Water Trading Explained
Water markets and trade
Water trade allows for the efficient redistribution of water and is an important mechanism for managing the Murray-Darling Basin’s scarce water resources.
There are two main types of water rights traded in the Basin – entitlements and allocations:
- Water access entitlements are rights to an ongoing share of the total amount of water available in a system.
- Water allocations are the actual amount of water available under water access entitlements in a given season.
Rules operate together to govern water trade in the southern-connected Murray-Darling Basin, reduce restrictions on trade, improve transparency and access to information and
improve market confidence through a more effective water market.
There are overarching rules of the Commonwealth Basin Plan 2012, which all Basin States must comply with and rules in state water planning or water sharing instruments such as water allocation plans in South Australia and water sharing plans in New South Wales.
Water trading elements
A water licence stipulates how much water can be taken out of a river system, and is often aligned with a property.
Currently, Government appointed Water Authorities allocate the amount of water that can be taken from a river system as a percentage.
Government appointed Water Authorities provide specific trading rules that govern licence in relation to their licences.
Water User Needs
Water users identify specific volumes of water that they require for the irrigation season.
Water markets facilitate the trading of water between two parties. Waterfind provides the most extensive water markets in Australia.
Temporary, Permanent and Forward water trade
There are different types of water trade which are explained, including:
- Temporary water trade
- Permanent water trade
- Forward water trade
Although temporary transfers are solely transfers of allocation between New South Wales and Victoria, Queensland and South Australia both have the means of transferring an entitlement on a temporary basis, whereby the water is transferred for the current irrigation season and the purchaser is the beneficiary of any increase in allocation from the date of the transfer.
The purchaser will retain the parcel and receive any allocation granted upon it from the date of the transfer indefinitely or until the time at which they sell the entitlement.