsDesigned around the allocations and constraints of large agricultural basins.
- Shadow-market pilotLive allocations and constraints, nothing binding.
Demo available on requestGet in touch →
Advisors
Hydraux is advised by leaders across market design, water economics, and water law.
- Water economicsAn architect of Australia's Murray-Darling water market
- Market designA Nobel laureate in economics
- Water lawLeading water-law scholars
Who's building it
Built at the meeting point of economics, technology, and water.
Market designData scienceWater lawFintech
Hydraux is the work of Bilen Essayas, an economist trained at Stanford in market design and data science, with a background investing in growth-stage fintech and enterprise software.
The idea grew out of research at Stanford designing water-management mechanisms for the Western US, working with a Nobel laureate economist and a leading water-law scholar. Bilen builds from first principles across economics, technology, and water.
The essayRead the original essay behind Hydraux
Get in touch
Run a shadow market in your basin.
For districts, growers, and anyone working on water. We'd like to hear from you.
essayas.bilen@gmail.com