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In my setting, a highly arid post-apocalyptic world, I am considering the use of a representative currency backed by clean, fresh water. The idea would be that the everyday person doesn't have to haul large quantities of water around all the time, they instead can trade in some kind of token, coin, or note for a specific quantity of drinkable water.

My reasoning is that since everyone requires water to survive, in a highly arid world it is a commodity that few take for granted. However, I am not certain that it would prove suitable in reality.

Some issues that I have considered, but despite my research I still don't know enough to properly evaluate:

  • Unlike gold or silver, water can become contaminated or evaporate.
  • Individuals who cash in their currency for water would then likely consume it.
  • Scarcity of water (beyond the usual), could cause massive swings in its value.

So, my question is: Would clean, fresh water be a suitable commodity to back a currency? Or, does it have too many issues to make it a viable choice?

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marked as duplicate by RonJohn, user535733, JBH, elemtilas, L.Dutch - Reinstate Monica Nov 12 '18 at 6:39

This question has been asked before and already has an answer. If those answers do not fully address your question, please ask a new question.

  • $\begingroup$ This is the basis of Bottle caps in the Fallout series. The value of bottles caps is backed by fresh and clean water. I believe it is part of Fallout 1 when this is mentioned. I'll leave a proper answer for someone with more knowledge in either currency or fallout. $\endgroup$ – Shadowzee Nov 12 '18 at 0:03
  • $\begingroup$ @Shadowzee Yes, I did read that in my research. Rather cool. However, I don't know whether the creators of Fallout actually determined at any point whether it'd actually work! $\endgroup$ – Arkenstein XII Nov 12 '18 at 0:09
  • $\begingroup$ @RonJohn The link you provided, while interesting, is about using water as currency, not about having a currency that is backed by water. $\endgroup$ – Arkenstein XII Nov 12 '18 at 0:40
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    $\begingroup$ "the everyday person doesn't have to haul large quantities of water around all the time, they instead can trade in some kind of token, coin, or note for a specific quantity of drinkable water." This is the post-apocalyptic version of the Gold Certificates (paper currency redeemable for gold) that the US issued from 1863–1933. $\endgroup$ – RonJohn Nov 12 '18 at 0:51
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    $\begingroup$ Classic what-about-currency-backed-by-X question, asked many times. Water, fire, magic, food, energy, chemicals, leaves, labor, sunlight -- it's all been asked before. All 'backed' currencies are bad ideas for various reasons...which is why most big modern economies don't use them anymore. $\endgroup$ – user535733 Nov 12 '18 at 0:56
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Go read Dune. Their entire community functions on water as a currency.

The properties you highlighted are true of any currency, even silver and gold backed currencies.

Take a look at the Spanish economy after the discovery of Silver in their South American Empire. It completely devalued their currency (sudden upswing in silver availability). And its not like people make jewellery out of silver, or computers out of gold - thus reducing the publicly available pure resource, even when those countries currency were backed by it.

As a comparison, today we use collections of bits (aka BitCoin and other crypto currencies) as stores of wealth. As a currency those bits hold worth because of provable work. YouTube's 3Blue1Brown has a decent visual video on it.

  • Everyday new bitcoins are being minted out of nothing but being the first to complete the next piece of work.
  • Individuals loose their cryptographic keys due to a host of environmental reasons, effectively deleting coins from the economy.
  • Also its relative scarcity and fixed volume does tend to swing its open-market value up and down.

In your water-currency driven world, every individual would be intimately aware of how expensive they are. They would take steps to conserve that wealth, much like a modern family attempts to conserve their money by choosing cheaper services, or improving their home with solar panels.

  • Homes would be built around water tanks. Both to collect dirty water for purification, but also to buffer them from a water shortage.
  • Homes would either have built in purifiers, or be attached to a community purify that exchanged fresh water for it. Home Gardens would be favoured both because of food prices, but for water recycling too.
  • Cities would (like today) operate massive water reservoirs. Though they would be made much more water tight, and probably under grounded.
  • Some cities might even enclose, by dome or being subterranean to capture water expelled by people walking in them.
  • Corporations would attempt to sway water prices in their favour, but water alone does not keep a human alive. There is building, growing, manufacture, mining, and other support services needed keep people alive, healthy, protected, and productive. So unless one company manages to monopolise all of this, the market power will be somewhat distributed.
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I think it's likely to not work very well. The biggest problem I can see is that the availability of water is pretty unpredictable, which will make it's value fluctuate like crazy, both over time and by location. Any time it rains, the value will plummet. Any region with access to any large body of water, fresh or not, will be extremely wealthy because they can sell that water. But within that region, water will be fairly cheap. It doesn't have to be fresh water either because you can desalinate the salt water. This is not economical in real life because none of our droughts are all that bad. But if the world was more like the one in Mad Max, it would be supremely profitable.

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Sounds exactly like Dune where people were paid in water to work on Arrakis.

People wore still suits that collected and recycled sweat and body waste but they still lost a small amount of water every day. Wind traps would collect water from the air and the water used as currency.

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