NWC Australian Water Markets Report 2007-08

AUSTRALIAN WATER MARKETS REPORT 2007–2008

National Water Commission Australian Water Markets Report 2007–2008

© Commonwealth of Australia 2008 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and enquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Attorney General’s Department, Robert Garran Offices, National Circuit, Barton ACT 2600 or posted at www.ag.gov.au/cca. ISBN 978-1-921107-70-2 Australian Water Markets Report 2007–2008, December 2008 Published by the National Water Commission 95 Northbourne Avenue Canberra ACT 2600 Tel: 02 6102 6000 Email: [email protected] Date of publication: December 2008 Design by Spectrum Graphics sg.com.au Printed on Dalton Revive Silk and ENVI Silk Printed by Canprint An appropriate citation for this publication is: National Water Commission 2008, Australian Water Markets Report 2007–2008, NWC, Canberra

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National Water Commission • Australian Water Markets Report 2007–2008

Foreword by the Chair and Chief As well as providing an overall summary of the various water markets in operation around Australia, the report includes Executive Officer specific sections on each jurisdiction. Aside from the trading Water trading is a centrepiece of national water reform data, the report includes information about terminology, under the National Water Initiative (NWI). The National trade processes, governance arrangements and other aspects Water Commission (Commission) has strongly promoted the of Australia’s water markets. development of water markets in Australia. In doing so, it has Therefore, in addition to its role as a statement of activity, identified the need to improve market performance through the report also stands as an important information the provision of better information. resource, describing administrative/trading arrangements The production of the inaugural National Water Commission in each jurisdiction. Australian Water Markets Report 2007–2008 (Australian Looking to the future of the Australian Water Markets Water Markets Report) has been a twelve month project, Report, the Commission has collaborated with the Bureau funded through the Raising National Water Standards of Meteorology throughout this project, as the Bureau is program. It is anticipated that following the publication of expected to commence the collection of water trading data this inaugural report for the 2007–08 water year, further under the Water Act 2007 (Cwth) in 2009. This data will be a reports will be produced at the end of each successive water foundation for the production of the Australian Water Markets year and therefore progressively build an on-going source of Report 2008–2009. In the 2008–09 water year and future market information. years, the Commission intends to begin trend analysis. Production of the Australian Water The Commission would welcome feedback on the report. Markets Report Ken Matthews AO Before the production of the Australian Water Markets Report, Chair and Chief Executive Officer there was no consolidated, annual, nation-wide report on 17 December 2008 water trading around Australia. Mindful of the disparate sources of market information required to compile the report, the Commission engaged the Allen Consulting Group to assist with data collection and analysis in this inaugural year of publication. The Bureau of Rural Sciences was also engaged to produce maps for the report. The Commission acknowledges the assistance of the states and territories for providing water trading information for the Australian Water Markets Report. A number of private organisations also assisted in the provision of market information. Even so, the collection of trading data and other related water information remains very challenging. The Commission is pleased that new ground has been broken to establish a valuable new data resource for Australia. Content of the Australian Water Markets Report The Australian Water Markets Report is a statement of past activity for the 2007–08 water year. It is therefore not intended to be a guide to inform market participants for the future, but rather highlights trends and market activity over the course of an entire water year (and subsequent water years as it is reproduced annually).

National Water Commission • Australian Water Markets Report 2007–2008 iii

Table of contents

Foreword iii Explanatory notes xi Section 1—Executive summary—market highlights 1 Introduction Water supply Trading activity Legislative and administrative developments Environmental purchases Market performance issues Section 2—Overview of water markets 9 Summary Market resources Irrigation infrastructure operators and trading zones Principal mechanisms of trade Section 3—National summary of trading activity 21 Summary Water access entitlement markets Water allocation markets Estimated market turnover Government environmental water purchasing programs Urban water markets Section 4.1—Trading summary—Queensland 31 Summary Market operation Water supply conditions Queensland water allocation markets Queensland seasonal assignment markets Value of market turnover Section 4.2—Trading summary—Victoria 51 Summary Market operation Water supply conditions Victorian water share markets Victorian water allocation markets Value of market turnover

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Table of contents continued

Section 4.3—Trading summary—South Australia 73 Summary Market operation Water supply conditions South Australian water licence markets South Australian water allocation markets Value of market turnover Section 4.4—Trading summary—New South Wales 85 Summary Market operations Water supply conditions New South Wales water access licence markets New South Wales water allocation markets Value of market turnover Section 4.5—Trading summary—Western Australia 105 Summary Market operation Water supply conditions Western Australian water licence markets Western Australian water allocation markets Section 4.6—Trading summaries—Northern Territory, 113 Australian Capital Territory and Tasmania Summary Northern Territory Australian Capital Territory Tasmania Section 5—Market performance 119 Summary Transaction times for water access entitlement transfers Transaction times for water allocation trades Processing times in each jurisdiction Market depth indicators Other market indicators Appendix A 127

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List of figures and tables

Figure 1.1: National rainfall in the 2007–08 water year relative to long-term average 3 Figure 1.2: Murray-Darling Basin rainfall in the 2007–08 water year relative to long-term average 4 Figure 1.3: Storage levels for major water systems—Australia (as at 1 July 2008) 5 Figure 1.4: Water allocation announcements for selected supply schemes in the Murray-Darling Basin 6 during the 2007–08 water year Figure 1.5: Environmental water purchases in the 2007–08 water year 8 Figure 2.1: Principal water systems where trading is operational 10 Figure 2.2: Interstate trading zones in the connected Murray-Darling Basin system 16 Figure 3.1: Water access entitlement trading in each state and territory as a volume share of national total 22 Figure 3.2: Water access entitlement price differentials across water systems 23 Figure 3.3: Water allocation trading in each state and territory as a volume share of national total 24 Figure 3.4: Water allocation price differentials across water systems 25 Figure 3.5: Net change in water allocation volumes in Murray-Darling Basin trading zones due to 26 interstate water allocation trading

Figure 3.6: Interstate trade of water allocations 28 Figure 3.7: Commonwealth buy-back program—purchases by water system 29 Figure 4.1.1: Water levels in key Queensland storages supplying the market 37 Figure 4.1.2: Water allocation trading volumes and prices for Mareeba-Dimbulah supply scheme 42 Figure 4.1.3: Water allocation trading volumes and prices for Bundaberg supply scheme 43 Figure 4.1.4: Water allocation trading intensity 44 Figure 4.1.5: Weekly trading volumes of seasonal assignments 47 Figure 4.1.6: Seasonal assignments trading intensity 48 Figure 4.2.1: Water levels in key Victorian storages supplying the market 57 Figure 4.2.2: Water share trading intensity 62 Figure 4.2.3: Water share volumes traded and average prices—Northern Victoria 63 Figure 4.2.4: Water share volumes traded and averages prices—Greater Goulburn 64 Figure 4.2.5: Water share volumes traded and averages prices—Victorian Murray (Barmah to South Australia) 64 Figure 4.2.6: Water allocation trading intensity by trading zone 67 Figure 4.2.7: Net change in water allocation by trading zone 68 Figure 4.2.8: Water allocation trading volumes and prices—Greater Goulburn 69 Figure 4.2.9: Water allocation trading volumes and prices—Victorian Murray (Dartmouth to Barmah) 70 Figure 4.2.10: Water allocation trading volumes and prices—Victorian Murray (Barmah to South Australia) 70 Figure 4.3.1: Water levels in key storages supplying the South Australian market 77 Figure 4.3.2: Water licence trading intensity 79

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List of figures and tables continued

Figure 4.3.3: Water licence volumes traded and average prices—South Australian River Murray 80 Figure 4.3.4: Water allocation trade intensity 82 Figure 4.3.5: Prices and volumes of water allocation trade in the South Australian River Murray 83 Figure 4.3.6: Prices and volumes of interstate water allocation trades into the South Australian River Murray 84 Figure 4.4.1: Water levels in key New South Wales storages supplying the market 91 Figure 4.4.2: Water access licence trading intensity 97 Figure 4.4.3: Water access licence entitlement prices and volumes traded 98 —New South Wales general security (reliability) Figure 4.4.4: Water allocation trading intensity 101 Figure 4.4.5: Water allocation prices and trade volumes—Murrumbidgee 102 Figure 4.4.6: Water allocation prices and trade volumes—New South Wales Murray River 102 Figure 4.4.7: Water allocation prices and trade volumes—total New South Wales 103 Figure 4.5.1: Water levels in key Western Australian storages supplying the market 110 Figure 5.1: Approval times for water allocation subdivision, amalgamation and location changes—Queensland 121 Figure 5.2: Approval times for water licence transfers—South Australia 123 Figure 5.3: Approval times for water allocation trades—South Australia 123 Figure 5.4: Processing times for water access licence transfers—New South Wales 124 Figure 5.5: Approval times for assignment of water allocations—New South Wales 125

Table i: Water market information sources xiv Table 2.1: Water access entitlements on issue 11 Table 2.2: Water levels of major surface water storages supplying the Australian water markets 11 —as at 30 June 2008 Table 2.3: Irrigation infrastructure operators 15 Table 2.4: Principal exchanges and methods of operation 17 Table 2.5: Water market registers 17 Table 3.1: Water access entitlement trading activity 22 Table 3.2: Water allocation trading activity 24 Table 3.3: Prices for water allocations—by water system 25 Table 3.4: Interstate water allocation trades—origin and destination for the 2007–08 water year 27 Table 3.5: Estimated market turnover—gross value of water sales ($million) 28 Table 4.1.1: Queensland water trading terminology 32 Table 4.1.2: Water entitlements on issue as at 30 June 2008 33 Table 4.1.3: Water allocations on issue by resource operation plan area 34

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List of figures and tables continued

Table 4.1.4: Supplemented interim water allocations on issue 36 Table 4.1.5: Water entitlement shares by sector 37 Table 4.1.6: Queensland—water allocation announcements 38 Table 4.1.7: Water allocation transfers by resource operation plan area 40 Table 4.1.8: Water allocation transfers executed with or without a land sale 41 Table 4.1.9: Water allocation prices 42 Table 4.1.10: Water allocation leases 43 Table 4.1.11: Seasonal assignment trades 45 Table 4.1.12: Estimated value of market turnover 49 Table 4.2.1: Victorian water trading terminology 52 Table 4.2.2: Status of unbundling of Victorian water rights and entry on the water register 54 Table 4.2.3: Water entitlements on issue as at 30 June 2008—all Victoria 54 Table 4.2.4: Water entitlements on issue as at 30 June 2008—by water system in northern Victoria 55 Table 4.2.5: Approximate water entitlement shares by sector 57 Table 4.2.6: Victoria—water allocation announcements 58 Table 4.2.7: Water share transfers—northern regulated rivers 58 Table 4.2.8: Bundled water entitlement transfers—southern regulated rivers 59 Table 4.2.9: Change in location of water shares—northern regulated rivers 60 Table 4.2.10: 10% non water use limit 61 Table 4.2.11: Limited term transfers 61 Table 4.2.12: Prices for water shares 63 Table 4.2.13: Water allocation trades—net change in allocation volume by zone 65 Table 4.2.14: Water allocation trades—southern regulated rivers 66 Table 4.2.15: Interstate allocation trades into and out of Victoria—DSE data 66 Table 4.2.16: Interstate allocation trades into and out of Victoria—MDBC data 66 Table 4.2.17: Prices for water allocation trades—regulated rivers 69 Table 4.2.18: Estimated value of market turnover—regulated rivers, northern Victoria 71 Table 4.3.1: South Australian water trading terminology 74 Table 4.3.2: Water licences on issue (taking and holding allocations) 75 Table 4.3.3: Water entitlement shares by sector—River Murray 77 Table 4.3.4: South Australia—River Murray water allocation announcements 77 Table 4.3.5: Water licence transfers 78 Table 4.3.6: Prices for water licences 80

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List of figures and tables continued

Table 4.3.7: Water allocation trades and net change in allocation volumes by region 80 Table 4.3.8: Interstate water allocation trades into and out of South Australia—MDBC data 81 Table 4.3.9: Water allocation prices 83 Table 4.3.10: Estimated value of market turnover 84 Table 4.4.1: New South Wales water trading terminology 86 Table 4.4.2: Water entitlements on issue as at 30 June 2008 88 Table 4.4.3: Water access licences on issue by water source—as at 30 June 2008 88 Table 4.4.4: Approximate water entitlement shares by sector 90 Table 4.4.5: New South Wales—water allocation announcements 92 Table 4.4.6: Breakdown of entitlement transfers by type of dealing 94 Table 4.4.7: Water entitlement transfers by valley and water resource 94 Table 4.4.8: Transfer of entitlement out of irrigation districts 96 Table 4.4.9: Term transfers 96 Table 4.4.10: Prices for water access licences 98 Table 4.4.11: Water allocation assignments—regulated river water sources 99 Table 4.4.12: Interstate water allocation trades into and out of New South Wales—MDBC data 100 Table 4.4.13: Prices for water allocations 100 Table 4.4.14: Estimated value of market turnover 103 Table 4.5.1: Water licences on issue as at 30 June 2008 107 Table 4.5.2: Water licences on issue by region—as at 30 June 2008 107 Table 4.5.3: Water entitlement shares by sector 110 Table 4.5.4: Groundwater licence transfers 110 Table 4.5.5: Prices for water licence transfers 111 Table 4.5.6: Water allocation trades in Harvey Water irrigation districts 111 Table 4.5.7: Prices for water allocation—surface water 112 Table 4.6.1: Groundwater licences on issue—by aquifer 114 Table 4.6.2: Water entitlement on issue—by water control districts 116 Table 4.6.3: Statutory water dealings—Tasmania 117 Table 5.1: Approval times for water allocation trades—Victoria 122 Table 5.2: Market depth indicators for each Australian state/territory 125 Table 5.3: Market indicators for each Australian state/territory 126

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 ix

Explanatory notes

National Water Commission • Australian Water Markets Report 2007–2008

Explanatory notes

Reporting period and scope xii

Water market terminology xii

Reporting conventions xii

Information sources xiii

Disclaimer xv

National Water Commission • Australian Water Markets Report 2007–2008

Explanatory notes Water market terminology The objective of this inaugural Australian Water Markets Various terms have been adopted by Australian jurisdictions to describe statutory water rights and dealings. In some Report is to inform market participants and other interested cases different terms are used to refer to essentially the parties about the structure of water markets in Australia, same market product or dealing. To avoid confusion, by documenting trading products, activity and prices. the Australian Water Markets Report generally uses Therefore considering the varied audience for this report, terms that are consistent with those developed by the and the inconsistencies in market structure and terminology National Water Initiative (NWI). around Australia, it is important to note the key terminology The exception to this is in Section 4 of the report, which and reporting conventions used in the report. contains the trading summaries for each jurisdiction. In that Reporting period and scope section, trading statistics are reported using the terminology adopted by the particular jurisdiction, with an accompanying The Australian Water Markets Report reflects the 2007–08 table of definitions for each term and how they relate to the water year, which is the twelve month period from 1 July 2007 NWI terms. to 30 June 2008. In this inaugural year it does not attempt The principal NWI definitions that are used in this report are: to articulate trends in comparison with previous water years. As the Australian Water Markets Report will be produced ++ water access entitlements—‘a perpetual or ongoing in subsequent years, this comparison between years will entitlement to exclusive access to a share of water from a specified consumptive pool as defined in the relevant become available over time. water plan’ and The report is a statement of past activity for the 2007–08 ++ water allocations—‘the specific volume of water allocated water year. As it is published after the end of the 2007–08 to water access entitlements in a given season, defined water year, it is not intended to be a contemporary guide to according to rules established in the relevant water plan.’ inform market participants on their day to day water trading decisions. Instead, it highlights trends and market activity The term ‘entitlement’ is often used as a generic description of different water products, including bundled water rights. over the course of the recent water year—information that is informative not only to direct market participants, Reporting conventions but also to regulators, policy makers and other indirect A number of conventions have been used in capturing and market participants. setting out the market information. The Australian water market consists of a number of separate 1. Definition of a water trade markets of varying size, activity and connectivity with each other. There are water resources with tradeable products in For the purpose of this report, a water trade is defined as one each state and territory in Australia. The Murray-Darling Basin of the following transactions: (often referred to as the Basin) is also comprised of a number ++ A transfer of water access entitlement from one legal entity of markets and covers parts of Queensland, New South Wales, to another, with or without a change in location. This was the Australian Capital Territory, Victoria and South Australia. formally referred to as a ‘permanent’ water trade. Therefore, while a national summary is provided, and trading is possible across large distances in the Basin, this report is Transfers made as part of a land sale are included in the structured as a review of a number of distinct markets. report as a water trade. Where possible, these transactions have been identified separately to those transfers made The focus of the report is on the market institution. Therefore, independently of a land sale. it does not contain statistics on volumes of water used by • Transfer of ownership between related parties, often various sectors, the efficiency of water use or the economic involving zero consideration, are included in the value of different water uses. trade data and are not reported separately due to the This inaugural report focuses on surface water as the incapacity of existing water registers to single these water source for trading activity. Groundwater trading also trades out. (The incidence of a zero price could be occurs in certain areas of Australia and this is reflected in for a number of reasons other than trade between the Australian Water Markets Report. There may potentially related parties.) be other man-made water sources that become part of • Transfers accompanied by a change in location from Australia’s water markets in future years. one water source, delivery system or trading zone to

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another are included in the report and, where possible, 3. Price information are identified separately to ‘internal transfers’ made The availability and quality of price information for water within a trading zone or water source. access entitlements and water allocation assignments is of • Dealings that vary the location of a water access variable quality, depending on the depth of market. Prices entitlement, without an accompanying transfer of for water access entitlements are generally of poor quality ownership, are not included in the report. due to the comparatively small volume of trade of this product (relative to allocation trades) and the fact that most ++ An assignment (or trade) of water allocation from one jurisdictions do not have a statutory requirement for buyers authorised water user to another, or between water and sellers to disclose price. accounts held by the same water user, with or without a change in location. This was formerly referred to as a This report contains price information from a number of ‘temporary’ water trade. sources, as indicated below the tables and charts. In all cases, zero prices and outliers have been removed from the • While the movement of water between accounts held data. A ‘standard deviation’ statistic has been reported to by the same legal entity should arguably not be counted indicate the amount of price variation around the mean (or as a water trade, the registers and information systems average) price. maintained by the states and territories typically do not identify these dealings separately to transactions 4. Data availability between two independent parties. For the purposes of this report: • Water allocation assignments within a trading zone or ++ a dash (-) indicates that trading was not possible in the water source are reported separately to assignments out 2007–08 water year of and into a zone/water source. ++ a zero indicates that trade was possible, but none occurred 2. Trading volume, activity and net change ++ n/a indicates that the data was not available. Three measures of market activity are defined and reported: Information sources ++ The total volume of water access entitlement transfers or water allocation trades for a particular jurisdiction, zone or Water markets differ in each jurisdiction. Each state and water source is calculated to equal the total volume (ML) territory has at least one department that facilitates the of trades within the jurisdiction/zone/water source plus the operation of the water market within that jurisdiction. volume (ML) of outbound trades. (Double counting would Each jurisdiction also has a statutory register to record water occur if both inbound and outbound trades were counted access entitlement transfers and other dealings. (The various because an outbound trade from one jurisdiction/zone/ governance arrangements for water trading in each water source is an inbound trade to another). jurisdiction are summarised in Appendix A.) ++ The trading activity experienced by a particular trading Information for the report is therefore compiled from zone or water source is measured in relative terms and is numerous sources, as depicted in the following table. The defined as the total volume of trades in/out and within a Commission gratefully acknowledges the assistance of the zone, divided by the total nominal volume of entitlement in organisations that contributed information to the report. that zone. A relative measure is used so as to ensure that Where information has been provided directly by a source trading activity for each zone can be compared on an equal and reproduced without alteration or interpretation, it is noted basis, to consider any differences in activity due to differing in the report accordingly. However where data has been volumes of issued entitlement in each zone. Trading activity provided and then manipulated through comparison, collation is measured and mapped separately for water access or some other form of analysis before being presented in this entitlement transfers and water allocation trades. report, it remains unsourced. ++ The net change in water access entitlement volume The dates for the finalisation and reconciliation of trading or water allocation holdings for a particular trading information for each water year varies among the various data zone, water source or jurisdiction is calculated as the sources. In some cases this process is lengthy and therefore difference between inbound trades and outbound trades, this report is based upon information that is correct as of in megalitres. This statistic is mapped for each major 1 December 2008. water system.

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 xiii

Table i: Water market information sources

Organisation State or Information Territory Department of Sustainability and Environment VIC Entitlements on issue, trading volumes for northern Victoria, allocation and water access entitlement prices. Water storage levels Department of Land, Water and SA Entitlements on issue, trading volumes, prices for Biodiversity Conservation water allocation and water access entitlements, allocation announcements Water storage levels Department of Natural Resources and Water QLD Entitlements on issue, trading volumes, prices for water access entitlements Department of Water and Energy NSW Entitlements on issue, trading volumes, prices for water access entitlements, allocation announcements. Water storage levels Department of Lands NSW Entitlements on issue and trading volumes (Water access entitlements only) Department of Water WA Entitlements on issue, trading volumes, some price information Territory and Municipal Services ACT Entitlements on issue, trading volumes Department of Natural Resources, Environment NT Entitlements on issue, trading volumes and the Arts Department of Primary Industries and Water TAS Entitlements on issue, trading volumes Murray-Darling Basin Commission Multiple Interstate trading statistics jurisdictions Water infrastructure operators Murray Irrigation Limited NSW Water access entitlement and water allocation trades within irrigation scheme and external trades off or onto bulk licence Coleambally Irrigation Cooperative Limited NSW As above Western Murray Irrigation Limited NSW As above Jemalong Irrigation Cooperative NSW As above Murrumbidgee Irrigation Limited NSW As above

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Table i: Water market information sources continued

Organisation State or Information Territory WA Water Corporation WA WA water storage levels Harvey Water WA As above Ord Irrigation Cooperative WA As above SunWater QLD As above, plus storage levels, water allocation trades (seasonal assignments), allocation announcements Central Irrigation Trust SA As above Renmark Irrigation Trust SA As above Southern Rural Water VIC As above Grampians Wimmera Mallee Water VIC As above National Irrigation Corporations Water Multiple Water access entitlements on issue to water users Entitlement Register (NICWER) jurisdictions serviced by private infrastructure operators on the NICWER register Goulburn-Murray Water VIC Water allocation announcements Brokers and exchanges WaterExchange Water allocation prices Watermove Water allocation prices Murrumbidgee Water Exchange Water allocation and water access entitlement prices Other Bureau of Meteorology Rainfall

Disclaimer The Commission and its consultant, the Allen Consulting Group, have made reasonable endeavours to ensure the accuracy of this document. However, the information contained within this document should not be relied upon for commercial dealings and the accuracy and currency of the material should be verified by users with the relevant state and local authorities. The Commission and the Allen Consulting Group will not be liable under any circumstances for any loss of profits or damages of any kind arising from any use of or reliance upon the information in this report.

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 xv

Section 1 Executive summary 1.1 Introduction 2 Market highlights 1.2 Water supply 3 1.3 Trading activity 6

1.4 Legislative and administrative 7 developments

1.5 Environmental purchases 7

1.6 Market performance issues 8

1.1 Introduction In summary, the Australian water market consists of a number of separate markets in each state and territory of varying size, The executive summary of the National Water Commission’s activity and connectivity with each other. inaugural Australian Water Markets Report provides some of the market highlights for the 2007-2008 water In terms of the location, volume and value of trades, the year, which are explained in detail in the body of the Australian Water Markets Report records that water was report. It begins with an overview of the water supplies to traded in markets in every jurisdiction in Australia during Australia’s water markets, with particular focus on rainfall the 2007-08 water year, with the exception of the Northern and storage levels in the Murray-Darling Basin. Water Territory. While not every transaction that occurred during scarcity and the variability of the associated water allocation the water year is reported (or reported in full) to authorities, announcements have been two of the main drivers of market 4087 water access entitlement transfers and 28 118 water activity this water year. allocation trades were recorded around Australia. This amounts to 32 205 trades that were recorded during the At the same time, the 2007-08 water year has witnessed 2007-08 water year, which, aside from those that were not significant legislative and administrative developments reported, averages as nearly 90 water trades every day of the with the passage of the Water Act 2007 (Cwth). The role of year around Australia. government in the water market has been the focus of much attention this year, with the Commonwealth Government’s In fact the trading data demonstrates that trading activity is Restoring the Balance in the Murray-Darling Basin Program not constant throughout the year, as the majority of trade joining other government water purchasing programs already occurs between October and March. Therefore during the present in the market. peak summer months of water trading, many hundreds of transactions may occur around Australia in a single day. Following this executive summary in Section 1, the report provides an overview of the structure and operation of The 32 205 trades in the 2007-08 water year involved Australia’s water markets (Section 2) followed by a national 2515 GL of water, approximately two thirds (1594 GL) of summary of trading activity (Section 3). which was water allocation trade. 921 GL of water access entitlements were traded, of which 69 GL were purchased Section 4 of the report contains detailed trading data for the by governments for the environment—approximately markets within each jurisdiction. The majority of Australia’s 8% of the total water access entitlement trade volume. water trading activity occurs in the Murray-Darling Basin, and This 69 GL includes both high and low reliability water, but therefore the majority of the Australian Water Markets Report not the 104 GL of very low reliability supplementary access focuses on the water markets in Queensland (Section 4.1), entitlement that was also purchased through the NSW Victoria (Section 4.2), South Australia (Section 4.3) and RiverBank program. New South Wales (Section 4.4). Western Australia’s trading information is provided in Section 4.5, while the Northern Considering the incomplete trading and price information Territory, Australian Capital Territory and Tasmania are around Australia it is difficult to quantify the value of summarised together in Section 4.6 (due to their limited size). Australia’s water markets. This report estimates that the total value of the transactions in the 2007-08 water year was Having presented the trading data for Australia’s water approximately $1.68 billion. markets, the Australian Water Markets Report reviews market performance issues in Section 5. In particular, the issue of transaction processing times is reviewed, but other market indicators are also provided. Appendix A concludes the report by illustrating in detail, the governance arrangements for water trading in each jurisdiction in Australia.

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Market Highlights Market Executive Summary 2008-12-01 Map document: National_Rainfall_07-08_a4_im_20081201_HelveticaNeuLite.mxd km 200-300% 150-200% 124-150% 100-125% 80-100 % 60-80% 40-60% 20-40% <20% 0 500 1,000 1961 to to 1990. 1961 Rainfall Percentages Rainfall Mean of Percentage Relative to long term average for Revised DRAFT IncludesNWC comments 1 July 2007 to July 2007 1 2008 June 30 Section 1 Brisbane

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Data Sources: Rainfall data: Australian Bureau of Meteorology (2008). Topographic data: Geoscience Australia (2002-08). Australia Geoscience data: Topographic (2008). Meteorology of Bureau Australian data: Rainfall Sources: Data Map produced by the Bureau of Rural Sciences © Commonwealth of Australia. of Commonwealth © Sciences Rural of Bureau the by produced Map 1.2 Water supply—well below average in most regions below average supply—well 1.2 Water Australia during the 2007–08 water year (Figure 1.1). There was significant variability in rainfall across with much of the southern part Basin receiving only The Murray-Darling Basin experienced severe drought over the course of 2007–08 water year, 60 per cent or less of long-term average rainfall for the region (Figure 1.2). to long-term relative average year in the 2007–08 water National rainfall 1.1: Figure

nurd y an by incurred pro a a eut f cesn, sn o rlig pn n o te nomto o dt st u i ti pbiain o h mxmm xet emte b law. by permitted extent maximum the to publication this in out set data or information the of any upon relying or using accessing, of result a as person y

publication. Notwithstanding, the Bureau of Rural Sciences, its employees and advisers disclaim all liability, including liability for negligence, for any loss, damage, injury, expense or cost cost or expense injury, damage, loss, any for negligence, for liability including liability, all disclaim advisers and employees its Sciences, Rural of Bureau the Notwithstanding, publication. The Australian Government acting through the Bureau of Rural Sciences has exercised due care and skill in the preparation and compilation of the information and data set out in this this in out set data and information the of compilation and preparation the in skill and care due exercised has Sciences Rural of Bureau the through acting Government Australian The

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 3

2008-12-01 Map document: MDB_Rainfall_07-08_a4_im_20081201_HelveticaNeuLite.mxd 500 400 300 km 200 150-200% 124-150% 100-125% 80-100 % 60-80% 40-60% 20-40% <20% Murray-DarlingBasin 100 Rainfall Percentages Rainfall 0 30 2008 June 30 1 July 2007 toJuly 2007 1 1961 to to 1990. 1961 Percentage of Mean of Percentage Relative to long term average for Revised DRAFT IncludesNWC comments Brisbane

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nurd y n pro as person any by incurred rsl o acsig uig r eyn uo ay f h ifrain r aa e ot n hs ulcto t te aiu etn pritd y law. by permitted extent maximum the to publication this in out set data or information the of any upon relying or using accessing, of result a

4 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

At the close of the 2007–08 water year, many of the major these regions or exceeding the annual average by up to 50 water storages supplying New South Wales, Victorian and per cent. Due to good summer rainfall, dam levels in central South Australian irrigation areas were only at 20 per cent of full and northern Queensland were at 90 to 100 per cent full capacity, or less. Tasmania, too, suffered a dry year with two by February 2008. The south west of Western Australia also of its major storages at just 30 per cent or less (Figure 1.3). experienced a return to long-term average rainfall over the winter of 2008. Market Highlights Market

Parts of Queensland and northern New South Wales fared Executive Summary better, with rainfall either equalling the long-term average for

Figure 1.3: Storage levels for major water systems—Australia (as at 1 July 2008)

Tasmania

Miena Rockfill

Craigmore Dam

Western Australia Tasmania Section 1 Miena Rockfill Harvey River Basin Craigmore Dam

MURRAY VALLEY Western Australia Harvey River Basin

Victoria MURRAY VALLEY Loddon Basin Victoria Campaspe Basin Loddon Basin Campaspe Basin Broken Basin Broken Basin Goulburn Basin Goulburn Basin

New South Wales New South Wales Murrumbidgee Valley Murrumbidgee Valley Macquarie Valley Macquarie Valley Namoi Valley Gwydir Valley Namoi Valley

Gwydir Valley Queensland Pioneer River Queensland Nogoa Mackenzie

Pioneer River Burdekin Haughton Bundaberg Nogoa Mackenzie

Burdekin Haughton

Bundaberg

0 10 20 30 40 50 60 70 80 90 100

Per cent of storage capacity

The severity of the drought meant that water allocations South Australia only delivered allocations of between 30 per were at extremely low levels in most of the southern cent and 55 per cent of entitlement volume. Low reliability Murray-Darling Basin. Even high reliability classes of classes of water access entitlement were at, or close to, zero water access entitlement in New South Wales, Victoria and allocation for most of 2007 (Figure 1.4).

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 5

Figure 1.4: Water allocation announcements for selected supply schemes in the Murray-Darling Basin during the 2007–08 water year

Macintyre Brook (QLD) medium priority Nogoa Mackenzie (QLD) medium priority Murrumbidgee (NSW) high security NSW Murray high security Murrumbidgee NSW Murray Goulburn (VIC) high reliability VIC Murray high reliability SA Murray high security

100 90 80 70 60 50 40

Percent allocation 30 20 10 0

7-Jul-07 31-Jul-07 9-Aug-07 2-Sep-07 2-Oct-07 2-Nov-075-Nov-07 2-Dec-074-Dec-07 1-Jan-083-Jan-08 4-Feb-08 3-Mar-08 1-Aug-07 14-Aug-0728-Aug-07 16-Sep-0730-Sep-07 14-Oct-0731-Oct-07 13-Nov-0714-Nov-07 10-Dec-0711-Dec-0715-Dec-0716-Dec-0719-Dec-07 14-Jan-0816-Jan-0831-Feb-08 14-Feb-08 16-Mar-0831-Mar-08

1 July 2007 to 30 June 2008

Table 2.2 in the body of the report provides a comprehensive ++ the average price of water allocation in the New South review of surface water supplies to Australia’s water markets. Wales Murray and Murrumbidgee reached a peak of Section 4 of this report contains water supply conditions and $1100 per ML in October 2007, up from just $150 per ML allocation announcements for each individual jurisdiction. at the start of the 2007–08 water year 1.3 Trading activity—increased as a ++ a similar price increase was experienced in northern consequence of the drought Victoria. By 1 July 2008 prices of water allocation had dropped back to around $400 per ML Water scarcity contributed to increases in both trading ++ the price of high reliability water access entitlement in the volumes and price during the 2007–08 water year. Murray-Darling Basin varied within the range of $1000 With respect to the volume of trade in the 2007–08 and $2500 per ML water year: ++ water access entitlement prices were less volatile than ++ of the total of 1594 GL of water allocation traded water allocation prices. Australia wide, 14% of this was interstate trade In terms of water movement within the Basin: ++ water access entitlement transfers were a smaller, but ++ Reduced rainfall prompted strong demand for allocation nevertheless significant, share of the market, constituting water, particularly in horticultural regions of South Australia 921 GL of trade, though by comparison there was and Victoria negligible interstate trade (200 ML). ++ Approximately 148 GL of water allocation was traded into Section 3 illustrates the dominance of the markets within the South Australia over the course of the 2007–08 water year, Basin states, as they accounted for: with most of this from New South Wales (100 GL) and the ++ 94% of Australia’s total water access entitlement trade rest from Victoria (48 GL). (Section 3.2) Australia-wide, high prices and strong demand resulted in ++ 99% of Australia’s total water allocation trade (Section 3.3) approximately $1.68 billion of water sales nationally during the 2007–08 water year. Although there was almost twice ++ 99.9% of the estimated market turnover (Section 3.4). the volume of water allocation traded in comparison with Therefore considering the size and variability of trade prices water access entitlements, each made up approximately half within the Basin (the one connected market):

6 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

of the actual value of sales (reflecting the higher price for These government environmental purchasing programs water access entitlements). have gained significant public attention during the 2007–08 water year. Section 3 of this report is a national summary of trading activity and provides an overview of Australia’s water In 2008, the Commonwealth Government announced the markets. Subsequently, Section 4 of this report presents $12.9 billion Water for the Future plan for the Murray-Darling Market Highlights Market trading data from each separate jurisdiction. Basin. The plan included a $3.1 billion commitment over Executive Summary 10 years to buy water in the Basin for environmental purposes 1.4 Legislative and administrative through the Restoring the Balance in the Murray-Darling developments Basin Program. Australia’s water markets continued to mature this year The first $50 million tender package was announced in as a result of legislative and administrative developments. February 2008 and although the purchases will all be settled Significantly, this year witnessed the passage of the after the 2007–08 water year, approximately 35 GL of water Water Act 2007 (Cwth), the bulk of which came into force access entitlements were purchased from seven of the on 3 March 2008. The Water Act 2007 (Cwth) has important Murray-Darling Basin’s 18 catchments. implications for Australia’s water markets, including: Secondly, RiverBank (managed by the New South Wales Section 1 ++ establishment of the Commonwealth Environmental Government) acquired approximately 118 GL of entitlement over Water Holder the 2007–08 water year. However, most of this water entitlement ++ establishment of the Murray-Darling Basin Authority was supplementary access licence, thus representing a very (MDBA) to develop a whole of Basin plan, incorporating low reliability product. trading rules Finally, the MDBC’s The Living Murray Pilot Environmental ++ the Australian Competition and Consumer Commission’s Water Purchase Project also secured 20 GL of water access (ACCC) role in advising the MDBA on water trading entitlement through a tender system during the 2007–08 rules in the Basin, advising the Minister on market rules water year. Most of the offers to sell water originated from the and charges in the Basin, and its role in monitoring Murray Valley. The prices at which entitlement was purchased and enforcement under this program remain commercial-in-confidence. ++ the Bureau of Meteorology’s role in the collection of water Across the three programs, a total of 69 GL of low and high information data. reliability water access priority entitlements were purchased (the remaining 104 GL in Figure 1.5 was supplementary The activities of the Council of Australian Governments access licence—a very low reliability product). The 69 GL (COAG) during the 2007–08 water year are expcted to be total represents about eight per cent of the total water access important for market performance in future water years. entitlement trade in the 2007–08 water year. A number of administrative reforms have been important A more detailed review of the various government purchasing during the 2007–08 water year, such as the implementation programs is provided in Section 3.5. of Tagged interstate water access entitlement trade. In addition to government reforms, there have also been industry-led developments, such as the growth of the Australian Water Brokers Association and the increasingly sophisticated products and services offered by water market intermediaries. Appendix A provides a detailed description of the water trading governance arrangements in place around Australia during the 2007–08 water year. 1.5 Environmental purchases—heighten market demand In recent years, governments have sought to increase environmental water flows in the Murray-Darling Basin by purchasing water access entitlements from willing sellers.

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 7

Figure 1.5: Environmental water purchases in the 2007–08 water year

NSW RiverBank - Commonwealth - General Security (14 GL) Restoring the Balance in the Murray-Darling Basin Program (35 GL)

MDBC - The Living Murray Pilot Environmental Water Purchase Project (20 GL)

NSW RiverBank - Supplementary Access (104 GL)

1.6 Market performance issues ++ streamlining transaction processes With the large amount of trading activity that occurred during ++ reducing approval times for water trades. the 2007–08 water year, much attention was focused on While many of these market performance issues have been the issues of market performance such as: subject of COAG deliberations this year, Section 5 focuses upon ++ lack of market information (particularly price information) transaction processes and the time involved with processing certain dealings within Murray-Darling Basin states. ++ incompatibility of water registers around Australia ++ the conduct and regulation of water market intermediaries

8 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 Section 2 Overview of 2.1 Summary 10 water markets 2.2 Market resources 10 2.3 Irrigation infrastructure operators 15 and trading zones

2.4 Principal mechanisms of trade 17

2.1 Summary tradeable entitlement volume is distributed through irrigation infrastructure operators, the major operators located in each The following section provides information on the location and state are described in Table 2.3. Similarly, as most of the characteristics of Australia’s water markets (Figure 2.1) before tradeable entitlements in Australia exist within the Murray- the actual trading activity is presented in Sections 3 and 4. Darling Basin, the interstate trading zones which constitute Section 2.2—Market resources, presents a summary of the Basin as a whole are shown in Figure 2.2. the water access entitlements on issue around Australia in Section 2.4 notes the principal mechanisms of trade. The Table 2.1. The amount of water that is available in storage majority of trades are facilitated through intermediaries (such (Table 2.2) has a significant bearing on the water allocations as the principal exchanges in Table 2.4), but may also occur announced as a percentage of those water access entitlements. directly between buyers and sellers. Various trade information The main irrigation infrastructure operators and trading is then recorded on the water markets registers that are in zones are shown in Section 2.3. As a significant amount of operation around Australia (Table 2.5).

2.2 Market resources Figure 2.1: Principal water systems where trading is operational

Darwin Ord Irrigation Principal Water Systems Where Trading is Operational

Dominant Water Source NT Surface Water Groundwater QLD

Gascoyne Water WA Irrigation

SA Brisbane NSW

Perth Harvey Water Preston Valley Sydney Irrigation Adelaide Canberra VIC Melbourne

Winnaleah Irigation 0 500 1,000 TAS Cressey-Longford South East IA Hobart km

Data Sources: Water system boundaries: Australian Water Resources 2005 surface water management areas; WA Dept. of Water; Harvey Irrigation; NT Dept. of Natural Resources, Environment, The Arts and Sport; Qld Water Supply Scheme boundaries from Sunmap publications; Murray Irrigation Limited; Murray-Darling Basin Comission; Victoria Dept. Sustainability and Environment. Topographic data: Geoscience Australia (2002-08). Map produced by the Bureau of Rural Sciences © Commonwealth of Australia.

10 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 2.1: Water access entitlements on issue

Regulated rivers Unregulated rivers Groundwater Number Volume (GL) Number Volume (GL) Number Volume (GL) NSW 10 401 8464 1345 110 2867 1004 VIC 37 260 3550 7704 162 6236 490 QLD 10 893 3142 1018 349 369 76 SA 3703 980 223 1 5719 215 WA 844 906 0 0 16 031 1609

TAS 0 0 2826 1471 0 0 Overview markets of water NT 0 0 82 228 247 266 ACT 27 64 0 0 114 1 Australia 63 128 17 106 13 198 2321 31 583 3661

Note: (a) NSW includes Water Management Act 2000 water access licences but excludes Water Act 1912 licences. While both are tradeable, the trading data contained in this report pertain to water access licences. (b) VIC only includes northern water systems. Section 2 (c) QLD includes water allocations and interim water allocations but excludes water licences, which are not tradeable. (d) SA only includes volumetric entitlements (taking allocations). Area-based entitlements not shown. (e) No 2007–08 water year information is available for the ACT. Data shown is 2004–05 data from ABS Water Access Entitlements, Allocations and Trading report

Table 2.2: Water levels of major surface water storages supplying the Australian water markets—as at 30 June 2008

Capacity at full supply Storage level as at Per cent of capacity Level 30 June 2008 (GL) (GL) Victoria Goulburn Basin Eildon 3390 474 14% Waranga Basin 411 52 13% Broken Nillahcootie 40 9 23% Mokoan 365 14 4% Campaspe Eppalock 312 20 6% Loddon Cairn Curran 148 7 5% Tullaroop 74 4 5% Ovens

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 11

Table 2.2: Water levels of major surface water storages supplying the Australian water markets—as at 30 June 2008 continued

Capacity at full supply Storage level as at Per cent of capacity Level 30 June 2008 (GL) (GL) William Hovel 14 12 86% Buffalo 24 12 49% Wimmera Rocklands 348 3 1% Thomson Thomson (M.W.) 1068 194 18% New South Wales Border Rivers Glenlyon Dam 254 88 35% Pindari Dam 312 98 31% Gwydir Valley Copeton Dam 1362 299 22% Namoi Valley Split Rock Dam 397 25 6% Keepit Dam 426 95 22% Chaffey Dam 62 48 78% Macquarie Valley Burrendong Dam 1188 237 20% Windamere Dam 368 89 24% Lachlan Valley Carcoar Dam 36 3 8% Wyangala Dam 1220 122 10% Murrumbidgee Valley Burrinjuck Dam 1026 426 42% Blowering Dam 1631 609 37% Hunter Valley Glenbawn Dam 750 401 54% Glennies Ck Dam 283 172 61% Murray River Hume Dam 3038 482 16%

12 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 2.2: Water levels of major surface water storages supplying the Australian water markets—as at 30 June 2008 continued

Capacity at full supply Storage level as at Per cent of capacity Level 30 June 2008 (GL) (GL) Dartmouth Dam 3908 696 18% Lake Victoria 680 302 44% Queensland Barker Barambah

Bjelke-Petersen Dam 135 18 13% Overview markets of water Bowen Broken Rivers Eungella Dam 112 112 100% Boyne River And Tarong Boondooma Dam 204 97 48% Bundaberg

Fred Haigh Dam 562 188 33% Section 2 Paradise Dam 300 135 45% Burdekin Haughton Burdekin Falls Dam 1860 1783 96% Callide Valley Callide Dam 136 11 8% Eton Kinchant Dam 63 63 100% Logan River Maroon Dam 44 28 62% Macintyre Brook Coolmunda Dam 69 49 71% Mareeba Dimbulah Tinaroo Falls Dam 439 397 91% Mary River Borumba Dam 46 46 100% Nogoa Mackenzie Fairbairn Dam 1301 1203 92% Pioneer River Teemburra Dam 148 147 100%

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 13

Table 2.2: Water levels of major surface water storages supplying the Australian water markets—as at 30 June 2008 continued

Capacity at full supply Storage level as at Per cent of capacity Level 30 June 2008 (GL) (GL) Proserpine River Peter Faust Dam 491 307 63% St George E.J. Beardmore Dam 82 35 42% Three Moon Creek Cania Dam 89 5 5% Upper Burnett Wuruma Dam 165 4 2% Upper Condamine Leslie Dam 106 16 15% Warrill Valley Moogerah Dam 84 33 39% Tasmania Miena Rockfill Dam (Great 3356 1023 30% Lake) Craigbourne Dam (Coal River) 13 1 10% Western Australia Harvey River Basin Harvey Dam 56 12 21% Logue Brook Dam 24 8 34% Samson Brook Dam 8 6 81% Stirling Dam 54 18 34% Waroona Dam 15 6 40% Wellington Dam a 185 124 67%

Note: (a) Utilisation of the water from Wellington Dam was constrained during the 2007–08 water year due to salinity levels. Sources: www.ourwater.vic.gov, www.waterinfo.nsw.gov.au, www.sunwateronline.com.au, www.watercorportion.com.au, ICOLD Dam Register

14 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

2.3 Irrigation infrastructure operators and trading zones Table 2.3: Irrigation infrastructure operators

Water supply system Bulk water access Number of entitlement (ML) irrigation customers

NEW SOUTH WALES

Murray Irrigation Limited NSW River Murray 1 615 661 2433 Murrumbidgee Irrigation Limited Murrumbidgee 1 426 305 3727 Coleambally Irrigation Corporation Limited Murrumbidgee 647 434.5 347 Overview markets of water Jemalong Irrigation Limited Lachlan 100 040 138 Western Murray Irrigation Limited NSW River Murray 61 302 438 QUEENSLAND SunWater 27 water supply schemes across 2 522 248 5500 Queensland

VICTORIA Section 2 Goulburn-Murray Water Goulburn, Broken, Loddon, 3 626 817 30 302 Campaspe First Mildura Irrigation Trust VIC River Murray 83 511 200 Grampians Wimmera Mallee Water Wimmera, Avoca and Richardson 3242 230 Rivers Lower Murray Water VIC River Murray 347 819 1350 Coliban Water Loddon 60 446 1763 WESTERN AUSTRALIA Harvey Water Harvey River Basin 152 000 558 Ord Irrigation Cooperative Lake Argyle 350 000 60 SOUTH AUSTRALIA Central Irrigation Trust a River Murray 151 405 1400 Renmark Irrigation Trust River Murray 47 815 700 TASMANIA Cressy Longford Irrigation Brumby’s Creek 8277 150 South East District Irrigation Coal River 3605 n/a River Clyde Irrigation Scheme Clyde River 9915 n/a

Note: (a) Central Irrigation Trust is a management company for 11 individual trusts.

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 15

7 10A 10B 11 12 13 14 km 1 3 4A 4C 5A 6 6B 0 50 100 150 200 Basin InterstateTrading Zonesin the Murray-Darling Zones Trading Interstate Basin Murray-Darling

CANBERRA r

e ver v i

i umut R R T urray M

ee ta Mit g d a i t 6 it b M m Wagga Wagga Wagga

u Albury r r u r e

M v

i R 10A 6B 13 MELBOURNE 7 Vic Murray from Barmah Choke to SA Border 10A NSW Murray above Barmah Choke 10B Murray Irrigation areas 11 NSW Murray below Barmah Choke 12 South Australian Murray 14 Lower Darling 1 6

r 10B

v i

R 1

Echuca a

l Hay

c Deniliquin a L 4A 10B 4C 7 Bendigo 1 5A Balranald 11 Wales

New SouthNew

SwanHill i l n r g

Interstate Water Trading Zones a 1 1 Greater Goulburn 3 3 Lower Goulburn 4A 4A Campaspe 4C Lower Campaspe 5A 5A Part Loddon 6 6 Vic Murray above Barmah Choke 13 Murrumbidgee 6B 6B Lower Broken Creek

D Euston

o y L a

Mildura r

14 r u M 7 er iv

11 R

Victoria

a r B A

n a Lakes Menindee Lake Victoria Renmark

y River River a r r u M Lake Alexandrina Lake South Albert MurrayBridge Australia Morgan

DataSources: systemWater Australianboundaries: ResourcesWater 2005 surfacewater management areas, Victoria Dept. Sustainabilityand Environment irrigation systems,Murray Irrigation Limited and Bureau of Ruraldata:Australia Geoscience Sciences.(2002-08).Topographic Map Map producedtheby Bureau of Rural Sciences© Commonwealth Australia. of Figure 2.2: Interstate trading zones in the connected Murray-Darling Basin system zones in the connected Murray-Darling Interstate trading 2.2: Figure

16 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

2.4 Principal mechanisms of trade Table 2.4: Principal exchanges and methods of operation

Exchange Ownership Regions serviced Products traded Method of operation Watermove Victorian Government, VIC and southern NSW Water access Weekly pool operated by entitlements and Goulburn-Murray Water allocations Waterexchange The National Stock VIC, NSW and SA Water allocations, Posted sell and Exchange of Australia (NSX) forward contracts buy bids

Waterfind Private firm VIC, NSW and SA Water access Negotiated trades Overview markets of water entitlements and between buyer water allocations and seller SunWater exchange Sunwater, a Queensland QLD Water allocations Pooled price system Government-owned (seasonal corporation assignments) WaterMart Coleambally Irrigation Developed as a Water access Posted sell and Corporation acting as a service to Coleambally entitlements and buy bids broker for Waterexchange Irrigation customers water allocations and allows customers Section 2 to trade water to and from NSW, VIC and SA Murrumbidgee Water Murrumbidgee Horticulture NSW Water allocations Posted sell and Exchange Council (not-for-profit) only buy bids Murray Irrigation Murray Irrigation Limited NSW Water access Posted sell and Exchange entitlements and buy bids water allocations

Note: There were no water access entitlement trades through Watermove in the 2007–08 water year.

Table 2.5: Water market registers

Function Managed by Availability

NEW SOUTH WALES Water access licence Statutory register for title of ownership of WALs Department of Lands Public, online (fee (WAL) register and encumbrances on those licences (Land and Property based search) information) Register of applications for Provides information about the status of Department of Water Public, online water approvals applications held by the department and Energy (DWE) Register of water approvals Provides information about the status of DWE Public, online approvals held by the department Water access licence Provides basic information on WALs under DWE Public, online conditions register the Water Management Act 2000. Full details are only available on the water access licence register

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 17

Table 2.5: Water market registers continued

Function Managed by Availability Available water Provides information on the volume of water DWE Public, online determinations (AWD) available for extraction determined by the register Minister’s AWD. AWDs are made for each access licence category in each water source Water allocation Provides information about trade in water DWE Public, online assignments register allocations under the Water Management Act 2000 (water allocation trading) Water share register (water Provides information about trade in water access DWE Public, online access entitlement trading) licence share components (part or all of the share of the available water under the licence) to another licence holder in the same water source under s. 71Q of the Water Management Act 2000 National irrigation Record of all water access entitlements Australian Private Public, online corporations water access (or irrigation rights) issued by participating Irrigation Entities entitlement register water businesses Inc. (known as the (NICWER) Bondi Group) VICTORIA Victorian water register The register is shared between the Office of Department of Public, online Water, rural water authorities and the Victorian Sustainability and Water Registrar. The register: Environment, Office of Water ++ records who has been issued with water shares and the reliability, tenure, location and holding in megalitres for each water share ++ records how much water has been allocated against water shares, how much has been used, and where it was used ++ records interests in water shares, such as mortgages and leases ++ records volumes of trades of allocations, transfers of water shares and other transactions QUEENSLAND Water allocations register Records ownership and other information on Registrar of Water Public, online (fee water allocations Allocations (also the based search) Registrar of Land Titles) SOUTH AUSTRALIA Water Information and WILMA is a register of works access Department of Water, Not public Licencing Management entitlements. It records sales but does not record Land and Biodiversity Application (WILMA) the allocation/use right Conservation (DWBLC) Trade assessment TAD records the allocation/use right attached to DWLBC Not public database (TAD) the water access entitlement

18 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 2.5: Water market registers continued

Function Managed by Availability WESTERN AUSTRALIA Register of water access Records water licences and details of transfers Department of Water Public, not online entitlements AUSTRALIAN CAPITAL TERRITORY Register of licences and Register of licences, water allocations and Environment Public, not online water access entitlements permits granted, including transfers made Protection Authority under the Water Resources Act 2007 Overview markets of water NORTHERN TERRITORY Register of water access Register of licences granted to use and trade Controller of Water Public, not online entitlements and licences surface water and take groundwater Resources (NRETA) TASMANIA Register of licences and Register of licences, water allocations and Department of Public, not water access entitlements transfers made under the Water Management Primary Industries and online Act 1999. Register based upon the Water Water

Information Management System Section 2

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 19 Section 1 Executive Summary Market Highlights Section 3 National summary 3.1 Summary 22 of trading activity 3.2 Water access entitlement markets 22 3.3 Water allocation markets 24

3.4 Estimated market turnover 28

3.5 Government environmental water 29 purchasing programs

3.6 Urban water markets 30

3.1 Summary the 2007–08 water year. Based on the data that are available this year, the water market in the 2007–08 water year Section 3 provides a national level summary of trading activity witnessed approximately $1.68 billion in trade. for the 2007–08 water year. A more detailed analysis of the markets within each jurisdiction is presented in Section 4. A significant element of the 2007–08 water year was the Commonwealth Government’s environmental purchasing Section 3.2—Water access entitlement markets, provides program. While not the only government entitlement trading activity (Table 3.1), national distribution (Figure 3.1) purchasing program, it gained widespread attention this year and summary price information (Figure 3.2). and therefore Section 3.5 describes the various government Section 3.3—Water allocation markets, also provides trading environmental water purchasing programs that operated activity (Table 3.2), national distribution (Figure 3.3) and during the year. summary price information (Table 3.3 and Figure 3.4). In Another potentially significant development this year is the addition, net changes between Murray-Darling Basin trading emergence of urban water markets, as described in Section zones are presented (Table 3.4, Figure 3.5 and Figure 3.6). 3.6. While Adelaide has been part of the water market for Combining the data in Sections 3.2 and 3.3 in Section 3.4 many years, the involvement of urban water suppliers in the (and therefore both the water access entitlement and water water market has increased this year, and may do so further allocation markets) allows an estimate of market turnover for in future water years.

3.2 Water access entitlements markets Table 3.1: Water access entitlement trading activity

Internal trades Trade in Trade out Net change Total volume traded No. ML No. ML No. ML ML ML NSW 874 546 679 1 200 0 0 200 546 679 VIC 2 278 223 975 0 0 1 200 -200 223 976 QLD 611 75 968 0 0 0 0 0 75 968 SA 224 16 983 0 0 0 0 0 16 983 WA 14 486 - - - - - 486 TAS 79 56 515 - - - - - 56 515 NT 0 0 - - - - - 0 ACT 6 34 0 0 0 0 0 34 Total 4086 920 640 1 200 1 200 0 920 640

Note: (a) Internal trades for a state calculated as the sum of intravalley (or intrazone) trades plus intervalley (or interzone) trades within that state. (b) NSW internal trades include transfers within NSW irrigation districts, where available. (c) VIC data includes trades in both northern and southern water systems.

22 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Figure 3.1: Water access entitlement trading in each state and territory as a volume share of national total

VIC 24%

NSW 59% QLD 8%

SA 2% WA <1% of Trading Activity Trading of TAS 6% National Summary

ACT <1%, NT 0%

Note: Total trade for a state is defined as the sum of internal trades in that state. In the 2007–08 water year there was only a single interstate water access entitlement transfer.

Figure 3.2: Water access entitlement price differentials across water systems

Average price Weighted all systems price Section 3

4000

3500

3000

2500

$/ML 2000

1500

1000

500

Gwydir Hunter Namoi Lachlan Goulburn Bundaberg VIC Murray SA Murray NSW Murray Murrumbidgee

Marreebah-Dimbulah Water system

Note: (a) Due to limited price information for water access entitlements, separate prices for general reliability and high reliability entitlement are not reported. Prices shown are for combined reliability classes. (b) The selection of water systems was based upon both the availability of reliable price information and the presentation of a representative sample of water systems. (c) The ‘weighted all systems price’ is a mean weighted average price for all the systems calculated by weighting the average prices in each system by the volume of trade in that system and summing the weighted means of all systems. Source: Price data from public water registers

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 23

3.3 Water allocation markets Table 3.2: Water allocation trading activity

Internal trades Trade in Trade out Net change Total volume traded ML ML ML ML ML NSW 528 283 14 544 171 174 -156 630 699 457 VIC 432 708 73 175 61 795 11 380 494 503 QLD 116 105 - - - 116 105 SA 265 900 147 582 2332 145 250 268 232 WA 13 169 - - - 13 169 TAS 2913 - - - 2913 NT 0 - - - 0 ACT 0 - - - 0 Total 1 473 305 235 301 235 301 0 1 594 379

Note: (a) Total internal trades for a state calculated as the sum of intravalley (or intrazone) trades plus intervalley (or interzone) trades within that state. (b) Victorian data includes trades in Northern and Southern Victoria. Source: Interstate trading data from MDBC. Internal trades from state water registers and irrigation corporations

Figure 3.3: Water allocation trading in each state and territory as a volume share of national total

ACT 0%, NT 0%

NSW 34% VIC 29%

TAS 0% QLD 7%

Interstate 14%

WA 1% SA 15%

Note: The total trade for a state or territory is defined as the sum of internal trades in that jurisdiction.

24 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Figure 3.4: Water allocation price differentials across water systems

Average price Weighted all systems price

800

700

600

500

$/ML 400

300

200

100

0 of Trading Activity Trading of Goulburn National Summary SA Murray NSW Murray Lower Darling Victorian Murray

Coleambally Irrigation Murrumbidgee Irrigation Western Murray Irrigation

Water system

Note: (a) Prices are for high reliability water allocation. (b) The ‘weighted all systems price’ is a mean weighted average price for all the systems calculated by weighting the average prices in each system by the volume of trade in that system and summing the weighted means of all systems. Source: Price data from WaterExchange and public water registers Section 3 Table 3.3: Prices for water allocations—by water system

Median Mode Mean Standard Number of Deviation trades New South Wales Lower Darling 495 50 440 188 46 Murrumbidgee 389 850 495 319 383 Coleambally 399 350 526 276 1122 Murrumbidgee Irrigation 460 400 566 290 1547 NSW Murray 570 1050 656 316 746 Murray Irrigation 930 930 764 279 28 Western Murray Irrigation 520 1100 661 302 153 All NSW 450 350 549 310 3603 South Australia SA Murray 773 350 682 333 2568 Renmark 483 570 465 81 36 All SA 705 350 679 332 2602

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 25

Table 3.3: Prices for water allocations—by water system continued

Median Mode Mean Standard Number of Deviation trades Victoria Goulburn 750 1050 702 324 1963 VIC Murray 590 500 666 322 1729 All VIC 550 1050 668 326 3545

Note: (a) Price statistics for each water system based on internal trades, sales out and purchases into system, including interstate trades. (b) “Number of trades” indicates the number of trades for which reliable price information is available. Source: WaterExchange

Figure 3.5: Net change in water allocation volumes in Murray-Darling Basin trading zones due to interstate water allocation trading 2008-12-01 Map document: Interstate_NetChange_WaterAllocation (temporary)_a4_im_20081201_HelveticcaNeueLight.mxd Interstate_NetChange_WaterAllocation document: Map 2008-12-01

Interstate Water Trading Zones 1 Greater Goulburn 7 Vic Murray from Barmah Choke to SA Border Net Change in 3 Lower Goulburn 10A NSW Murray above Barmah Choke Allocation Volumes 4A Campaspe 10B Murray Irrigation areas Menindee 4C Lower Campaspe 11 NSW Murray below Barmah Choke Due to Interstate Lakes 5A Part Loddon 12 South Australian Murray 6 Vic Murray above Barmah Choke 13 Murrumbidgee Allocation Trading 6B Lower Broken Creek 14 Lower Darling

Net Increase (ML)

South 14 g n New South h > 100 000

c l

r r Australia n a a ive r Wales D R 25 000 - 50 000 B n r e la

Lake a h n w Lo c Victoria A a 11 L Net Decrease (ML) Morgan Mildura < 500 12 Renmark y R 7 a iv r Euston e r Mu 500 - 5 000 ur M r Hay ru M u m r rr Balranald b e a 13 idg iv y ee R 5 000 - 50 000

River 11 > 100 000 Murray Bridge Deniliquin T Swan Hill Wagga Wagga u CANBERRA Lake m No trade 10B 10B u t Alexandrina Victoria R i No data Lake 7 v 10A Albury e Albert 6 River r M u Echuca r 1 r 6B a Murray-Darling Basin 3 6 y 1 M i 4C tta M

4A i

5A tt a Bendigo a r esult of accessing, using or relying upon any of the information or data set out in this publication to the maximum extent permitted by law. 1

0 50 100 150 200 MELBOURNE km incurred by any person as The AustralianThe Government acting through the Bureau of Rural Sciences has exercised due care and skill in the preparation and compilation of the information and data set out in this publication. Notwithstanding,the Bureau ofRural Sciences, its employees and advisers includingdisclaim liability all liability, fornegligence, for any loss,expense damage, orcostinjury, Data Sources: Water system boundaries: Australian Water Resources 2005 surface water management areas, Victoria Dept. Sustainability and Environment irrigation systems, Murray Irrigation Limited and Bureau of Rural Sciences. Topographic data: Geoscience Australia (2002-08). Revised DRAFT Map produced by the Bureau of Rural Sciences © Commonwealth of Australia. Includes NWC comments

26 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 3.4: Interstate water allocation trades—origin and destination for the 2007–08 water year

Destination Regions

Volumes in ML NSW Murray NSW Murray Barmahabove NSW Murray Barmahbelow Irrigation Murray Limited areas Murrumbidgee Darling Lower GoulburnGreater GoulburnLower Campaspe (4A) Loddon (5A) above VIC Murray Barmah from VIC Murray Barmah to SA SA Murray

NSW Murray above - - - - - 207 0 0 0 729 2001 1779 Barmah choke NSW Murray below - - - - - 2629 200 0 0 349 18 556 33 827 Barmah choke Murray Irrigation - - - - - 296 0 0 0 134 286 2630 of Trading Activity Trading of Limited areas National Summary Murrumbidgee - - - - - 6472 0 0 0 2179 36 973 61 771 Lower Darling - - - - - 0 0 0 0 0 128 0 Greater Goulburn 186 7090 0 30 0 ------26 882 Lower Goulburn 0 553 0 0 0 ------1153 Campaspe (4A) 0 8 0 0 0 ------243 Loddon (5A) 00000------0

VIC Murray above 236 1221 0 195 0 ------4793 Section 3 Barmah choke VIC Murray from 15 4634 260 92 0 ------14 475 Barmah to SA border

Origin Regions SA Murray 0 184 0 110 0 344 0 0 0 32 1660 -

Note: These MDBC figures are interim, based on the Victorian record. The interstate totals will be subject to very minor alterations (within 1%). There will be some redistribution on trades between NSW valleys (to ensure consistency with the NSW record). Source: MDBC, 27 October 2008

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 27

Figure 3.6: Interstate trade of water allocations

61.77 GL 38.24 GL 28.79 GL 18.75 GL South Australia

Lower Darling

0.28 GL 0.03 GL 0.11 GL Murrumbidgee

Buyer 5.83 GL 8.11 GL 0.18 GL NSW Murray

3.33 GL 6.53 GL 0.34 GL Goulburn

39.09 GL

22.05 GL 0.13 GL 1.69 GL Victorian Murray

Goulburn

NSW Murray Lower Darling Murrumbidgee South Australia Victorian Murray

Seller

Source: MDBC, 27 October 2008

3.4 Estimated market turnover Table 3.5: Estimated market turnover—gross value of water sales ($million)

Water access entitlements Water allocation Total NSW 470.5 384.0 854.5 VIC 277.4 270.5 547.9 QLD 57.7 n/a 57.7 SA 38.3 181.3 219.6 WA 1.0 0.26 1.3 TAS n/a n/a n/a NT 0 0 0 ACT n/a 0 n/a Australia 845 836 1681

Source: Estimate of total value of market based on trades captured in this report. Values based on WaterExchange price information.

28 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

3.5 Government environmental water tender process from February to May 2008. This involved purchasing programs water access entitlement holders submitting offers to sell their entitlements. DEWHA offered to buy water access This section contains summary information for three major entitlements following assessment of the offers based on what government-sponsored programs that made purchases it considered to be fair market value. The agreed trades are of water entitlement during the 2007–08 water year. The being settled in the 2008–09 water year. programs identified have involved direct participation in the market, through a tender process, as opposed to investment 35 GL of water access entitlements were purchased from seven of the Murray-Darling Basin’s 18 catchments. This in water efficiency projects for achieving water savings. comprised: 3.5.1 Restoring the Balance in the Murray- ++ 75 per cent New South Wales general security (reliability) Darling Basin Program—Commonwealth and Victorian low reliability licences, with an average price Government of $1131 per ML; and ++ 25 per cent high security (reliability) water access In 2008, the Commonwealth Government announced the entitlements, with an average price of $2124 per ML. $12.9 billion Water for the Future plan for the Murray-Darling Basin. The plan included a $3.1 billion commitment over 10 Figure 3.7 summarises the types and volumes of entitlement years to buy water in the Basin for environmental purposes purchased (reliability levels) and the water systems where the of Trading Activity Trading of

through the Restoring the Balance in the Murray-Darling purchases were made. National Summary Basin Program. A second tender to purchase water access entitlements In February 2008, the government announced the provision of under the program was announced on 8 September 2008, an initial $50 million to purchase water access entitlements. with a further $400 million of the program budget being The Commonwealth Department of the Environment, allocated. The tender will run between 15 September and Water, Heritage and the Arts (DEWHA) conducted a public 19 December 2008.

Figure 3.7: Commonwealth buy-back program—purchases by water system

Low reliability High reliability Section 3 New South Wales

NSW Murray

Murrumbidgee

Lachlan

Macquarie

Gwydir

Victoria

Ovens Water system Water

VIC Murray

Goulburn

Campaspe

South Australia

SA Murray

0 2000 4000 6000 8000 10000 12000

Volume (ML)

Source: Department of Environment, Water, Heritage and the Arts

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 29

3.5.2 RiverBank—New South Wales information available to prospective sellers who are seeking to Government determine fair market value of their water access entitlements. RiverBank is an environmental buy-back scheme managed by Also, the NWI four per cent annual threshold limit on water the New South Wales Government and is part of the broader access entitlement trade out of irrigation areas has restricted Rivers Environment Restoration Program. The Commonwealth the volume of water available for purchase. The limit has Government has also contributed through the Water Smart recently been subject to review, and COAG has stated an Australia Program. ‘ambition’ to increase it to 6% in 2009 as an interim measure whilst further consideration is given to continuation of the The New South Wales Government has committed $105 annual threshold limit. million over five years to 2011 to the RiverBank program, with a further $71.77 million grant from the Commonwealth The RiverBank project and The Living Murray Pilot Government to buy water access entitlements. Public Environmental Water Purchase Project are yet to publicly expressions of interest in the sale of a water access release details of their results, although both have indicated that entitlement are invited from time to time and it is possible to they plan to release some data. The timely and comprehensive enter into a lease arrangement. Water is purchased at market disclosure of information to the market will facilitate a more prices and preference is given to general security (reliability) transparent market for water access entitlements. licences in targeted water sources. 3.6 Urban water markets RiverBank operates as a single desk for all water purchases A number of suppliers of urban centres located within in New South Wales. This includes the Wetlands Recovery regulated rivers systems have entered into the rural sector Program (which is focused on the Gwydir Wetlands and the market to gain additional water entitlements for their Macquarie Marshes) and NSW’s purchases under The Living populations (Canberra for example, while Adelaide has been a Murray. RiverBank acquired approximately 118 GL over the long term presence in the water market). In addition, Perth’s 2007–08 water year. Prices for general security (reliability) water supplier has been able to secure additional supplies water access entitlement ranged between $1100 to $2200 through a bilateral transfer of entitlement from Harvey per ML. However, most of this water access entitlement was Water—an irrigation company. supplementary access licence, thus representing a very low reliability product. An innovative urban/rural trading scheme has been trialled in the Wodonga area. North East Water facilitated a rural urban 3.5.3 The Living Murray Pilot Environmental trading pilot program over 2007. The pilot enabled community Water Purchase Project—Murray-Darling facilities and small businesses to purchase water allocations Basin Commission on the open market allowing these businesses to meet their outdoor watering needs in the face of severe restrictions on The MDBC has purchased water for environmental purposes the use of town supplies. through the Pilot Environmental Water Purchase Project, as part of The Living Murray program. The Queensland government has introduced a new market structure and new supply arrangements in South East In 2007, The Living Murray Pilot Environmental Water Queensland, on the back of investment in the water grid. Purchase Project aimed to buy 20 GL of water access The grid connects a range of distant and manufactured entitlements. Potential sellers were able to submit an water sources with bulk water supply entities and retailers. expression of interest to sell water. The market price for each The new structure will make provision for wholesale trading offer to sell was independently assessed and purchases of water between bulk suppliers and large water users. The were made if the price offered was close to the market price. Queensland Water Commission has signalled further work The pilot secured 20 GL, with most of this water becoming will be done to consider additional opportunities for trading in available during 2008 and 2009. Most of the offers to sell water resources. water originated from the Murray Valley. The prices at which entitlement was purchased under this program remain commercial-in-confidence. 3.5.4 Issues arising from environmental water purchase programs The programs have had difficulty in securing entitlement in the 2007–08 water year. This is in part due to the lack of

30 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 Section 4.1 Trading summary 4.1.1 Summary 32 Queensland 4.1.2 Market operation 33 4.1.3 Water supply conditions 37

4.1.4 Queensland water allocation markets 40

4.1.5 Queensland seasonal 45 assignment markets

4.1.6 Value of market turnover 49

4.1.1 Summary Section 4.1.3—Water supply conditions, presents information on storage levels and allocation announcements in The following section presents Queensland trading data Queensland during the 2007–08 water year. made available for the purposes of this report. While NWI Section 4.1.4—Queensland water allocation markets, terminology is used when describing national market describes the markets of products that would be known as a characteristics and activity, Queensland water trading water access entitlement under the NWI. terminology is used in this section (although it is not consistent with the NWI or other jurisdictions). Table Section 4.1.5—Queensland seasonal assignment markets, 4.1.1 provides a summary of Queensland’s water trading describes the markets of products that are approximately equivalent to trading water allocations under the NWI. terminology, including NWI equivalents where applicable. Commonly in Queensland, these markets are called Section 4.1.2—Market operation, describes the legislative temporary markets. and planning framework that underpins Queensland’s water Section 4.1.6—Value of market turnover, attempts to provide markets, and also the types of products and trading that an estimate of the value of Queensland’s water markets, occur within the state. Further information can also be found noting however that price information is not available for at Appendix A. seasonal assignments.

Table 4.1.1: Queensland water trading terminology

Term Definition and NWI equivalent Water allocation An authority to take water, equivalent to a water access entitlement (NWI). Separate from land and tradeable. Can be held and traded as personal property by non-landholders. Interim water allocation An entitlement to be supplied with a volumetric share of water by the operator of a water supply (IWA) scheme. These entitlements are usually attached to land, although supply scheme operators, local governments and water authorities can hold IWAs without being landholders. IWAs can only be traded in two Queensland water supply schemes. Water licence An authority to take water and use it on specified land. Licences are attached to land and are not recorded on the Water Allocation Register. Tradeable under a limited set of circumstances. Water account The volume of water in megalitres that is available to the allocation holder in a water year. This volume results from the application of the water sharing rules and the approval of seasonal water assignments. Water resource plan A statutory plan for a catchment that establishes the consumptive share and environmental share of a water resource. The plan also identifies any additional water available for allocation. Resource operations A plan that provides the rules and processes to implement a water resource plan. plan (ROP) Supplemented water A water supply where the reliability is enhanced by releases of stored water from infrastructure. Equivalent to a regulated water supply (NWI). Unsupplemented water A water supply where reliability is not enhanced by releases of stored water from infrastructure. Equivalent to unregulated water supply (NWI) Priority group An attribute of a group of water allocations for supplemented supply that specifies the supply reliability of the allocation (e.g. High, Medium). Dealings Water allocation transfer The passing of the legal or beneficial interest in the water allocation to another person or legal entity. Commonly referred to as permanent trade. Lease of water allocation Equivalent to term transfer (NWI). The passing of the benefits and responsibilities associated with ownership of the allocation to another person for a fixed period.

32 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.1.1: Queensland water trading terminology continued

Term Definition and NWI equivalent Seasonal water The assigning of some or all of the water available under a water allocation for all or part of a water assignment year to another person or another place of extraction. Commonly referred to as temporary trade. Change dealings A dealing that changes one or more attributes of a water allocation. The most common changes sought by water allocation holders are to move the allocation to a different location and subdivisions of water allocations. Can be undertaken as part of a transfer of ownership or independently (e.g. water allocation retained by existing owner but moved to a different property).

Source: National Water Commission (2007) Dictionary of Terms for Water Access Entitlements and Transactions

4.1.2 Market operation ++ ‘Temporary’ trading or seasonal assignments of water available under water allocations, interim water allocations The Water Act 2000 (Qld) provides the legislative framework and water licences. for water management and water trade in Queensland. Water resource plans (WRPs) and resource operations plans With few exceptions, the trading of ‘supplemented’ water (ROPs) provide the planning and management base for water allocation is restricted to a geographic area supplied by a water resources throughout the state. As at 30 June 2008, ROPs supply scheme (a dam or weir and associated distribution (which specify trading rules and water sharing rules) had been infrastructure). Trading is not possible between schemes. completed for eleven out of 20 catchments where plans are Unsupplemented water allocations can be traded within required under the Water Act 2000 (Qld). defined water management areas. Three types of water access entitlements exist in At present, Queensland and New South Wales do not have summary — QLD Trading Queensland—water allocations, interim water allocations the institutional arrangements in place to allow Queensland to and water licences. Of these three instruments, only water trade water with New South Wales or the other Basin states. allocations are unbundled from land and registered as title on the Queensland Water Allocation Register. Interim water Regulatory approval to trade is required for dealings that involve allocations have limited tradeability (trading is only possible in a change in the location of water extraction. The Queensland two water supply schemes). Water licences are not tradeable. Department of Natural Resources and Water is the approvals authority for unsupplemented water allocation trades and Three types of water trading are possible: seasonal assignments of unsupplemented water. The licensed ++ ‘Permanent’ trading of water allocations and interim operator of the water supply scheme (typically SunWater) is the water allocations approval body for seasonal assignments of supplemented water that does not involve a change (referred to in Queensland as

++ Leases of water allocations Section 4.1 temporary trades).

Table 4.1.2: Water entitlements on issue as at 30 June 2008

Number Volume (ML) Volume (Hectares) Water allocations Supplemented surface water 8364 1427 333 0 Unsupplemented surface water 1018 348 810 0 Total 9382 1 776 143 0 Interim water allocations Supplemented surface water 2529 1 714 218 0 Supplemented surface water (area based) 111 0 1499 Supplemented groundwater 369 76 060 0 Total 3009 1 790 278 1499

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 33

Table 4.1.2: Water access entitlements on issue as at 30 June 2008 continued

Number Volume (ML) Volume (Hectares) Water licences * Surface water licences 17 458 836 730 3972 Groundwater licences 11 376 375 020 123 796 Total 28 834 1 211 750 127 768 Total water entitlements 41 225 4 778 171 129 267

Note: (a) Excludes entitlements for unsupplemented surface water in areas not managed under a resource operations plan. (b) As at 30 June 2008 the total number of water licences on issue was 29 458. The 28 834 figure shown in the table is a 2006–07 estimate from Queensland Annual Water Statistics 2006–07. As the Commission was not provided with a breakdown of water licences by surface water and groundwater for the 2007–08 water year, the 2006–07 water year data have been reported.

Table 4.1.3: Water allocations on issue by resource operation plan area

ROP and supply scheme or water Supplemented Unsupplemented Total management area Number Volume Number Volume Number Volume (No) (ML) (No) (No) (ML) (ML) Barron Mareeba Dimbulah Water Supply Scheme 1943 204 424 0 0 1943 204 424 Border Rivers Macintyre Brook Water Supply Scheme 114 24 997 0 0 114 24 997 Border Rivers Water Supply Scheme 164 84 714 0 0 164 84 714 Border Rivers Water Management Area 0 0 111 99 188 111 99 188 Callandoon Creek Water Management 0 0 17 5598 17 5598 Area Lower Weir River Water Management Area 0 0 14 25 457 14 25 457 Northern Weir River Water 0 0 11 2351 11 2351 Management Area Upper Weir River Water Management Area 0 0 16 17 047 16 17 047 Stanthorpe Water Management Area 0 0 95 1947 95 1947 Macintyre Brook Water Management Area 0 0 2 564 2 564 Burnett Barker Barambah Water Supply Scheme 226 34 315 0 0 226 34 315 Boyne River and Tarong Water 193 45 699 0 0 193 45 699 Supply Scheme Bundaberg Water Supply Scheme 3348 375 829 0 0 3348 375 829 Upper Burnett Water Supply Scheme 562 48 200 0 0 562 48 200

34 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.1.3: Water allocations on issue by resource operation plan area continued

ROP and supply scheme or water Supplemented Unsupplemented Total management area Number Volume Number Volume Number Volume (No) (ML) (No) (No) (ML) (ML) Barker Barambah Creeks Water 0 0 168 9722 168 9722 Management Area Lower Burnett and Kolan Rivers Water 0 0 39 2622 39 2622 Management Area Upper Burnett and Nogo Rivers Water 0 0 133 7378 133 7378 Management Area Fitzroy Fitzroy Barrage Water Supply Scheme 239 62 093 0 0 239 62 093 Lower Fitzroy Water Supply Scheme 23 28 621 0 0 23 28 621 Nogoa Mackenzie Water Supply Scheme 516 235 323 0 0 516 235 323 Dawson Valley Water Supply Scheme 217 61 832 0 0 217 61 832 Fitzroy Water Management Area 0 0 121 45 598 121 45 598 Nogoa Mackenzie Water Management Area 0 0 70 46 355 70 46 355 Pioneer Valley summary — QLD Trading Pioneer River Water Supply Scheme 346 78 110 0 0 346 78 110 Eton Water Supply Scheme 444 62 563 0 0 444 62 563 Pioneer River Water Management Area 0 0 39 5660 39 5660 Warrego-Paroo-Bullo-Nebine Cunnamulla Water Supply Scheme 27 2612 0 0 27 2612 Bulloo Water Management Area 0 0 2 20 2 20 Lower Warrego Water Management Area 0 0 21 37 833 21 37 833 35 Section 4.1 Nebine Water Management Area 0 0 4 2039 4 2039 Paroo Water Management Area 0 0 2 50 2 50 Upper Warrego Water Management Area 0 0 20 2170 20 2170 Boyne Awoonga Dam 2 78 000 0 0 2 78 000 Boyne and Stuart Rivers Water 0 0 101 8 544 101 8544 Management Area Moonie Moonie Water Management Area 0 0 32 28 668 32 28 668 Total 8364 1 427 333 1018 348 810 9382 1 776 143

Note: Although there were 11 completed ROPs as of 30 June 2008, only eight are listed in Table 4.1.3 as the other three do not have unbundled, tradable entitlements on issue. Source: QLD Department of Natural Resources and Water

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 35

Table 4.1.4: Supplemented interim water allocations on issue Water supply scheme Number Volume (ML) Baroon Pocket 1 36 500 Bowen-Broken River 18 47 734 Burdekin Haughton 700 1 110 747 Callide Valley 157 24 326 Central Lockyer 8 581 Chinchilla Weir 38 4056 Cunnamulla Weir 6 12 Dawson Valley 1 105 Julius Dam 3 47 600 Logan River 165 23 413 Lower Lockyer 164 12 830 Macintyre Brook 1 2 Maranoa River 6 805 Mary River 508 67 274 Nerang 1 76 300 Paluma-Crystal 1 21 571 Proserpine River 166 60 076 Ross River 1 75 000 St George 277 83 803 Three Moon Creek 113 14 959 Upper Burnett 2 350 Upper Condamine 161 33 962 Warrill Valley 388 33 848 Wide Bay 12 14 425 Total 2898 1 790 277

Note: Table excludes 111 interim water allocations in the Central Lockyer Water Supply Scheme that are defined on an area basis. Source: QLD Department of Natural Resources and Water

36 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.1.5: Water entitlement shares by sector

Volume (GL) Per cent share Agriculture and rural 1079 61% ‘Any use’ (may include industrial and mining) 560 31% Urban 136 8% Water loss 3 < 1% All sector total 1776 100%

Note: (a) As part of the Queensland planning process, water entitlements are specified in ways that provide for environmental needs through sustainable extraction regimes. (b) The ‘any use’ category includes water allocations that can be used for any purpose. Some entitlements have restrictions on the purpose for which water can be used. Source: QLD Department of Natural Resources and Water

4.1.3 Water supply conditions Figure 4.1.1: Water levels in key Queensland storages supplying the market

Bjelke Petersen Dam Burdekin Falls Dam Fairburn Dam Teemburra Dam

100 Trading summary — QLD Trading 90

Storage level – per cent of capacity 10

0 Section 4.1

31-Jul-07 31-Oct-07 31-Jan-08 31-Mar-08 30-Apr-08 31-Aug-07 30-Sep-07 30-Nov-07 31-Dec-07 29-Feb-08 31-May-08 30-June-08 1 July 2007 to 30 June 2008

Source: SunWater

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 37

Table 4.1.6: Queensland—water allocation announcements

Water supply scheme Date effective Allocation (%) Medium priority High priority (reliability) (reliability) Barker Barambah 1/7/07 0 0 14/12/07 100 100 14/2/08 46 46 Bowen Broken 1/7/07 100 100 Boyne River and Tarong 1/7/07 0 50 20/12/07 0 66 18/2/08 80 100 Bundaberg 1/7/07 28 85 24/7/07 47 85 22/2/08 47 100 Burdekin-Haughton 1/7/07 100 100 Central Lockyer (Mortonvale) 1/7/07 0 0 11/2/08 0 0 26/3/08 0 100 Chinchilla Weir 1/10/07 0 86 5/12/07 100 100 Dawson Valley (Dawson A) 1/10/07 0 62 3/12/07 71 100 5/8/08 74 100 Eton 1/7/07 78 (high B) 100 (high A) 1/9/07 81 (high B) 100 (high A) 1/12/07 93 (high B) 100 (high A) 1/2/08 100 (high B) 100 (high A) Logan 1/7/07 0 0 8/1/08 80 100 30/1/08 90 100 Lower Fitzroy 1/7/07 100 100 Lower Lockyer 1/4/07 0 25/2/08 16 Macintyre Brook 1/7/07 0 100 28/8/07 11 100

38 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.1.6: Queensland—allocation announcements continued

Water supply scheme Date effective Allocation (%) Medium priority High priority (reliability) (reliability) 5/11/07 27 100 13/11/07 42 100 10/12/07 85 100 17/12/07 100 100 Mareeba-Dimbulah 1/7/07 87 100 1/9/07 90 100 1/11/07 100 100 Mary River (Bell’s Bridge to Miva) 1/7/07 14 100 28/8/07 21 100 15/10/07 32 100 23/1/08 60 100 20/2/08 100 100

Nogoa Mackenzie 1/7/07 0 100 summary — QLD Trading 4/12/07 34 100 11/12/07 67 100 19/12/07 82 100 3/1/08 100 100 Pioneer River 1/7/07 76 (high B) 100 (high A) 7/8/07 84 (High B) 100 (high A) 1/9/07 100 (high B) 100 (high A) Section 4.1 St George 391/7/07 0 11/9/07 5 10/12/07 73 4/1/08 86 20/2/08 96 Upper Burnett (Barambah Creek to Claude 1/7/07 0 47 Wharton Weir) 15/7/07 0 100 11/2/08 88 100 Upper Condamine 19/7/07 61 (high A) 21/10/07 95 (high A) 14/11/07 100 (high A) Warrill Valley 1/7/07 0 (High B) 51 (High A)

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 39

Table 4.1.6: Queensland—allocation announcements continued

Water supply scheme Date effective Allocation (%) Medium priority High priority (reliability) (reliability) 5/12/07 0 (High B) 100 (High A) 13/12/07 5 (High B) 100 (High A) 10/1/08 37 (High B) 100 (High A) 7/2/08 100 (High B) 100 (High A)

Source: SunWater

4.1.4 Queensland water allocation markets

Table 4.1.7: Water allocation transfers by resource operation plan area

ROP and supply scheme or water management area Source type Number Volume transfers (ML)

Barron River Mareeba Dimbulah Water Supply Scheme supplemented 193 11 664 Border Rivers Border Rivers Water Management Area unsupplemented 3 2058 Macintyre Brook Water Supply Scheme supplemented 2 335 Upper Weir River Water Management Area unsupplemented 2 2064 Burnett Basin Barker Barambah Creeks Water Management Area unsupplemented 16 1043 Barker Barambah Water Supply Scheme supplemented 34 3690 Boyne River and Tarong Water Supply Scheme supplemented 27 4315 Bundaberg Water Supply Scheme supplemented 164 13 166 Upper Burnett and Nogo Rivers Water Management Area unsupplemented 5 133 Upper Burnett Water Supply Scheme supplemented 20 1279 Boyne Boyne and Stuart Rivers Water Management Area unsupplemented 15 1193 Fitzroy Basin Dawson Valley Water Supply Scheme supplemented 15 2937 Fitzroy Barrage Water Supply Scheme supplemented 19 473 Fitzroy Water Management Area unsupplemented 7 922 Nogoa Mackenzie Water Management Area unsupplemented 10 5468

40 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.1.7: Water allocation transfers by resource operation plan area continued

ROP and supply scheme or water management area Source type Number Volume transfers (ML)

Nogoa Mackenzie Water Supply Scheme supplemented 34 18 823 Moonie Moonie Water Management Area unsupplemented 1 413 Pioneer Eton Water Supply Scheme supplemented 17 2239 Pioneer River Management Scheme unsupplemented 2 330 Pioneer River Water Supply Scheme supplemented 24 3343 Warrego, Paroo, Bulloo and Nebine Upper Warrego Water Management Area unsupplemented 1 80 Total (Supplemented) 549 62 264 Total (Unsupplemented) 62 13 704 TOTAL 611 75 968 Trading summary — QLD Trading

Source: QLD Department of Natural Resources and Water

Table 4.1.8: Water allocation transfers executed with or without a land sale

Number of transfers Volume transferred (ML) Supplemented With land 251 34 288 Without land 298 27 976

Total 41 549 62 264 Section 4.1 Unsupplemented With land 37 7708 Without land 25 5996 Total 62 13 704 Grand total 611 75 968

Source: QLD Department of Natural Resources and Water

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 41

Table 4.1.9: Water allocation prices

Price ($/ML) Supply scheme or management area Median Mode Mean Standard Number of deviation trades Mareeba Dimbulah Water Supply Scheme 744 750 733 188 43 Bundaberg Water Supply Scheme 708 748 806 127 34 Other supply schemes 1117 1900 1289 616 34 State total 1117 750 926 438 111

Note: Price information was only available for 111 transfers out of the total 611 transfers made in the 2007–08 water year. This is partly due to the large number of transfers that were made as part of a property sale. The majority of trades for which price information was available occurred in the Mareeba-Dimbulah and Bundaberg water supply schemes. Source: QLD Department of Natural Resources and Water

Figure 4.1.2: Water allocation trading volumes and prices for Mareeba-Dimbulah supply scheme

Volume traded Average Price

3000 1200

2500 1000

2000 800

1500 600 $/ML ML

1000 400

500 200

0 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun

Months: 1 July 2007 to 30 June 2008

Note: (a) Volume data include all transfers, whereas average prices are based on those transfers for which price information is available (b) Figure 4.1.2 should be treated as a guide only, as it is based on 43 trades in total over the 2007–08 water year and therefore is based on very thin trade data. Source: QLD Department of Natural Resources and Water

42 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Figure 4.1.3: Water allocation trading volumes and prices for Bundaberg supply scheme

Volume traded Average Price

4000 1200

3500 1000

3000

800 2500 $/ML ML 2000 600

1500 400

1000

200 500

0 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun

Months: 1 July 2007 to 30 June 2008

Note: (a) Volume data include all transfers, whereas average prices are based on those transfers for which price information is available (b) Figure 4.1.3 should be treated as a guide only, as it is based on 34 trades in total over the 2007–08 water year and therefore is based on very thin trade data. Trading summary — QLD Trading Source: QLD Department of Natural Resources and Water

Table 4.1.10: Water allocation leases

ROP Number Average duration Volume (ML) (years) Barron 7 20.0 710 Border Rivers 0 0 0 Burnett 38 21.1 2824 43 Section 4.1 Fitzroy 0 0 0 Pioneer 24 5.4 3032 Warrego, Paroo, Bulloo, Nebine 0 0 0 Total 69 6566

Source: QLD Department of Natural Resources

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 43

2008-12-03 Map document: QLD_WaterAllocation(Entitlement)_TradingIntensity_(permanent)_a4_landscape_margins_im_20081203.mxd km < % < 1 -% 1 2 -% 2 5 - 5 10 % - 20 10 % - 30 20 % - 40 30 % - 50 40 % % > 50 No Trade 0 100 200 300 400 within within a water divided source, by the Water Allocation Water Trading intensity is defined as total the volume of trades in/out and total nominal volume of entitlement PRELIMINARY (Entitlement) Intensity Trading D R A F F T A R D in that water source that water in Mary Logan Moreton Rivers Border Burnett BRISBANE Note: are data trade Groundwater map. in this included not

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Data Sources: Water system boundaries: Australian Water Resources 2005 surface water management areas. Topographic data: Geoscience Australia Geoscience data: Topographic areas. management water surface 2005 Resources Water Australian boundaries: system Water Sources: Data data. final contains map This NOTE: Consistentwith report tables(18 NOV version). (2002-08). Map produced by the Bureau of Rural Sciences © Commonwealth of Australia. of Commonwealth © Sciences Rural of Bureau the by produced Map (2002-08).

Figure 4.1.4: Water allocation trading intensity allocation trading Water 4.1.4: Figure

nurd y n p any by incurred ro a a eut f cesn, sn o rlig pn n o te nomto o dt st u i ti pbiain o h mxmm xet emte b law. by permitted extent maximum the to publication this in out set data or information the of any upon relying or using accessing, of result a as erson

44 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

4.1.5 Queensland seasonal assignment markets Table 4.1.11: Seasonal assignment trades

Supply scheme or management area Water source Number Volume of of internal internal trades trades (No.) (ML) Barron River Resource Operations Plan Mareeba Dimbulah Water Supply Scheme supplemented 215 13 217 Border Rivers Resource Operations Plan Border Rivers Groundwater Management Area unsupplemented 8 1126 Dumaresq River Water Management Area unsupplemented 39 1447 Macintyre Brook supplemented 100 11 839 Burdekin Basin Resource Operations Plan Bowen Broken Rivers Water Supply Scheme supplemented 17 394 Burdekin Haughton Water Supply Scheme supplemented 73 17 930 Burnett Basin Resource Operations Plan

Barker Barambah Water Supply Scheme supplemented 6 257 summary — QLD Trading Boyne River and Tarong Water Supply Scheme supplemented 3 244 Bundaberg Water Supply Scheme supplemented 207 11 056 Coastal Burnett Groundwater Management Area unsupplemented 65 1946 Three Moon Creek Water Supply Scheme supplemented 5 126 Upper Burnett Water Supply Scheme supplemented 30 1046 Condamine-Balonne Basin Resource Operations Plan

Chinchilla Weir Water Supply Scheme supplemented45 5 277 Section 4.1 Condamine Groundwater Management Area unsupplemented 20 1625 Oakey Creek Groundwater Management Area unsupplemented 7 200 St George Water Supply Scheme supplemented 87 6805 Upper Condamine Water Supply Scheme supplemented 60 6665 Fitzroy Basin Resource Operations Plan Callide Valley Groundwater Management Area supplemented 1 10 Callide Valley Water Supply Scheme supplemented 14 254 Dawson Valley Water Supply Scheme supplemented 101 4966 Lower Fitzroy Water Supply Scheme supplemented 9 83 Nogoa Mackenzie Water Supply Scheme supplemented 167 30 025 Great Artesian Basin Resource Management

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 45

Table 4.1.11: Seasonal assignment trades continued

Supply scheme or management area Water source Number Volume of of internal internal trades trades (No.) (ML) Great Artesian Basin—Eastern Downs unsupplemented 1 300 Logan Basin Resource Operations Plan Logan River Water Supply Scheme supplemented 4 363 Mary River Resource Operations Plan Mary River Water Supply Scheme supplemented 22 605 Moreton Basin Resource Operations Plan Lower Lockyer Valley Water Supply Scheme supplemented 13 99 Warrill Valley Water Supply Scheme supplemented 12 215 Pioneer Valley Resource Operations Plan Eton Water Supply Scheme supplemented 20 223 Pioneer Groundwater Management Area unsupplemented 2 415 Pioneer River Water Supply Scheme supplemented 15 538 Upper Hodgson Creek Groundwater Management Area unsupplemented 5 275 Whitsunday Resource Operations Plan Proserpine River Water Supply Scheme supplemented 1 700 Warrego, Paroo, Bulloo And Nebine Resource Operations Plan Cunnamulla Weir Water Supply Scheme supplemented 3 843 Total (Supplemented) 1189 108 771 Total (Unsupplemented) 147 7334 Total 1336 116 105

Source: QLD Department of Natural Resources and Water and SunWater

46 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Figure 4.1.5: Weekly trading volumes of seasonal assignments

25000

20000

15000 ML

10000

5000

0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Weeks: 1 July 2007 to 30 June 2008

Note: No price information is collected for seasonal assignment trade. Data includes supplemented and unsupplemented water sources. Trading summary — QLD Trading Source: QLD Department of Natural Resources and Water and SunWater Section 4.1

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 47

2008-12-03 Map document: QLD_SeasonalAssignments_TradingIntensity_(temporary)_a4_landscape_margins_im_20081203.mxd km < % < 1 -% 1 2 -% 2 5 - 5 10 % - 20 10 % - 30 20 % - 40 30 % - 50 40 % % > 50 No Trade 0 100 200 300 400 within within a water divided source, by the Seasonal Assignments Intensity Trading Trading intensity is defined as total the volume of trades in/out and total nominal volume of entitlement PRELIMINARY D R A F F T A R D in that water source that water in Mary Logan Moreton Rivers Border Burnett BRISBANE Note: are data trade Groundwater map. in this included not

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Figure 4.1.6: Seasonal assignments trading intensity Seasonal assignments trading 4.1.6: Figure

48 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

4.1.6 Value of market turnover Table 4.1.12: Estimated value of market turnover

Water supply scheme Gross value of water sales ($ million) Water allocations Seasonal assignments Mareeba Dimbulah Water Supply Scheme 8.5 n/a Bundaberg Water Supply Scheme 10.6 n/a Other supply schemes Not estimated n/a Queensland 57.7 n/a

Note: (a) Estimates of market value are based on the annual mean price and the total number of trades in each Water Supply Scheme. The state total has been derived using the mean price of all trades and thus the state total does not equal the sum of market turnover in the individual schemes. (b) No price information is collected for seasonal assignment trade. Data include supplemented and unsupplemented water sources, therefore n/a (not available). Trading summary — QLD Trading Section 4.1

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 49 Section 4.2 Trading summary Victoria Section 4.2 Trading summary 4.2.1 Summary 52 Victoria 4.2.2 Market operation 53 4.2.3 Water supply conditions 57

4.2.4 Victorian water share markets 58

4.2.5 Victorian water allocation markets 65

4.2.6 Value of market turnover 71

4.2.1 Summary Section 4.2.3—Water supply conditions, presents information on storage levels and allocation announcements in Victoria The following section presents Victorian trading data during the 2007–08 water year. made available for the purposes of this report. While NWI terminology is used when describing national market Section 4.2.4—Victorian water share markets, describes the characteristics and activity, Victorian water trading terminology markets of products that would be known as a water access is used in this section (although it is not consistent with the entitlement under the NWI. NWI or other jurisdictions). Table 4.2.1 provides a summary of Section 4.2.5—Victorian water allocation markets, describes Victoria’s water trading terminology, including NWI equivalents the markets of products that are consistent with the NWI where applicable. concept of water allocations. Section 4.2.2—Market operation, describes the legislative Section 4.2.6—Value of market turnover, attempts to provide and planning framework that underpins Victoria’s water an estimate of the value of Victoria’s water markets. markets, and also the types of products and trading that occur within the state. Further information can also be found at Appendix A.

Table 4.2.1: Victorian water trading terminology

Term Definition and NWI equivalent Water share An authority to take an ongoing share of a consumptive pool of water in a particular water system. Able to be traded subject to trading rules. Water use licence An authority to use water on land for irrigation. Water use registration An authority to use water on land for purposes other than irrigation. Water allocation Water allocations are formally made against water shares for use during a specified irrigation season. Allocations are announced as a percentage of the water share volume. Able to be traded subject to trading rules. Bulk entitlement An entitlement held by rural water corporations and other authorities defined in theWater Act 1989. Entitles the holder to take an ongoing share of a consumptive pool of water in a regulated system or, in the case of unregulated systems, a volumetric allocation. Tradeable subject to trading rules. Authorities may acquire water shares and licences and convert them to a bulk entitlement or add them to an existing bulk entitlement. Water system A description of a water source (river basin, groundwater aquifer) and system type (regulated, unregulated). Water shares are tagged against a source water system. Trading zone A defined area within which trade between entitlement holders can always occur, subject to a few conditions. Trade between trading zones may in some cases be possible subject to conditions defined in the trading rules. Trading zones are based on hydrology and delivery infrastructure, which define the physical limits to trade. Some trading zones span multiple water authorities. Delivery system A system for the delivery of water for irrigation. Refers to an irrigation district or, for private diverters, a river reach on a regulated river. Reliability class Water shares are classed according to their reliability, which is defined by the frequency with which full seasonal allocations are expected to be available. Most water shares are classed as either high-reliability or low-reliability. Dealings Water share transfer The transfer of ownership of a water share. As part of the process of transferring the water share, the buyer can also vary the share or change the association of the water share (see below).

52 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.2.1: Victorian water trading terminology continued

Term Definition and NWI equivalent Limited term transfer The transfer of a right to future allocations under a water share for a limited period to the owner or occupier of land specified in a water use licence or registration. Associate or revoke Water shares are either associated with water use licences (and thus land) or water use a water share registration or classified as being ‘non-associated’. No more than ten per cent of a water system association can be non-associated. Vary a water share To change one or more attributes of the water share, including the water system, trading zone, delivery system, water authority or reliability class. Assignment of water The holder of a water allocation may trade the whole or a part of that allocation to a person who is allocation the owner or occupier of land specified in the water-use licence or water-use registration. Subdivision and A water share may be divided by cancelling the share and issuing new water shares. Two or more consolidation shares may be consolidated.

Source: National Water Commission (2007) Dictionary of Terms for Water Access Entitlements and Transactions

4.2.2 Market operation Victoria has recently embarked on a series of water market reforms. On 1 July 2007, water rights held by irrigators and The issue and allocation of water entitlements in Victoria diverters on regulated water systems in northern Victoria were is governed by the Water Act 1989 (Vic). It defines water unbundled. From 1 July 2008, unbundling will extend to the Trading summary — VIC Trading entitlements and establishes the mechanisms for managing Werribee/Bacchus Marsh and Thomson/Macalister water Victoria’s water resources. There is a range of entitlements systems in southern Victoria. The unbundling of traditional that may be issued by the Minister for Water including: water rights produces three separate entitlements: ++ bulk entitlements ++ Water share—a legally recognised, secure share of the ++ environmental entitlements water available to be taken from a defined water system: a water share is specified as a maximum volume of seasonal ++ water-use licences allocation that may be made against that share. ++ water shares ++ Delivery share—the right to have water delivered by a water corporation and a share of the available flow in a ++ delivery shares. delivery system: a share in terms of unit volume per unit of Bulk entitlements can be held by water corporations and time of the total amount of water that can be drawn from a Section 4.2 other specified bodies defined in the Water Act 1989 (Vic), water system at a certain point. and are tradeable. Environmental entitlements have recently ++ Water-use licences—the right to use water on a specific been included in the Water Act 1989 (Vic). Introduction of the piece of land, or water-use registration (an authorisation to Water (Resource Management) Act 2005 (Vic) amended the use water for purposes other than irrigation). Water Act 1989 (Vic), to create the legal foundation for water to be set aside to maintain environmental values of rivers Entitlements in declared systems in Victoria are recorded in and streams. It is intended that environmental provisions the Water Register, the public register of all water-related embedded in existing bulk entitlements will be converted into entitlements in Victoria. The right to take water in declared environmental entitlements. An environmental entitlement systems is not tied to land. Despite this, the government has determined that 90 per cent of water shares must still be is held by the Minister for Environment. The Minister may associated with land in a declared system. This is achieved temporarily sell or assign an allocation of water under an through setting a non-water user limit of 10 per cent or as environmental entitlement to an owner or occupier of land. determined by the government from time to time. Water shares, delivery shares and water-use licences can Compared with the former bundled entitlements, water shares be held by any legal entity, providing the entity meets certain are easier to trade and can be mortgaged separately, leased conditions, which vary depending on the type of entitlement. and held without land. At this stage unbundling does not apply Delivery shares must be owned by landholders and are linked to groundwater, unregulated waterways or recycled water. to land. Similarly, water-use licences must be held by an Table 4.2.2 summarises the status of unbundling in Victoria at owner/occupier of land. the end of the 2007–08 water year.

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 53

Table 4.2.2: Status of unbundling of Victorian water rights and entry on the water register

Unbundled? On register? Regulated rivers Northern Victoriaa Yes, on 1 July 2007 Yes Southern Victoria Yes, on 1 July 2008b Yes, on 1 July 2008b Unregulated rivers and groundwater Northern Victoriaa Noc Yes Southern Victoria Noc No (not till Jan 2009)

Note: (a) Excluding Coliban and Wimmera Mallee (b) For purposes of this report, regulated river entitlements in southern Victoria are treated as bundled as unbundling only took effect on 1 July 2008. (c) There are no firm plans to unbundle water rights for unregulated rivers and groundwater.

Table 4.2.3: Water entitlements on issue as at 30 June 2008—all Victoria

Water source On register (ML) Off register (ML) Total (ML) Regulated rivers 3 550 146 2 289 294 5 839 440 Unregulated rivers 161 751 169 159 330 910 Groundwater 489 923 511 077 1 001 000 Drainage diversion 93 322 0 93 322 Small catchment dams 0 364 700 364 700 Total 4 295 142 3 334 230 7 629 372

Note: Total entitlements on issue obtained from Victorian Water Accounts 2006–07. The ‘off register’ entitlements were calculated by taking the difference between total entitlements on issue and those that have been entered on the water register. Source: Victorian Water Register and State Water Report 2005–06

54 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

ML 462 2353 1830 Total 58 417 10 067 25 577 463 215 102 874 161 753 477 465 3 072 681 3 072 681 1 6 80 No 199 305 4836 7704 2867 1331 1046 35 929 35 929 0 0 ML 698 698 4040 identified Source not Source 0 0 19 No 421 421 ML 7932 6829 7932 Ovens 38 936 38 936 18 061 24 890 3 3 No 853 853 945 287 1232 ML 5129 16 664 28 436 11 772 Murray 226 969 221 840 1 488 606 1 488 606 97 36 No 133 645 572 1217 16 296 16 296 1 ML 110 7523 6044 1478 29 748 29 748 30 597 19 258 11 339 Loddon Trading summary — VIC Trading 4 1 1 No 603 603 516 516 548 511 1064 0 0 ML 2631 Kiewa 15 867 18 498 0 0 No 120 534 654 ML 177 462 4938 1829 13 809 26 228 40 499 21 427 220 016 226 960 Goulburn 1 426 944 1 426 944 5 1 32 No 253 680 102 114 285 1686 2367 Section 4.2 16 918 16 918 ML 6315 6315 4883 3863 8746 55 779 55 779 Campaspe 3 3 No 719 719 283 291 574 0 78 78 ML 1157 1157 Bullarook 1 1 0 54 54 No ML 990 990 7154 2933 31 511 31 511 10 087 Broken 1 1 No 486 486 377 219 596 Regulated rivers shares Water (unbundled) Bulk entitlement s51 direct diversion Supply by agreement allowance Water Subtotal (unbundled) Subtotal (bundled) Unregulated rivers Bulk entitlement s51 catchment dam s51 direct diversion Subtotal Groundwater s51 Dewatering Table 4.2.4: Water entitlements on issue as at 30 June 2008—by water system in northern Victoria system in northern water entitlements on issue as at 30 June 2008—by Water 4.2.4: Table

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 55

6456 Total 93 322 457 890 489 923 4 295 144 820 2911 6236 3020 52 020 3281 40 650 47 971 48 669 identified Source not Source 795 2389 2810 1575 352 Ovens 12 070 12 422 84 180 182 354 172 2442 480 59 417 59 897 25 456 Murray 1 829 364 183 414 231 249 18 309 618 51 882 52 610 Loddon 120 478 255 523 267 2706 74 1997 2071 Kiewa 20 569 38 75 37 729 1343 67 845 236 338 259 108 Goulburn 2 021 356 636 567 1327 2248 22 353 21 298 53 993 54 291 125 152 Campaspe 4 97 221 124 1521 0 1235 Bullarook 0 55 10 1553 1543 44 141 Broken 5 7 12 1095 s8 Private right Subtotal Drainage Drainage diversion agreement Total entitlements on register s51 Groundwater defines the following entitlements, which remain bundled: remain bundled: which entitlements, defines the following Act 1989 Section 51 of the Water river systems and groundwater. and unregulated includes entitlements on issue in regulated Table Note: Victorian Department of Sustainability and Environment Right entitlements. Source: Act defines Private Section 8 of the Dewatering. Groundwater, Diversion, Direct Dam, Catchment Table 4.2.4: Water access entitlements on issue as at 30 June 2008—by water system in northern Victoria continued system in northern water access entitlements on issue as at 30 June 2008—by Water 4.2.4: Table

56 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.2.5: Approximate water entitlement shares by sector

Volume (GL) Per cent share Irrigation 5645 74% Stock and domestic 305 4% Urban and commercial 1450 19% Power generation 229 3% All sector total 7629 100%

Note: Entitlement shares are approximate because they are based on the percentage shares of each sector’s water use in 2006–07. These shares were multiplied by the total entitlement on issue for Victoria to obtain an estimate of the respective entitlement holdings of each sector. Source: Water use shares from Victorian Water Accounts 2006–07

4.2.3 Water supply conditions Figure 4.2.1: Water levels in key Victorian storages supplying the market

Eildon Dam Mokoan Dam Eppalock Dam Cairn Curran Dam Hume Dam Dartmouth Dam Lake Victoria Trading summary — VIC Trading 100

30 Storgae level - per cent of capacity 20 Section 4.2 10

31-Jul-07 31-Aug-07 30-Sep-07 31-Oct-07 30-Nov-07 31-Dec-07 31-Jan-08 29-Feb-08 31-Mar-08 30-Apr-08 31-May-08 30-Jun-08

1 July 2007 to 30 June 2008

Source: Victorian Government, Our Water Our Future Monthly Water Report

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 57

Table 4.2.6: Victoria—water allocation announcements

Date Broken Bullarook Campaspe Goulburn Loddon Murray announced Creek 1/7/07 0 0 0 0 0 0 31/7/07 0 0 0 0 0 0 14/8/07 0 0 0 15 0 5 2/9/07 10 0 0 17 0 5 16/9/07 15 0 0 20 5 10 30/9/07 15 0 1 23 5 16 14/10/07 18 0 2 26 5 18 31/10/07 18 0 2 29 5 20 14/11/07 23 0 5 35 5 23 2/12/07 26 0 5 37 5 26 16/12/07 29 0 5 39 5 28 1/1/08 48 0 10 45 5 33 14/1/08 56 0 12 47 5 34 31/1/08 65 0 14 51 5 36 14/2/08 68 0 16 53 5 42 2/3/08 70 0 18 54 5 43 16/3/08 70 0 18 55 5 43 31/3/08 71 0 18 57 5 43

Source: htttp://www.g-mwater.com.au/news/allocation-announcements/archive.asp

4.2.4 Victorian water share markets Table 4.2.7: Water share transfers—northern regulated rivers

High reliability Low reliability Total trades Water system and trading zone Number Volume Number Volume Number Volume (ML) (ML) (ML) Goulburn 1A Greater Goulburn 655 61 531 403 24 611 1058 86 142 1B Boort 25 13 605 22 14 833 47 28 438 3 Lower Goulburn 8 201 5 204 13 406 Broken 2A Broken—Nill to Casey’s 4 170 3 35 7 204 2B Broken—Casey’s to Goulburn 9 412 6 85 15 497

58 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.2.7: Water Share transfers—northern regulated rivers continued

High reliability Low reliability Total trades Water system and trading zone Number Volume Number Volume Number Volume (ML) (ML) (ML) Campaspe 4A Campaspe—Eppalock to WWC 8 532 4 173 12 705 4C Lower Campaspe 3 133 0 0 3 133 Bullarook 5B Bullarook 1 18 1 8 2 26 Loddon 5A Loddon—Coliban Channel to Lower 8 1095 5 342 13 1437 Weir Pool Victorian Murray 6 VIC Murray—Dart to Barmah 176 23 589 128 9613 304 33 201 6B Lower Broken Creek 9 485 7 317 16 801 7 VIC Murray—Barmah to SA 593 55 640 123 9,220 716 64 860 Trading summary — VIC Trading Ovens 9A Ovens 6 348 4 171 10 518 9B King 3 131 1 18 4 149 Total 1508 157 888 712 59 629 2220 217 517

Note: (a) Includes transfers as part of a property sale. (b) Includes both transfers within a trading zone and between trading zones. For inter-zone transfers, seller’s side of transaction is reported. (c) The ‘low reliability’ category includes ‘spill reliability’ water shares, which exist in the Ovens system.

(d) Excludes transfers of unregulated river licences and groundwater licences. Section 4.2 Source: Victoria Water Register

Table 4.2.8: Bundled water entitlement transfers—southern regulated rivers

Internal trades Trades in Trades out Net change Water system Number Volume Number Volume Number Volume (ML) (ML) (ML) Thompson/ Macalistera 47 2031 0 0 0 0 0 Werribeea 3 144 0 0 0 0 0 Wimmera (Horsham 17 4283 0 0 0 0 0 Irrigation Area)b Total 58 6458 0 0 0 0 0

Source: aSouthern Rural Water Authority bGrampians Wimmera Mallee Water

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 59

Table 4.2.9: Change in location of water shares—northern regulated rivers

Delivery system Net change in volume (ML) High reliability Low reliability Total Goulburn-Murray Water (GMW) Broken -2 0 -2 Bullarook 0 0 0 Campaspe -442 -3 -445 Campaspe Irrigation District -687 -183 -870 Central Goulburn Irrigation Area -14 799 -6187 -20 987 Goulburn 102 412 514 Loddon -2 0 -2 Murray -6123 -1396 -7520 Murray Valley Irrigation Area -11 109 -3261 -14 370 Nyah, Tresco and Woorinen -291 -20 -311 Ovens -112 -18 -130 Pyramid-Boort -9343 1680 -7662 Rochester Irrigation Area -6665 -3019 -9684 Shepparton Irrigation Area -6627 -2255 -8883 Torrumbarry Irrigation Area -13 520 -4539 -18 059 GMW—Non water use 50 179 12 447 62 626 GMW subtotal -19 442 -6340 -25 782 First Mildura Irrigation Trust (FMIT) First Mildura Irrigation Trust -2818 0 -2818 FMIT—Non water use 1216 0 1216 FMIT Subtotal -1602 0 -1602 Lower Murray Water (LMW) Murray 15 982 6076 22 058 Robinvale, Red Cliffs and Merbein -691 0 -691 LMW—Non water use 6167 264 6431 LMW Subtotal 21 458 6340 27 798 Grand total 414 0 414

Note: (a) Includes change of location with or without a transfer of ownership. (b) Data represent net changes of water share volumes, by delivery system. (c) No data available on total movement in water shares (inbound and outbound). (d) Positive sign indicates net increase in water share volume. (e) Net changes in water share volumes include cancellations and issues of water shares. (f) The total net increase of 414ML of water shares is due to corrections to the conversion (unbundling) of previous entitlements. (g) The non water use category includes outbound tagged interstate trades and water shares whose association with a use licence has been revoked. In the 2007–08 water year there was only one interstate transfer, i.e. (200ML) out of Central Goulburn Irrigation Area. Source: Department of Sustainability and Environment

60 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.2.10: 10% non water use limit—status at 30 June 2008

Irrigation district Reliability Non water use Water held by non Volume of limit % of limit 10% limit (ML) water users (ML) remaining (ML) remaining Broken High 2641.0 2.0 2639.0 100% Low 510.0 0.0 510.0 100% Bullarook High 77.0 0.0 77.0 100% Low 39.0 0.0 39.0 100% Campaspe High 3712.0 1212.0 2500.0 67% Low 1866.0 185.4 1680.6 90% Goulburn High 98 678.0 28 264.6 70 413.4 71% Low 43 628.0 11 000.0 32 628.0 75% Loddon High 2165.0 2.0 2163.0 100% Low 810.0 0.0 810.0 100% VIC Murray High 118 883.0 28 081.2 90 801.8 76% Low 30 325.0 7178.3 23 146.7 76% Ovens High 2645.0 124.0 2521.0 95% Trading summary — VIC Trading Low 1249.0 23.5 1225.5 98%

Source: Victorian Water Register

Table 4.2.11: Limited term transfers

Water system Number Average duration Volume (ML)

Total 36 n/a 8327 Section 4.2

Note: No breakdown of term transfers by water system available. No duration information available. Source: Department of Sustainability and Environment

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 61

2008-12-03 Map document: VIC_WaterEntitlementTradingIntensity_(permanent)_a4_landscape_margins_im_20081203.mxd km < % < 1 -% 1 2 -% 2 5 - 5 10 % - 20 10 % - 30 20 % - 40 30 % - 50 40 % % > 50 No Trade Water Entitlement Water Trading intensity is defined as total volume of the trades within a zone by the that zone. in total entitlement nominal volume of RevisedDRAFT IncludesNWC comments Trading Intensity Trading and and sales out of a zone, all divided MVBnew definition 0 50 100 150

y er Mu r ra iv Dartmouth R Dam Hume Dam 6 Sale A 9 Albury B Macalister 6 9 homson / Macalister Wangaratta Eildon Dam 41 Thompson / / Thompson 41 5B Bullarook 6 Vic Murray Dartmouth Barmahto 6B Lower Broken Creek 9B King 21 Wimmera 31 Werribee 41 T . Lake Lake Mokoan R e g id A

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Geelong Water trading zones for Victorian water systems 1A 1A Greater Goulburn 1B 1B Boort 5A Loddon 1L 1L Loddon Weir Pool 2A 2A Broken: Nillahcootie Casey’sto Weir 7 Vic Murray Barmah to SA 2B 2B Broken: Casey’sWeir to Goulburn River 9A Ovens 3 3 Lower Goulburn 4A 4A Campaspe 4B 4B Coliban channel system 4C Lower Campaspe

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Figure 4.2.2: Water share trading intensity trading share Water 4.2.2: Figure Australia (2002-08). Map produced by the Bureau of Rural Sciences © Commonwealth of Australia. of ©Commonwealth Sciences Rural of Bureau the by produced Map (2002-08). Australia Data Sources: Water system boundaries: Victoria Dept. Sustainability and Environment and Bureau of Rural Sciences. Topographic data: Geoscience data: Topographic Sciences. Rural of Bureau and Environment and Sustainability Dept. Victoria boundaries: system Water Sources: Data data. final contains map This NOTE: Reviseddata Victorian from MVB 01/12/2008

62 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.2.12: Prices for water shares

Trading zone Prices ($ per ML) Mean Standard Number of Deviation trades 1A Greater Goulburn High reliability 1602 679 525 Low reliability 204 266 259 VIC Murray-Dartmouth to Barmah High reliability 1588 490 144 Low reliability 168 221 96 VIC Murray-Barmah to SA High reliability 1814 719 401 Low reliability 204 494 64 All northern Victoria High reliability 1678 679 1128

Low reliability 209 335 450 summary — VIC Trading

Note: Zeros and outliers removed from price data. Mean prices for other trading zones not calculated due to limited price information. Source: Victorian Water Register

Figure 4.2.3: Water share volumes traded and average prices—Northern Victoria

High reliability volume Low reliability volume High reliability price Low reliability price

40000 2000

1800 Section 4.2 35000

1600 30000 1400

25000 1200

ML 20000 1000 $/ML

800 15000

600 10000 400

5000 200

0 0

July April May June March August October January February September November December Months: 1 July 2007 to 30 June 2008

Source: Victorian Water Register

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 63

Figure 4.2.4: Water share volumes traded and average prices—Greater Goulburn

High reliability volume Low reliability volume High reliability price Low reliability price

18000 2500

16000

2000 14000

12000 1500 10000 ML $/ML 8000 1000 6000

4000 500

2000

0 0

July April May June March August October January February September November December

Months: 1 July 2007 to 30 June 2008

Source: Victorian Water Register

Figure 4.2.5: Water share volumes traded and average prices—Victorian Murray (Barmah to South Australia)

High reliability volume Low reliability volume High reliability price Low reliability price

12000 2500

10000 2000

8000 1500

6000 ML $/ML

1000 4000

500 2000

0 0

July April May June March August October January February September November December

Months: 1 July 2007 to 30 June 2008

Source: Victorian Water Register

64 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

4.2.5 Victorian water allocation markets Table 4.2.13: Water allocation trades—net change in allocation volume by zone

Trading zone Internal Trades in Trades out Net Total number Total volume trades (ML) (ML) (ML) change of trades traded (ML) (ML) 1A Greater Goulburn 86 524 2 866 92 737 -63 534 7492 179 261 1B Boort 2302 11 629 16 586 -4957 494 18 888 2A Broken—Nill to Casey’s 195 7 213 -206 16 408 2B Broken—Casey’s to 1014 213 7 206 53 1021 Goulburn 3 Lower Goulburn 170 1444 13 894 -12 450 276 14 064 4A Campaspe—Eppalock 871 263 669 -406 108 1540 to WWC 4C Lower Campaspe 3 22 72 -50 6 75 5A Loddon—CC/Tull to 269 159 122 37 76 391 LWP 6 VIC Murray—Dart to 18 195 14 612 25 859 -11 299 1642 44 054 Barmah summary — VIC Trading 6B Lower Broken Creek 315 1100 3878 -2778 192 4193 7 VIC Murray—Barmah 99 184 134 239 26 875 107 511 4594 126 059 to SA 9A Ovens 1162 0 0 0 23 1162 9B King 408 0 0 0 11 408 Groundwater, unregulated, 11 295 2022 2080 -58 170 13 375 uncategorised

Total 221 907 194 578 182 992 12 017 15 153 404 899 Section 4.2

Note: (a) ‘Internal trades’ equivalent to the total volume of sales within a trading zone. (b) Table includes interstate trades into and out of Victoria. (c) ‘Net change’ is equivalent to the total volume bought less total volume sold. (d) Total number of trades and total volume traded is calculated as the sum of internal trades plus trades out. (e) Data have been corrected for pool exchange trades by only counting seller’s side of the transaction (in the case of internal trades and trades out) and just the buyer’s side in the case of trades in. (f) In the groundwater/unregulated category, the 58ML mismatch between volume in and volume out is due to allocation transferring into regulated trading zones. Source: Department of Sustainability and Environment

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 65

Table 4.2.14: Water allocation trades—southern regulated rivers

Internal trade Trades in Trades out Water system Number Volume Number Volume Number Volume Net change (ML) (ML) (ML) (ML) Thompson/ Macalistera 195 8080 14 1361 40 3508 -2146 Werribeea 25 701 0 0 0 0 0 Wimmera (Horsham 502 77 315 0 0 0 0 0 Irrigation Area)b Total 722 86 096 14 1361 40 3508 -2146

Source: (a) Southern Rural Water Authority (b) Grampians Wimmera Mallee Water Table 4.2.15: Interstate allocation trades into and out of Victoria—DSE data

Interstate trading zone Destination of Source of trades Net trade into trades out of into Victoria (ML) Victoria (ML) Victoria (ML) 10A NSW Murray above Barmah Choke 437 2936 2499 10B NSW—Murray Irrigation Limited 260 976 716 11 NSW Murray below Barmah Choke 13 497 21 707 8209 Total NSW Murray 14 194 25 619 11 424 13 Murrumbidgee 317 45 671 45 354 14 Lower Darling 0 128 128 12 SA Murray 47 432 2036 -45 395 Grand total 61 943 73 454 11 511

Note: The net trade into Victoria of 11 511 ML differs from the net increase of 12 017 ML reported in table 4.2.13. This is due to 506 ML remaining in the Watermove clearing accounts at the end of the 2007–08 water year with some pool exchange trades still to be submitted and approved. Source: Department of Sustainability and Environment Table 4.2.16: Interstate allocation trades into and out of Victoria—MDBC data

Interstate trading zone Destination of trades Source of trades into Net trade into Victoria out of Victoria (ML) Victoria (ML) (ML) NSW Murray 14 002 24 794 10 792 Murrumbidgee 247 46 344 46 097 Lower Darling 0 0 0 SA Murray 47 546 2036 -45 509 Total 61 795 73 175 11 380

Note: There are a number of differences between this table and table 4.2.15, due to reconciliation done by the MDBC and DSE following the end of the 2007–08 water year. Source: MDBC, 27 October 2008

66 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

2008-12-03 Map document: VIC_WaterAllocationTradingIntensity_(temporary)_a4_landscape_margins_im_2008203.mxd km < % < 1 -% 1 2 -% 2 5 - 5 10 % - 20 10 % - 30 20 % - 40 30 % - 50 40 % % > 50 No Trade within within a zone, divided by the total Water Allocation Water Trading intensity is defined as total the volume of trades in/out and nominal volume of entitlement in that RevisedDRAFT IncludesNWC comments Trading Intensity Trading zone. 0 50 100 150

y er Mu r ra iv Dartmouth R Dam Hume Dam 6 Sale A 9 Albury B Macalister 6 9 Wangaratta Eildon Dam 41 Thompson / / Thompson 41 5B Bullarook 6 Vic Murray Dartmouth Barmahto 6B Lower Broken Creek 9B King 21 Wimmera 31 Werribee 41 Thomson / Macalister . Lake Lake Mokoan R summary — VIC Trading e g id A

b 2 m

u B r

r 2

u A Shepparton M 6 1 B 6 MELBOURNE A 3 1

Hay

r NEW SOUTH WALES

e C

v A i 4 Melton

Lake Eppalock R

h c Echuca

B a

4 L Werribee 31 31 A Section 4.2 7

. Bendigo

map. in this included not are data trade Groundwater Note: L

B A B e

1 1

e 5 5

i R

r Ballarat

r b

A M 7

Swan Hill Swan

p o Euston H

Mildura

g n i D l a r 21 Wimmera 21 7

VICTORIA .

Horsham R

Lake Hindmarsh

g l

y e

a n

r e

r l Lake Victoria u G M

r e

v i R AUSTRALIA SOUTH

Data Sources: Water system boundaries: Victoria Dept. Sustainability and Environment and Bureau of Rural Sciences. Topographic data: Geoscience data: Topographic Sciences. Rural of Bureau and Environment and Sustainability Dept. Victoria boundaries: system Water Sources: Data Australia. of ©Commonwealth Sciences Rural of Bureau the by produced Map (2002-08). Australia data. final contains map This NOTE: Reviseddata Victorian from MVB 01/12/2008

Figure 4.2.6: Water allocation trading intensity by trading zone trading intensity by allocation trading Water 4.2.6: Figure

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 67

2008-12-03 Map document: VIC_NetChange_WaterAllocation (temporary)_a4_landscape_margins_im_20081203.mxd km > > 100000 < 600 < 600 600 000- 5 000 5 - 25 000 000 50 - 100 000 No Trade Internaltrade only Water Allocation Water Net Change in Change Net (ML) Increase Net (ML) Decrease Net The net change in water allocation RevisedDRAFT IncludesNWC comments for for a particular trading zone is calculated calculated as the between difference inbound inbound trades megalitres. in trades, and outbound 0 50 100 150

y er Mu r ra iv Dartmouth R Dam Hume Dam 6 Sale A 9 Albury B Macalister 6 9 homson / Macalister Wangaratta Eildon Dam 41 Thompson / / Thompson 41 5B Bullarook

6 Vic Murray Dartmouth Barmahto 6B Lower Broken Creek 9B King 21 Wimmera 31 Werribee 41 T . Lake Lake Mokoan R e g id A

b 2 m

u B r

r 2

u A Shepparton M 6 1 B 6 MELBOURNE A 3 1

Hay

r NEW SOUTH WALES

e C

v A i 4 Melton

Lake Eppalock R

h c Echuca

B a

4 L Werribee 31 31 A 7

Geelong Water trading zones for Victorian water systems 1A 1A Greater Goulburn 5A 5A Loddon 1B 1B Boort 1L 1L Loddon Weir Pool 2A 2A Broken: Nillahcootie Casey’sto Weir 7 Vic Murray Barmah to SA 2B 2B Broken: Casey’sWeir to Goulburn River 9A Ovens 3 3 Lower Goulburn 4A 4A Campaspe 4B 4B Coliban channel system 4C Lower Campaspe

. Bendigo

map. in this included not are data trade Groundwater Note: L

B A B e

1 1

e 5 5

i R

r Ballarat

r b

A M 7

Swan Hill Swan

p o Euston H

Mildura

g n i D l a r 21 Wimmera 21 7

VICTORIA .

Horsham R

Lake Hindmarsh

g l

y e

a n

r e

r l Lake Victoria u G M

r e

v i R AUSTRALIA SOUTH

Figure 4.2.7: Net change in water allocation by trading zone trading allocation by in water Net change 4.2.7: Figure Australia (2002-08). Map produced by the Bureau of Rural Sciences © Commonwealth of Australia. of ©Commonwealth Sciences Rural of Bureau the by produced Map (2002-08). Australia Data Sources: Water system boundaries: Victoria Dept. Sustainability and Environment and Bureau of Rural Sciences. Topographic data: Geoscience data: Topographic Sciences. Rural of Bureau and Environment and Sustainability Dept. Victoria boundaries: system Water Sources: Data data. final contains map This NOTE: Reviseddata Victorian from MVB 01/12/2008

68 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.2.17: Prices for water allocation trades—regulated rivers

Regulated water system Price ($ per ML) Median Mode Mean Standard Number of Deviation trades Goulburn 750 1050 702 324 1963 Victorian Murray 473 350 597 315 208 (Dartmouth to Barmah) Victorian Murray 700 500 681 324 1520 (Barmah to South Australia) All northern Victoria 550 1050 668 326 3545

Note: (a) Prices are for the whole year, 2007–08. (b) Price statistics for each water system based on internal trades, sales out and purchases into system, including interstate trades. (c) “Number of trades” indicates the number of trades for which reliable price information is available. Source: Water Exchange

Figure 4.2.8: Water allocation trading volumes and prices—Greater Goulburn

Volume traded WaterMove pool price Water exchange average price summary — VIC Trading 12000 1200

10000 1000

8000 800 $/ML ML

ML6000 600 Section 4.2 4000 400

2000 200

0 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

Weeks: 1 July 2007 to 30 June 2008

Source: Volumes traded from Victorian water register (regulated rivers). Price data from Waterexchange and Watermove.

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 69

Figure 4.2.9: Water allocation trading volumes and prices—Victorian Murray (Dartmouth to Barmah)

Volume traded Waterexchange average price Watermove pool price

3500 1200

3000 1000

2500 800 $/ML 2000 ML

600

1500

400 1000

200 500

0 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49

Weeks: 1 July 2007 to 30 June 2008

Source: Volumes traded from Victorian water register (regulated rivers). Price data from Waterexchange and Watermove.

Figure 4.2.10: Water allocation trading volumes and prices—Victorian Murray (Barmah to South Australia)

Volume traded Waterexchange average price Watermove pool price

25000 1400

1200 20000

1000

15000 $/ML 800 ML

600 10000

400

5000 200

0 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

Weeks: 1 July 2007 to 30 June 2008

Source: Volumes traded from Victorian water register (regulated rivers). Price data from Waterexchange and Watermove

70 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

4.2.6 Value of market turnover Table 4.2.18: Estimated value of market turnover—regulated rivers, northern Victoria

Gross value of water sales ($ million) Water system High reliability Low reliability Water allocations water shares water shares regulated rivers Greater Goulburn 98.6 5.0 125.8 VIC Murray—Dart to Barmah 37.5 1.6 29.3 VIC Murray—Barmah to SA 100.9 1.9 84.0 Total northern Victoria 264.9 12.5 270.5

Note: (a) Estimates of market value are based on mean price and the total volume of trades in each water system. (b) Due to limited price information, separate values have not been estimated for all water systems, but trades in these regions have been included in the northern Victoria total. Source: Allocations price data from WaterExchange, water share prices and volumes traded from Victorian Water Register Trading summary — VIC Trading Section 4.2

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 71 Section 4.3 Trading summary South Australia Section 4.3 Trading summary 4.3.1 Summary 74 South Australia 4.3.2 Market operation 75 4.3.3 Water supply conditions 77

4.3.4 South Australian water 78 licence markets

4.3.5 South Australian water 80 allocation markets

4.3.6 Value of market turnover 84

4.3.1 Summary Section 4.3.3—Water supply conditions, presents information on storage levels and allocation announcements in South The following section presents South Australian trading Australia during the 2007–08 water year. data made available for the purposes of this report. While NWI terminology is used when describing national market Section 4.3.4—South Australian water licence markets, characteristics and activity, South Australian water trading describes the markets of products that would be known as a terminology is used in this section (although it is not water access entitlement under the NWI. consistent with the NWI or other jurisdictions). Table 4.3.1 Section 4.3.5—South Australian water allocation markets, provides a summary of South Australia’s water trading describes the markets of products that are approximately terminology, including NWI equivalents where applicable. equivalent to trading water allocations under the NWI. Section 4.3.2—Market operation, describes the legislative Section 4.3.6—Value of market turnover, attempts to provide and planning framework that underpins South Australia’s an estimate of the value of South Australia’s water markets. water markets, and also the types of products and trading that occur within the state. Further information can also be found at Appendix A.

Table 4.3.1: South Australian water trading terminology

Term Definition and NWI equivalent Water licence Authorises the holder to take (or to hold) water. Water licences are ‘attached’ to land and conditions on how the water can be used are specified by the licence. Water allocation The water allocation endorsed on a water licence. A ‘taking allocation’ authorises the holder to take and use a specified volume of water pursuant to the licence. A ‘holding allocation’ authorises the holder to a quantity of water that can only be taken subject to approval by the Minister—and only once the allocation has been converted to a taking allocation. Conversion is subject to a favourable technical assessment of site use impacts. Water resource These are ‘prescribed’ management areas under the Natural Resources Management Act 2004 management areas (SA). Once a water resource is prescribed, a licence is required for all extractions—with exception of stock and domestic use. Dealings Transfer of licence The passing of the legal or beneficial interest in the licence from one legal entity to another. The transfer can be absolute or for a defined period. Commonly referred to as a permanent trade. Variation of licence To change the location where the water may be used, change the specified purpose of use or modify the conditions of use. Conversion of licence Conversion of a water allocation from taking to holding or vice versa. Transfer of water This dealing reduces the water allocation on one licence and increases the allocation on another allocation licence by a corresponding amount. Can be absolute or for a fixed period. Commonly referred to as a temporary trade.

Source: National Water Commission (2007) Dictionary of Terms for Water Access Entitlements and Transactions

74 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

4.3.2 Market operation ++ the location of the water resource from which water may be taken (applicable to taking allocations) The Natural Resources Management Act 2004 (SA) provides the legislative framework for managing South Australia’s ++ various conditions of use (for example, the parcel of land water resources, including trading. Part 3 of the Act contains where the water is to be used and/or the purpose of use). provisions for water licensing and allocation. A ‘taking-water allocation’ is an attribute of a water licence At present, water rights in South Australia are ‘bundled’. and is a quantity of water that the licensee is entitled to take The state is in the process of making changes to water and use from a specified water resource within a particular licensing arrangements as part of its commitment to the NWI. management area, subject to the conditions of the licence. Unbundling of the South Australian River Murray will occur A holding allocation represents a share in the volume of a early in the 2009–10 water year. The process of unbundling licensed allocation in a management area. Holding allocations for the rest of South Australia is expected to be completed in cannot be extracted and used without conversion to a taking 2010. Existing water licences will be separated into their main allocation, and this requires regulatory approval from the components of: Department of Water, Land and Biodiversity Conservation. ++ a water access entitlement The operational and regulatory basis for South Australia’s trading framework is contained in statutory Water Allocation ++ a water allocation Plans. These plans specify environmental and consumptive ++ a site use approval shares for each ‘prescribed’ water area, and the trading rules that apply to the prescribed area. Trading is only permissible ++ a water resource works approval within a prescribed area (i.e. trading is not permitted or feasible ++ a delivery capacity entitlement. between areas). All trades, including water licence transfers and water allocation trades, are registered on the Water The Natural Resources Management (Water Resources and Information and Licensing Management Application (WILMA). Other Matters) Amendment Act 2007 (SA) was assented to during the 2007–08 water year. This amends the Natural Approximately 40 irrigation trusts operate in South Australia, summary — SA Trading Resources Management Act 2004 (SA) to give effect to the including infrastructure operators (such as the Central unbundled scheme. The process of unbundling is expected to Irrigation Trust, a management company for 11 individual be completed by 2010. trusts and Renmark Irrigation Trust) and groups of private irrigators pumping directly from a watercourse. Each trust Under the existing legislative framework, water licences has a bulk licence which is held in common by members authorise the holder to take (or to hold) water. The instrument of the trust. Ownership of the licence resides with the trust, specifies: not the individual members. The trusts have the authority ++ the prescribed water resource from which water to develop trading rules for their members, which apply to may be taken trades between members of the trust. Internal trades are not recorded on WILMA, however water allocation or licence ++ one or more water allocations

transfers into or out of a trust are. Section 4.3

Table 4.3.2: Water licences on issue (taking and holding allocations)

Water source and management area Hectares haIE ML Surface water Barossa PWRA 784 0 577 Clare Valley PWRA 2212 0 268 Total surface water 2996 0 845 Underground water Angas Bremer PWA 0 0 8618 Barossa PWRA 0 0 6293 Clare Valley PWRA 3276 0 141 Far North PWA 0 0 9709

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 75

Table 4.3.2: Water entitlements on issue (taking and holding allocations) continued

Water source and management area Hectares haIE ML Lower Limestone Coast PWA Holding 0 291 13 2171 Taking 0 66 931 64 168 Mallee PWA 0 5251 1958 McLaren Vale PWA 0 0 7324 Musgrave PWA 0 0 2400 Northern Adelaide Plains PWA 0 0 25 097 Padthaway PWA Holding 0 10 0 Taking 0 5927 107 Tatiara PWA Holding 0 0 412 Taking 0 13 955 3467 Tintinara Coonalpyn PWA 0 0 86 026 Total underground water Holding 0 301 133 656 Taking 3887 92 064 215 308 Watercourse Barossa PWRA 1216 0 1140 Clare Valley PWRA 323 0 298 Little Para PWC 0 0 638 River Murray PWC Holding 0 0 4767 Taking 0 0 977 806 Total Watercourse Holding 0 0 4767 Taking 1539 0 979 883

Note: (a) Licences are taking allocations unless otherwise indicated. (b) Key to abbreviations: Prescribed Water Resources Area (PWRA); Prescribed Wells Area (PWA); Prescribed Water Course (PWC); Hectare Irrigation Equivalent (haIE). Source: Department of Water, Land and Biodiversity Conservation

76 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.3.3 : Water entitlement shares by sector—River Murray

Sector GL % share Irrigation 550 70% Metropolitan Adelaide 130 17% Country Towns 50 6% Stock, domestic and industrial 20 3% Environment 31 4% Total 781 100%

Note: Data in this table is limited to the River Murray, not other resources in South Australia. Source: Department of Water, Land and Biodiversity Conservation, Frequently Asked Questions, Water entitlements, setting allocations and accounting for losses. Issue 1, 16 April 2008

4.3.3 Water supply conditions Figure 4.3.1: Water levels in key storages supplying the South Australian market

Hume Dam Dartmouth Dam Lake Victoria

100

80 summary — SA Trading

20 Storage level – per cent of capacity

1-Jul-07 1-Jul-08 Section 4.3 1-Aug-07 1-Sep-07 1-Oct-07 1-Jan-08 1-Feb-08 1-Mar-08 February1-Apr-08 1-May-08 1-Jun-08 September November1-Nov-07 December1-Dec-07

Weeks: 1 July 2007 to 30 June 2008

Table 4.3.4: South Australia—River Murray water allocation announcements

Per cent allocation Scheme Date effective High security (reliability) Low security (reliability) SA River Murray 2/7/07 4% 1/8/07 13% 1/10/07 16% 15/11/07 22% 4/12/07 32%

Note: (a) The 32% allocation remained unchanged for the rest of 2007–08 water year. (b) SA only has high security (reliability) entitlement. (c) Data in this table is limited to River Murray, not other resources in South Australia. Source: Department of Water, Land and Biodiversity Conservation

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 77

4.3.4 South Australian water licence markets Table 4.3.5: Water licence transfers

Prescribed water area or watercourse Number Volume (ML) Regulated water source River Murray PWC 180 15 874 Unregulated sources Angas Bremer PWA 4 98 Barossa PWRA 4 24 Lower Limestone Coast PWA COM 1 1 Lower Limestone Coast PWA LKA 4 248 Lower Limestone Coast PWA NAR 0 0 Mallee PWA 0 0 McLaren Vale PWA 13 174 Northern Adelaide Plains PWA 9 276 Tatiara PWA 7 57 Tintinara Coonalpyn PWA 2 231 Total 224 16 983

Note: (a) Excludes permanent transfers within irrigation trusts. (b) Excludes area-based licences. (c) Includes transfers as part of a property sale. (d) There may be differences between this table and trade data published in South Australia due to the inclusion of unregulated sources and also reconciliation done by the MDBC and DWLBC following the end of the 2007–08 water year. Source: WILMA Register, Department of Water, Land and Biodiversity Conservation

78 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

2008-12-04 Map document: SA_WaterEntitlementTradingIntensity_(permanent)_WaterTradeZones_a4_im_20081204.mxd 150 100 km 50 < % < 1 -% 1 2 -% 2 5 - 5 10 % - 20 10 % - 30 20 % - 40 30 % - 50 40 % % > 50 No Trade

Water Entitlement Water Trading intensity is defined as the Revised DRAFT IncludesMVB comments total total volume of trades within a water divided source, by the in/out and Trading Intensity Trading total total nominal volume of entitlement in that water source. that water in

Anabranch Darling Darling Victoria

ra r u

M r

Lake Lake e Victoria New South Wales South New Mallee PWA Mallee PWA Tintinara-Coonalpyn PWA Tatiara PWA Coast Limestone Lower PWA Coast Limestone Lower v Ranges) (Naracoorte NAR (Comaum-Caroline) COM

Ri Pinnaroo Naracoorte Trading summary — SA Trading Renmark

a r r

M Gambier Mount

River Murray PWC Murray River v

R River Murray PWC Murray River Lake Alexandrina Lake Lake Albert Kingston SE Kingston Burra South Australia South Bridge Murray Murray Gawler ADELAIDE Section 4.3 Victor Victor Harbor Clare Padthaway PWA Padthaway Lower Limestone Coast PWA PWA Coast Limestone Lower LKA (Lacepede Kongorong) (Lacepede LKA Angas-Bremer Angas-Bremer PWA Clare Valley Valley Clare PWRA Barossa Adelaide Northern Vale McLaren PWRA PWA Plains PWA Plains (b) Excludes area-based entitlements. area-based Excludes (b) Notes: trusts. irrigation within transfers Excludes (a)

Data Sources: Water system boundaries: SA Department for Water, Land and Biodiversity Conservation. Topographic data: Geoscience Australia (2002-08). Australia Geoscience data: Topographic Conservation. Biodiversity and Land Water, for Department SA boundaries: system Water Sources: Data data. final map contains This NOTE: Consistentreportwith tables NOV(18 version). Map produced by the Bureau of Rural Sciences © Commonwealth of Australia. of Commonwealth © Sciences Rural of Bureau the by produced Map

Figure 4.3.2: Water licence trading intensity licence trading Water 4.3.2: Figure

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 79

Table 4.3.6: Prices for water licences

Prescribed water area or watercourse Price ($/ML) Standard Number deviation of trades Mean Median Mode River Murray PWC 2286 2300 2300 240 76 Angas Bremer PWA 1025 n/a 1200 247 2 South Australia Total 2253 2300 2300 312 78

Note: Data was not supplied for all trades. Source: WILMA Register, Department of Water, Land and Biodiversity Conservation

Figure 4.3.3: Water licence volumes traded and average prices—South Australian River Murray

Volume traded Average Price

4500 3000

4000 2500 3500

3000 2000

2500 $/ML ML 1500 2000

1500 1000

1000 500 500

0 0 Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun

Months: 1 July 2007 to 30 June 2008

Note: Excludes licence transfers within irrigation trusts. Source: WILMA Register, Department of Water, Land and Biodiversity Conservation

4.3.5 South Australian water allocation markets Table 4.3.7: Water allocation trades and net change in allocation volume by region

Internal trades Trades in Trades out Net Total change trade Prescribed water Number Volume Number Volume Number Volume (ML) (ML) area or watercourse (ML) (ML) (ML) River Murray PWC 761 261 601 3657 147 731 36 2, 81 145 350 263 982 Angas Bremer PWA 17 1222 0 0 0 0 0 1222 Barossa PWRA 4 29 0 0 0 0 0 29 Lower Limestone 1 5 0 0 0 0 0 5 Coast PWA COM

80 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.3.7: Water allocation trades and net change in allocation volume by region continued

Internal trades Trades in Trades out Net Total change trade Prescribed water Number Volume Number Volume Number Volume (ML) (ML) area or watercourse (ML) (ML) (ML) Lower Limestone 4 886 0 0 0 0 0 886 Coast PWA LKA Lower Limestone 0 0 0 0 0 0 0 0 Coast PWA NAR Mallee PWA 1 43 0 0 0 0 0 43 McLaren Vale PWA 21 119 0 0 0 0 0 119 Northern Adelaide 34 853 0 0 0 0 0 853 Plains PWA Tatiara PWA 4 6 0 0 0 0 0 6 Tintinara Coonalpyn 4 1134 0 0 0 0 0 1134 PWA Total 851 265 900 3657 147 731 36 2381 145 350 268 281

Note: (a) Includes interstate trades into and out of South Australian River Murray. Trading summary — SA Trading (b) Excludes area-based licences. (c) There may be differences between this table and trade data published in South Australia due to the inclusion of unregulated sources, the inclusion of interstate trade into and out of the River Murray and also reconciliation done by the MDBC and DWLBC following the end of the 2007–08 water year. Source: WILMA register, Department of Water, Land and Biodiversity Conservation

Table 4.3.8: Interstate water allocation trades into and out of South Australia—MDBC data

Interstate trading zone Destination of trades out Source of trades into SA Net trade into SA (ML) of SA (ML) (ML)

NSW Murray 184.2 38 235.9 38 051.7 Section 4.3 Murrumbidgee 110.0 61 800.2 61 690.2 Lower Darling 0.0 0.0 0 VIC Murray 1692.1 18 751.9 17 059.8 Goulburn 344.3 28 793.6 28 449.3 Total 2330.6 147 582 145 251.4

Source: MDBC, 27 October 2008

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 81

2008-12-04 Map document: SA_WaterAllocationTradingIntensity_(temporary)_WaterTradeZones_a4_im_20081204.mxd 150 100 km 50 < % < 1 -% 1 2 -% 2 5 - 5 10 % - 20 10 % - 30 20 % - 40 30 % - 50 40 % % > 50 No Trade

Water Allocation Water Intensity Trading Trading intensity is defined as the Revised DRAFT IncludesMVB comments total total volume of trades within a water divided source, by the in/out and total total nominal volume of entitlement in that water source. that water in

Anabranch Darling Darling Victoria

ra r u

M r

Ri Pinnaroo Naracoorte Renmark

a r r

M Gambier Mount

River Murray PWC Murray River v

R River Murray PWC Murray River Lake Alexandrina Lake Lake Albert Kingston SE Kingston Burra South Australia South Bridge Murray Murray Gawler ADELAIDE Victor Victor Harbor Clare Padthaway PWA Padthaway Lower Limestone Coast PWA PWA Coast Limestone Lower LKA (Lacepede Kongorong) (Lacepede LKA Angas-Bremer Angas-Bremer PWA Clare Valley Valley Clare PWRA Barossa Adelaide Northern Vale McLaren PWRA PWA Plains PWA Plains (b) Excludes area-based entitlements. area-based Excludes (b) Notes: trusts. irrigation within transfers Excludes (a)

Figure 4.3.4: Water allocation trade intensity allocation trade Water 4.3.4: Figure Data Sources: Water system boundaries: SA Department for Water, Land and Biodiversity Conservation. Topographic data: Geoscience Australia (2002-08). Australia Geoscience data: Topographic Conservation. Biodiversity and Land Water, for Department SA boundaries: system Water Sources: Data data. final map contains This NOTE: Consistentreportwith tables NOV(18 version). Map produced by the Bureau of Rural Sciences © Commonwealth of Australia. of Commonwealth © Sciences Rural of Bureau the by produced Map

82 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.3.9: Water allocation prices

Price ($/ML) Prescribed Water Area or Median Mode Mean Standard Number of Watercourse deviation trades River Murray PWC 773 350 682 333 2568 Renmark 483 570 465 81 36 South Australia Total 705 350 679 332 2602

Figure 4.3.5: Prices and volumes of water allocation trade in the South Australian River Murray

Volume traded Average Price

16000 1400

14000 1200 Trading summary — SA Trading 12000 1000

10000 $/ML 800 ML 8000

600 6000

400 4000

200 2000 Section 4.3

0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Weeks: 1 July 2007 to 30 June 2008

Source: WILMA Register, Department of Water, Land and Biodiversity Conservation and Water Exchange

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 83

Figure 4.3.6: Prices and volumes of interstate water allocation trades into the South Australian River Murray

Volume traded Average Price

14000 1200

12000 1000

10000 800

8000 $/ML

ML 600

6000

400 4000

200 2000

0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Weeks: 1 July 2007 to 30 June 2008

Note: The incidence of price information when there are no corresponding volumes is most likely due to timing differences between the data sources when recording trades. Source: WILMA Register, Department of Water, Land and Biodiversity Conservation and Water Exchange.

4.3.6 Value of market turnover Table 4.3.10: Estimated value of market turnover Section 4.4 Prescribed Water Area or Watercourse Gross value of water sales ($ million) Trading summary Licence transfers Water allocation trades River Murray PWC 36.3 180 New South Wales Others (estimate) 2.0 1.3 Total state 38.3 181.3

Note: (a) Total value of trade for a prescribed water area is calculated as the total volume of trade (internal trade within a water source plus outbound interstate trades) multiplied by mean price for trades in that area. (b) Other prescribed areas not reported individually due to a thin market and limited price information. Therefore the non-River Murray resources have been estimated and added to the River Murray to provide an overall estimate for South Australia. Source: Price data for water entitlements from WILMA, Department of Water, Land and Biodiversity Conservation. Price data for water allocations from WaterExchange.

84 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Section 4.4 Trading summary 4.4.1 Summary 86 New South Wales 4.4.2 Market operation 87 4.4.3 Water supply conditions 91

4.4.4 New South Wales water 94 access licence markets

4.4.5 New South Wales water 99 allocation markets

4.4.6 Value of market turnover 103

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

4.4.1 Summary Section 4.4.3—Water supply conditions, presents information on storage levels and allocation announcements in New South The following section presents New South Wales trading Wales during the 2007–08 water year. data made available for the purposes of this report. While NWI terminology is used when describing national market Section 4.4.4—New South Wales water access licence characteristics and activity, New South Wales water trading markets, describes the markets of products that would be terminology is used in this section (although it is not known as a water access entitlement under the NWI. consistent with the NWI or other jurisdictions). Table 4.4.1 Section 4.4.5—New South Wales water allocation markets, provides a summary of New South Wales’ water trading describes the markets of products that are approximately terminology, including NWI equivalents where applicable. equivalent to trading water allocations under the NWI. Section 4.4.2—Market operation, describes the legislative Section 4.4.6—Value of market turnover, attempts to provide and planning framework that underpins New South Wales’ an estimate of the value of New South Wales’ water markets. water markets, and also the types of products and trading that occur within the state. Further information can also be found at Appendix A.

Table 4.4.1: New South Wales water trading terminology

Term Definition and NWI equivalent Water access Entitles holder to a share of the available water source (specified in the relevant water sharing plan) and licence (WAL) to take water from a specified location. It can also include a right to a share of channel capacity or daily flow. The licence is equivalent to a water access entitlement (NWI). It is separate from land and tradeable. It can be held and traded as personal property by non-landholders. Attributes of a WAL include: ++ a share component (specified number of units) ++ water source (defined river, catchment or aquifer) ++ category (a mixture of reliability and purpose) ++ location (usually a zone) ++ nominated works. Water allocation The quantity of water available to be taken under a water access licence, as shown in the licence’s water allocation account. Supplementary An authority to access water that results from dam overflow that is surplus to environmental water access requirements. The water is ‘supplementary’ to the licensed volumes allowable for extraction under a water access licence. Commonly referred to as ‘off allocation’ water. Not a tradeable entitlement. Water Act 1912 In those water sources (rivers, lakes and groundwater aquifers) in New South Wales where water licences sharing plans have not been gazetted and commenced, the Water Act 1912 still governs the issue of new water licences and the trade of water licences and allocations. In general the Water Act 1912 licence is tied to the land as the licence covers both the right to take a specific volume of water as well as the works to be constructed. Security class New South Wales has two water supply reliability classes—general security and high security. Water source Any set of rivers, aquifers, lakes, etc. that are defined by a gazetted water sharing plan to be a water source. A water source is characterised as being either regulated or unregulated and has a geographic boundary, e.g. a valley or groundwater aquifer. Regulated water A water supply where the reliability is enhanced by releases of stored water from infrastructure. source

86 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.4.1: New South Wales water trading terminology continued

Term Definition and NWI equivalent Unregulated A water supply where reliability is not enhanced by releases of stored water from infrastructure. water source Dealings Transfer of water Change in the ownership of a water access licence. Commonly referred to as ‘permanent trading’. access licence Assign share Reduction in the part or whole share component of one water access licence and corresponding component increase in the share of another. This transaction effectively changes the location and ownership of the moved share in one transaction. Another form of ‘permanent trading’. Amendment of This dealing has the effect of varying the extraction point from which water may be taken. A change in share component water source is effected without a transfer of ownership. Term transfer This is the fixed term transfer (or lease) of rights under a water access licence to another person. Assign water Reduction in the water allocation in the account of one water access licence and a corresponding allocation increase in allocation in the account of another licence. Commonly referred to as ‘temporary trading’.

Source: National Water Commission (2007) Dictionary of Terms for Water Access Entitlements and Transactions

4.4.2 Market operation A water access licence transfer involves a change in the summary — NSW Trading holder of a licence. A transfer and change allows not only New South Wales is nearing completion of a transition from a change in the holder, but for the licence to be moved to water licensing and management under the Water Act another location. There are zones which, because of supply 1912 (NSW) to the Water Management Act 2000 (NSW). constraints, restrict the distance that licences can be moved. Approximately 90 per cent of the state’s water resources are Each licence has its own water account into which water is now managed under the new Act. This legislation provides credited each year and debited when any water is taken at for clearly defined water access entitlements, separate from the extraction point. land ownership and capable of being independently traded, mortgaged and leased. The entitlements are granted in Licence transfers must be registered on the water access perpetuity and entitle the holder to extract a share of the licence register administered by the Department of Lands. available water defined under the rules of a water The Department of Water and Energy maintains separate sharing plan. registers for recording other statutory dealings, including Section 4.4 water allocation assignments. Over 98 per cent of water licences in New South Wales are tradeable. The only water entitlements in the state that are There are five irrigation corporations in New South Wales, not capable of being traded are water access licences that each of whom hold single water access licences on behalf have replaced Water Act 1912 (NSW) licences, as a result of of their members—also commonly referred to as a bulk the commencement of a water sharing plan and that have not licence. While corporate structures vary, irrigators are typically completed the licence verification process and resolution of shareholders in the corporations and effectively have a unit prior licence security interests. share holding in the bulk licence. Irrigation corporations are responsible for setting rules governing trades between Under the Water Management Act 2000 (NSW), water member irrigators and administering trades into and out of dealings can involve: the district. Irrigation licence transfers and allocation trades ++ buying or selling a part or whole water access licence between shareholders are not recorded on the state registers. However, as of mid 2008, a number of the corporations began ++ buying or selling allocation water recording these trades on the privately owned and managed ++ changing the location where a licence can be used National Irrigation Corporations Water Entitlement Register (NICWER). ++ subdividing and consolidating licences.

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 87

Table 4.4.2 : Water entitlements on issue as at 30 June 2008

Number Volume (GL) Water Management Act 2000 licences Regulated river 10 401 8464 Unregulated river 1345 110 Groundwater 2867 1004 Total 14 613 9578 Water Act 1912 licences Unregulated surface water 12 525 1113 Regulated surface water 624 367 Groundwater 86 844 920 Total 99 993 2400 Grand total 114 606 11 978

Source: NSW Department of Water and Energy

Table 4.4.3: Water access licences on issue by water source—as at 30 June 2008

Number Volume (units/ML) Groundwater Alstonville Groundwater 57 2765 Bangalow Groundwater 24 1293 Brisbane Water Groundwater 2 24 Coopers Groundwater 2 24 Dorrigo Groundwater 9 190 Lennox Groundwater 1 5 Lower Gwydir Groundwater 214 46 157 Lower Lachlan Groundwater 123 129 238 Lower Macquarie Groundwater 130 70 941 Lower Mangrove and Popran Creeks Groundwater 56 946 Lower Murray Groundwater 447 132 056 Lower Murrumbidgee Groundwater 389 316 394 Lower Namoi Groundwater 342 107 011 Mooney Mooney and Mullet Creeks Groundwater 56 820 Ourimbah Creek Groundwater 37 741 Stockton Groundwater 25 997

88 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.4.3: Water access licences on issue by water source—as at 30 June 2008 continued

Number Volume (units/ML) Stuarts Point Groundwater 25 3735 Tomago Groundwater 13 26 055 Tomaree Groundwater 15 4551 Tuckean Groundwater 74 2752 Upper Mangrove Groundwater 30 380 Upper Namoi Groundwater 759 154 175 Wollombi Brook Groundwater 3 25 Wybong Creek Groundwater 18 2236 Wyong River Groundwater 14 469 Wyrallah Groundwater 2 38 Total Groundwater 2867 1 004 015 Regulated Rivers Gwydir 456 708 713

Hunter 1394 247 483 summary — NSW Trading Lachlan 1514 655 350 Lower Darling 273 299 449 Lower Namoi 554 369 885 Macquarie and Cudgegong 1498 724 345 Murrumbidgee 1581 2 948 671 NSW Murray River 2881 2 489 131

Paterson River 144 10 635 Section 4.4 Upper Namoi 106 10 046 Regulated Rivers Total 10 401 8 463 708 Unregulated Rivers Adelong Creek 75 4132 Apsley River 11 336 Castlereagh River 60 5087 Commissioners Waters 49 2184 Coopers Creek 133 5822 Dorrigo Surface Water 116 9893 Jilliby Jilliby Creek 26 1036 Kangaroo River 103 4826

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 89

Table 4.4.3: Water access licences on issue by water source—as at 30 June 2008 continued

Number Volume (units/ML) Karuah River 80 3608 Mandagery Creek 118 8448 Mooki River 39 29 632 Ourimbah Creek 91 7171 Phillips Creek 4 161 Quirindi Creek 36 2786 Rocky Creek, Cobbadah, Upper Horton and Lower Horton 64 5618 Tarcutta Creek 102 5111 Tenterfield Creek 67 4223 Upper Billabong 4 337 Upper Brunswick River 21 675 Wandella Creek 20 643 Warrah Creek 8 265 Wybong Creek Surface Water 118 8300 Unregulated Rivers Total 1345 110 290 Grand Total 14 613 9 578 013

Note: Water access licences are defined in unit shares of a consumptive pool. The amount of water credited to a water allocation account in a given year is equal to the unit share holding multiplied by the available water determination (or announced allocation). Source: NSW Department of Water and Energy

Table 4.4.4: Approximate water entitlement shares by sector

Volume (GL) Per cent share Irrigation, stock and domestic 6308 53% Industrial and power generation 1026 9% Urban household 2172 18% Losses 2473 21% All sector total 11 978 100%

Note: Entitlement shares are approximate because they are based on the percentage shares of each sector’s water use in 2004–05. These shares were multiplied by the total entitlement on issue for NSW to obtain an estimate of the respective entitlement holdings of each sector. Source: Water use shares from ABS Water Account 2004–05

90 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

4.4.3 Water supply conditions Figure 4.4.1: Water levels in key New South Wales storages supplying the market

Copeton Dam Keepit Dam Burrendong Dam Burrinjuck Dam

100

Storage level – per cent of capacity 10

1-Jul-07 1-Aug-07 1-Sep-07 1-Oct-07 1-Nov-07 1-Dec-07 1-Jan-08 1-Feb-08 1-Mar-08 1-Apr-08 1-May-08 1-Jun-08 30-Jul-08

1 July 2007 to 30 June 2008

Source: NSW Department of Water and Energy summary — NSW Trading

Table 4.4.5: New South Wales—water allocation announcements

Water source Date announced Allocation (%) General security High security (reliability) (reliability) Border Rivers 1/10/07 1.4% 1/11/07 0.4%

1/12/07 3.0% Section 4.4 19/12/07 8.0% 1/1/08 2.0% 15/1/08 4.9% 1/2/08 5.5% 18/2/08 3.4% 1/3/08 0.7% 1/4/08 1.7% 1/5/08 0.0% 1/6/08 0.0% Darling 1/7/07 0.0% 0% 30/12/07 0.0% 100%

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 91

Table 4.4.5: Allocation announcements—New South Wales continued

Water source Date announced Allocation (%) General security High security (reliability) (reliability) 17/1/08 20.0% 100% 15/2/08 50.0% 100% Gwydir 2/7/07 0.0% 2/8/07 0.0% 3/9/07 2.5% 5/10/07 0.0% 5/11/07 0.0% 4/12/07 0.5% 17/12/07 6.1% 22/12/07 1.7% 3/1/08 1.1% 1/2/08 1.3% 22/2/08 9.9% 2/4/08 0.0% 1/5/08 0.0% 1/6/08 0.0% Hunter 15/9/07 18.0% 84% 15/11/07 26.0% 88% 15/12/07 48.0% 99% 21/1/08 84.0% 100% 15/2/08 100.0% 100% Lachlan 1/7/07 0.0% 10% 30/7/07 0.0% 30% 24/12/07 0.0% 30% 3/1/08 0.0% 30% Namoi 2/7/07 0.0% 3/8/07 0.0% 3/9/07 0.0% 5/10/07 0.5% 5/11/07 0.0% 3/12/07 0.0% 17/12/07 3.1% 22/12/07 3.2%

92 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.4.5: Allocation announcements—New South Wales continued

Water source Date announced Allocation (%) General security High security (reliability) (reliability) 3/1/08 2.5% 31/1/08 1.7% 22/2/08 1.7% 2/4/08 0.0% 1/5/08 0.0% 1/6/08 0.0% Macquarie 1/7/07 0.0% 10% 13/8/07 0.0% 50% 21/12/07 0.0% 70% 3/1/08 0.0% 100% 4/2/08 2.0% 100% 19/2/08 5.0% 100%

Murray 1/7/07 0.0% 0% summary — NSW Trading 9/8/07 0.0% 0% 2/10/07 0.0% 0% 2/11/07 0.0% 0% 15/11/07 0.0% 0% 3/12/07 0.0% 0% 15/12/07 0.0% 0% 15/1/08 0.0% 0% 4/2/08 0.0% 0% Section 4.4 3/3/08 0.0% 25% Murrumbidgee 1/7/07 0.0% 0% 9/8/07 0.0% 30% 28/8/07 0.0% 60% 2/10/07 0.0% 75% 2/11/07 0.0% 80% 3/12/07 0.0% 90% 17/12/07 3.0% 90% 16/1/08 9.0% 90% 15/2/08 13.0% 90%

Note: High security (reliability) refers to irrigation entitlements and excludes local water utilities, town water supply and stock and domestic. Source: NSW Historical Allocations, http://www.waterinfo.nsw.gov.au/ac/allocation.shtml

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 93

4.4.4 New South Wales water access licence markets Table 4.4.6: Breakdown of entitlement transfers by type of dealing

Dealing type Number Volume (units/ML) Assignment of share component 126 245 167 Water Access Licence transfers 555 181 729 Subtotal 681 426 896 Permanent trades within irrigation corporations Murray Irrigation Limited n/a 49 413 Murrumbidgee Irrigation Limited 169 38 003 Coleambally Irrigation Corporation Limited n/a 30 192 Jemalong Irrigation Limited 1 715 Western Murray Irrigation Limited 23 1460 Sub total 193 119 783 Total 874 546 679

Source: Department of Water and Energy and the listed NSW irrigation corporations

Table 4.4.7: Water entitlement transfers by valley and water resource

Valley and water source Internal trades Number Volume (units/ML) Gwydir Gwydir Regulated River Water Source 17 28 557 Lower Gwydir Groundwater Source 5 561 Tenterfield Creek Water Source 1 7 Gwydir Total 23 29 125 Hunter Hunter Regulated River Water Source 129 11 681 Lower Mangrove and Popran Creeks Groundwater Source 3 44 Mooney Mooney and Mullet Creeks Groundwater Source 3 23 Ourimbah Creek Groundwater Source 1 5 Ourimbah Creek Water Source 1 50 Paterson Regulated River Water Source 1 36 Wybong Creek Water Source 19 1296 Hunter Total 157 13 135 Lachlan

94 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.4.7: Entitlement transfers by valley and water resource continued

Valley and water source Internal trades Number Volume (units/ML) Lachlan Regulated River Water Source 116 69 033 Lower Lachlan Groundwater Source 2 14 223 Mandagery Creek Water Source 8 773 Lachlan Total 126 84 029 Lower Darling Lower Darling Regulated River Water Source 20 606 Lower Darling Total 20 606 Macquarie Lower Macquarie Zone 1 Groundwater Source 5 1833 Macquarie and Cudgegong Regulated Rivers Water Source 69 15 080 Macquarie Total 74 16 913 Murrumbidgee Adelong Creek Water Source 4 128

Lower Murrumbidgee Deep Groundwater Source 20 4513 summary — NSW Trading Lower Murrumbidgee Shallow Groundwater Source 1 100 Murrumbidgee Regulated River Water Source 45 127 278 Tarcutta Creek Water Source 3 59 Murrumbidgee Total 73 132 078 Namoi Lower Namoi Groundwater Source 10 3015 Lower Namoi Regulated River Water Source 6 1615

Mooki River Water Source 1 100 Section 4.4 Quirindi Creek Water Source 1 8 Upper Namoi Regulated River Water Source 1 243 Upper Namoi Zone 12 Kelvin Valley Groundwater Source 2 487 Upper Namoi Zone 2 Cox’s Creek (Mullaley to Boggabri) Groundwater Source 6 5619 Upper Namoi Zone 3 Mooki Valley (Breeza to Gunnedah) Groundwater Source 2 528 Upper Namoi Zone 4 Namoi Valley (Keepit Dam to Gin’s Leap) Groundwater 15 4799 Source Upper Namoi Zone 5 Namoi Valley (Gin’s Leap to Narrabri) Groundwater Source 4 296 Upper Namoi Zone 8 Mooki Valley (Quirindi-Pine Ridge Road to Breeza) 1 269 Groundwater Source Namoi Total 49 16 979 Northern Rivers Bangalow Groundwater Source 1 20

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 95

Table 4.4.7: Entitlement transfers by valley and water resource continued

Valley and water source Internal trades Number Volume (units/ML) Commissioners Waters Water Source 1 135 Coopers Creek Water Source 2 2 Dorrigo Plateau Surface Water Source 1 135 Tuckean Groundwater Source 2 120 Northern Rivers Total 7 412 New South Wales Murray Lower Murray Groundwater Source 20 6952 New South Wales Murray Regulated River Water Source 132 126 669 New South Wales Murray Total 152 133 621 Total 681 426 292

Notes: (a) There were no water access licence transfers between water sources or valleys in the 2007–08 water year. (b) Table excludes transfers within the irrigation corporations. (c) Table includes both Share Assignments and Water Access Licence transfers. Source: Department of Water and Energy

Table 4.4.8: Transfer of entitlement out of irrigation districts

Irrigation Corporation Number Volume (ML) Murray Irrigation Limited 1 166 Murrumbidgee Irrigation Limited n/a 18 Coleambally Irrigation Corporation Limited n/a 1596 Jemalong Irrigation Limited n/a 497 Western Murray Irrigation Limited 0 0 Total 2277

Source: NSW irrigation corporations

Table 4.4.9: Term transfers

Water system Number Average Volume (ML) duration (years) Lower Murrumbidgee groundwater 1 5 1405 Upper Namoi Zone 5 groundwater source 1 3 111 Total 2 4 1516

Source: Department of Water and Energy

96 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

2008-12-04 Map document: NSW_WaterEntitlementTradingIntensity_(permanent)_WaterTradeZones_a4_im_20081204.mxd km < % < 1 -% 1 2 -% 2 5 - 5 10 % - 20 10 % - 30 20 % - 40 30 % - 50 40 % % > 50 Irrigation Corporations RevisedDRAFT 0 100 200 300 irrigation corporations, divided by the divided corporations, irrigation within within a water source, including total nominal volume of entitlement Water Entitlement Water Trading intensity is defined as total the volume of trades in/out and IncludesMVB revised in that water source. that water in Trading Intensity Trading definitionand revised notes. Newcastle Armidale SYDNEY .

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NOTE: This map contains final data. final contains map This NOTE: RevisedNSW datafrom MVB 01/12/2008 Data Sources: Water system boundaries: Australian Water Resources 2005 surface water management areas. Irrigation area boundaries: Murray Irrigation Murray boundaries: area Irrigation areas. management water surface 2005 Resources Water Australian boundaries: system Water Sources: Data Limited, Murray-Darling Basin Commission. Topographic data: Geoscience Australia (2002-08). Australia Geoscience data: Topographic Commission. Basin Murray-Darling Limited, Map produced by the Bureau of Rural Sciences © Commonwealth of Australia. of Commonwealth © Sciences Rural of Bureau the by produced Map

Figure 4.4.2: Water access licence trading intensity access licence trading Water 4.4.2: Figure nurd y a by incurred y esn s rsl o acsig uig r eyn uo ay f h ifrain r aa e ot n hs ulcto t te aiu etn pritd y law. by permitted extent maximum the to publication this in out set data or information the of any upon relying or using accessing, of result a as person ny

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 97

Table 4.4.10: Prices for water access licences

Valley High security General security (reliability) (reliability) Average price ($/ML) Number of trades Average price ($/ML) Number of trades Gwydir - 1 1594 19 Hunter - 11 2868 129 Lachlan - 10 1316 92 Macquarie - 2 911 60 NSW Murray 2087 39 992 34 Murrumbidgee - 5 1256 43 Namoi - 0 723 62 All NSW 2722 73 1504 457

Note: (a) Prices are based on water access licence transfers. (b) Due to limited price information and/or a thin market, prices for high security entitlement are not reported for some valleys (indicated by a dash). (c) “Number of trades” is the number of water access licence transfers for which reliable price information is available. Source: NSW Water Share Register

Figure 4.4.3: Water access licence prices and volumes traded—New South Wales general security (reliability)

General security volume General security average price

40000 3000

35000 2500

30000

2000 25000 $/ML

ML 20000 1500

15000 1000

10000

500 5000

0 0 Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun

Months: 1 July 2007 to 30 June 2008

Note: Price line is discontinuous due to limited price information in some months. Source: NSW Water Share Register

98 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

4.4.5 New South Wales water allocation markets Table 4.4.11: Water allocation assignments—regulated river water sources

Internal trades Trade in Trade out Net change Water source No. ML No. ML No. ML (ML) Gwydir Gwydir Regulated River Water Source 80 40 127 0 0 0 0 0 Hunter Hunter Regulated River Water Source 57 1411 0 0 0 0 0 Lachlan Lachlan Regulated River Water Source 224 9340 0 0 0 0 0 Jemalong Irrigation Corporation 3 116 10 726 5 146 580 Lower Darling 0 Lower Darling Regulated River Water Source 49 17 284 0 0 0 0 0 Namoi 0 Lower Namoi Regulated River Water Source 31 5550 30 1835 1 5 1830

Upper Namoi Regulated River Water Source 2 48 1 5 30 1835 -1830 summary — NSW Trading Macquarie 0 Macquarie and Cudgegong Regulated 103 3868 0 0 0 0 0 Rivers Water Source Murrumbidgee Murrumbidgee Regulated River Water 470 249 267 22 2729 2703 141 825 -139 096 Source Murrumbidgee Irrigation Limited 1273 73 946 228 19 586 1712 62 189 -42 603

Coleambally Irrigation Co-operative Limited 166 11 355 17 562 1013 72 848 -72 286 Section 4.4 Murrumbidgee Total 1909 334 568 267 2729 2703 141 825 -139 097 New South Wales Murray New South Wales Murray Regulated River 777 35 983 941 47 897 946 65 402 17 505 Water Source Murray Irrigation Limited 2700 40 767 31 936 217 13 560 -12 624 Western Murray Irrigation Limited 91 1182 158 5208 163 14 727 -9519 New South Wales Murray Total 3568 77 932 941 47 897 946 65 402 -17 505 All sources 6026 490 244 994 52 466 3680 209 213 -156 747

Note: (a) Includes interstate water allocation assignments. (b) Excludes trades in unregulated water allocations (groundwater and unregulated rivers) as no data provided to the Commission.

(c) Trades in and out of the irrigation corporations cannot be added to the regulated river source total because these trades are not mutually exclusive to the trades reported for each regulated river source (i.e. Lachlan, Murrumbidgee and NSW Murray). Source: NSW Water Allocation Assignment Register and information provided by the five irrigation corporations in NSW

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 99

Table 4.4.12: Interstate water allocation trades into and out of New South Wales—MDBC data

Interstate trading zone Destination of trades out Source of trades into NSW Net trade into NSW (ML) of NSW (ML) (ML) VIC Murray 61 273 6106 -55 167 Goulburn 9865 8143 -1722 SA Murray 100 036 294 -99 742 Total 171 174 14 543 -156 631

Source: MDBC, 27 October 2008

Table 4.4.13: Prices for water allocations

Price ($/ML) Water Source or Irrigation District Median Mode Mean Standard Number of Deviation trades Gwydir n/a n/a n/a n/a 3 Lachlan n/a n/a n/a n/a 3 Lower Darling 495 50 440 188 46 MacIntyre Valley 200 n/a 202 32 10 Macquarie 200 200 208 77 13 Murrumbidgee 389 850 495 319 383 Murrumbidgee Irrigation Limited 460 400 566 290 1547 Coleambally Irrigation Co-Operative Limited 399 350 526 276 1122 NSW Murray 570 1050 656 316 746 Western Murray Irrigation Limited 520 1100 661 302 153 Murray Irrigation Limited 930 930 764 279 28 Total 450 350 549 310 3603

Note: (a) Not available (n/a) due to limited price information. (b) Price statistics for each water system based on internal trades, sales out and purchases into system, including interstate trades. (c) “Number of trades” indicates the number of trades for which reliable price information is available. Source: Water Exchange

100 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

2008-12-04 Map document: NSW_WaterAllocationTradingIntensity_(temporary)_WaterTradeZones_a4_im_20081204.mxd km < % < 1 -% 1 2 -% 2 5 - 5 10 % - 20 10 % - 30 20 % - 40 30 % - 50 40 % % > 50 IrrigationCorporations 0 100 200 300 total total volume of trades in/out and Water Allocation Water Trading intensity is defined as the within a irrigation corporations, divided water by the source, including RevisedDRAFT IncludesMVB revised Trading Intensity Trading total total nominal volume of entitlement in definition. that water source. water that Newcastle Armidale SYDNEY .

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r r l i w n g r

u o Murray Lower Irrigation SwanHill

Menindee L M

v Victoria i

BrokenHill South Australia South Notes: map. this on shown is sources water regulated within activity trading Only (a) (b) Groundwater trade data are not included. not are data trade Groundwater (b) Renmark

Figure 4.4.4: Water allocation trading intensity allocation trading Water 4.4.4: Figure NOTE: This map contains final data. final contains map This NOTE: RevisedNSW datafrom MVB 01/12/2008 Data Sources: Water system boundaries: Australian Water Resources 2005 surface water management areas. Irrigation area boundaries: Murray Irrigation Murray boundaries: area Irrigation areas. management water surface 2005 Resources Water Australian boundaries: system Water Sources: Data Limited, Murray-Darling Basin Commission. Topographic data: Geoscience Australia (2002-08). Australia Geoscience data: Topographic Commission. Basin Murray-Darling Limited, Map produced by the Bureau of Rural Sciences © Commonwealth of Australia. of Commonwealth © Sciences Rural of Bureau the by produced Map

nurd y a by incurred y esn s rsl o acsig uig r eyn uo ay f h ifrain r aa e ot n hs ulcto t te aiu etn pritd y law. by permitted extent maximum the to publication this in out set data or information the of any upon relying or using accessing, of result a as person ny

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 101

Figure 4.4.5: Water allocation prices and trade volumes—Murrumbidgee

Volume Traded Average Price

160000 1400

140000 1200

120000 1000

100000 800 $/ML

ML 80000 600 60000

400 40000

200 20000

0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Weeks: 1 July 2008 to 30 June 2008

Note: Regulated river water sources only. Includes trades in the irrigation corporations. Source: Price data from WaterExchange, Volume data from the NSW Water Allocation Assignments Register and Murrumbidgee Irrigation Corporation Limited

Figure 4.4.6: Water allocation prices and trade volumes—New South Wales Murray River

Volume Traded Average Price

120000 1400

1200 100000

1000 80000

800 $/ML 60000 ML 600

40000 400

20000 200

0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Weeks: 1 July 2008 to 30 June 2008

102 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Figure 4.4.7: Water allocation prices and trade volumes—total New South Wales

Volume Traded Average Price

200000 1400

180000 1200 160000

1000 140000

120000 800 $/ML

ML 100000 600 80000

60000 400

40000 200 20000

0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Weeks: 1 July 2008 to 30 June 2008

4.4.6 Value of market turnover Table 4.4.14: Estimated value of market turnover

Region Gross value of water sales ($ million) Water Entitlements Water allocations Gwydir 45.5 n/a

Hunter 33.5 n/a Section 4.4 Lachlan 90.8 n/a Macquarie 13.7 0.8 Lower Darling n/a 7.6 Murrumbidgee 159.9 235.8 NSW Murray 125.7 94.0 Namoi 1.3 n/a All NSW 470.5 384.0

Note: (a) Total value of trade for a water source is calculated as the total volume of trade (internal trade within a water source plus sales out of a water source) multiplied by mean price for trades in that water source. (b) Price data for water access licences from the NSW Water Share Register. Price data for water allocations from WaterExchange. (c) n/a (not available) due to limited price information. (d) Value of water access licence market calculated based on general security (reliability) prices, due to limited price information for high security (reliability) entitlement. This convention will underestimate the value of entitlement trade to the extent that total volumes traded include some high security (reliability) trades.

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 103 Section 4.5 Trading summary Western Australia Section 4.5 Trading summary 4.5.1 Summary 106 Western Australia 4.5.2 Market operation 106 4.5.3 Water supply conditions 110

4.5.4 Western Australian water 110 licence markets

4.5.5 Western Australian water 111 allocation markets

4.5.1 Summary The taking of water is managed through the issue of a water licence to users in proclaimed areas, of which there are The following section presents Western Australian trading 45 groundwater and 51 surface water management areas. data made available for the purposes of this report. The Licences that have been defined in volumetric terms can be water markets in Western Australia are smaller than the transferred in part or whole to another party entitled to own Basin states (Sections 4.1–4.4) and therefore there are a licence. Eligibility for a licence is restricted to persons who limited data available. While NWI terminology is used when own, occupy or have access to land on which water occurs. describing national market characteristics and activity, Western Australian water trading terminology is used in this Trades are only permitted within a water resource section (although it is not consistent with the NWI or other management unit (WRMU), defined as either an aquifer or jurisdictions). river basin. Trades must occur within the limits of water availability and physical constraints of the relevant WRMU. Section 4.5.2—Market operation, describes the legislative and planning framework that underpins Western Australia’s The assignment of a licence is permitted and is commonly water markets, and also the types of products and trading referred to as a ‘temporary trade’ in Western Australia. This that occur within the state. Further information can also be transaction is akin to a lease as the licence is assigned to found at Appendix A. another party for an agreed period of time. This party is then able to operate under the licence for the period of the Section 4.5.3—Water supply conditions, presents information agreement but cannot on-trade the licence to a third party. on storage levels and allocation announcements in Western Australia during the 2007–08 water year. The Western Australian Department of Water is responsible for maintaining a register of water licences referred to as Section 4.5.4—Western Australia water licence markets, the ‘Water Resource Licensing’ database. This register describes the markets of products that would be known as a contains records of licences issued under the Rights in Water water access entitlement under the NWI. and Irrigation Act 1914 (WA), and permanent trades and Section 4.5.5—Western Australia water allocation markets, temporary trades in those licences. describes the markets of products that are approximately The register excludes trades within irrigation cooperatives, equivalent to trading water allocations under the NWI. as individual irrigators in these cooperatives hold a certificate No attempt has been made in this section to estimate the of water entitlement from the cooperative rather than a market turnover, as is the case in the larger basin markets licence under the Rights in Water and Irrigation Act 1914 (Sections 4.1.6–4.4.6), due to the limited trading activity and (WA). The cooperative holds a bulk licence under the Act and market information. is responsible for managing trading activities within that bulk licence. Irrigation cooperatives operating in Western Australia 4.5.2 Market operation include: The water markets in Western Australia are thin and ++ Harvey Water underdeveloped. This is due to a combination of factors, ++ Preston Valley Irrigation Cooperative including: ++ Gascoyne Water ++ institutional and legislative constraints ++ Ord Irrigation Cooperative Limited. ++ physical factors (the state does not have large interconnected surface water systems) The Western Australian Government has commenced a water reform program to improve water management in the state. ++ water scarcity has not, until recently, been sufficiently great The program was initiated by the Irrigation Review prepared to drive market demand. by the Irrigation Review Steering Committee, which led to Trading is therefore limited to localised areas—principally the development of ‘A Blueprint for Water Reform in Western within the south west irrigation districts managed by Harvey Australia’. The recommendations in this document are Water and some groundwater trading in the region north underpinning a comprehensive review of the state’s of Perth. water legislation. The current state legislation governing water resource A new Water Resources Management Bill is in progress and it management is the Rights in Water and Irrigation Act 1914 is planned for this Bill to adopt an unbundled system of water (WA). In 2001 the Act was amended to facilitate the trading of licensing consistent with the National Water Initiative. The NWI water entitlements, although constraints remain. The Rights obliges the state government to substantially complete reform in Water and Irrigation Regulations 2000 (WA) is subordinate implementation by 2014. legislation to the Act.

106 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Western Australia’s legislative reform program aims to Under the Water Resources Management Act, water trading consolidate 11 Acts (including the Rights in Water and will be supported by water allocation plans, and conducted in Irrigation Act 1914 (WA)) into two during 2008: accordance with rules in the plans. ++ The Water Services Act ++ The Water Resources Management Act.

Table 4.5.1 : Water licences on issue as at 30 June 2008

Number Volume (GL) Surface water 844 906 Groundwater 16 031 1609 Total 16 864 2515

Source: WA Department of Water

Table 4.5.2: Water licences on issue by region—as at 30 June 2008

Water management area Number Volume (ML) Groundwater Albany 434 4846 Trading summary — WA Trading Arrowsmith 140 51 531 Blackwood 97 13 424 Bolgart 0 0 Bolgart East 1 40 Bremer Bay 5 141 Broome 185 7200 Bunbury 1780 33 311 Busselton-Capel 1203 67 586

Canning-Kimberley 104 68 134 Section 4.5 Carnarvon 159 10 604 Cockburn 536 35 718 Collie 22 68 848 Condingup 1 20 Derby 112 2139 Dwellingup 1 15 East Murchison 82 51 425 Esperance 33 3282 Gascoyne 305 32 165 Gibson 2 30 Gingin 1189 141 402 Gnangara 12 40 517 Goldfields 234 260 769

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 107

Table 4.5.2: Water access licences on issue by region—as at 30 June 2008 continued

Water management area Number Volume (ML) Gwelup 2 14 750 Happy Valley 1 85 Hopetoun 6 311 Jandakot 379 13 754 Jurien 77 19 228 Karri 23 155 Kondinin-Ravensthorpe 7 3963 Mirrabooka 155 19 952 Murray 453 12 379 New Norcia 2 36 Nullarbor 0 0 Perth 1529 129 693 Pilbara 234 372 641 Rockingham 815 16 036 Serpentine 1353 16 226 South West Coastal 1035 28 941 Swan 1694 24 357 Wanneroo 1594 39 445 Westonia 3 1495 Yanchep 28 2519 Yenart 2 130 Yerecoin 2 43 Total groundwater 16 031 1 609 286 Surface water Albany Coast 3 2000 Ashburton River 4 1008 Avon River 3 78 Blackwood River 5 1116 Busselton Coast 91 7196 Cape Leveque Coast 0 0 Collie River 35 93 867 De Grey River 1 3 Denmark River 0 0 Donnelly River 67 8198 Drysdale River 0 0 Esperance Coast 0 0

108 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.5.2: Water access licences on issue by region—as at 30 June 2008 continued

Water management area Number Volume (ML) Fitzroy River 2 6405 Fortescue River 1 1 Frankland River 0 0 Gascoyne River 8 105 Greenough River 2 17 Harvey River 20 144 042 Isdell River 0 0 Keep River 0 0 Kent River 0 0 King Edward River 0 0 Lennard River 0 0 Lyndon-Minilya Rivers 2 26 Mackay Basin 0 0 Moore-Hill Rivers Coast 37 5216 Murchison River 1 28 Trading summary — WA Trading Murray River 71 130 216 Ninghan 0 0 Nullarbor Basin 0 0 Onslow Coast 2 5 Ord River 72 355 756 Pentecost River 0 0 Port Hedland Coast 5 15 018 Preston River 47 5496 Section 4.5 Prince Regent River 0 0 Salt Lake Basin 0 0 Sandy Desert 0 0 Shannon River 0 0 Swan Coastal 140 105 001 Warburton Basin 0 0 Warren River 225 25 380 Wooramel River 0 0 Yarra Yarra 0 0 Total surface water 844 906 176

Note: The Ord River accounts for 356 GL of the 906 GL of surface water licences available in Western Australia (approximately 40%). Source: WA Department of Water

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 109

Table 4.5.3: Water entitlement shares by sector

Sector GL % share Mining 805 32 Agriculture / horticulture 729 29 Town water supply 377 15 Licensed private use 327 13 Industry 151 6 Commercial 126 5 Total 8193 100%

Source: Department of Water

4.5.3 Water supply conditions Figure 4.5.1: Water levels in key storages supplying the market

Harvey Dam Logue Brook Dam Stirling Dam Wellington Dam

120

100

Storgae level - per cent of full capacity 20

0 July-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 June-08

1 July 2007 to 30 June 2008

Note: (a) Utilisation of the water from Wellington Dam was constrained during the 2007–08 water year due to salinity levels. Source: Western Australian Water Corporation

4.5.4 Western Australian water licence markets Table 4.5.4: Groundwater licence transfers

Water management area Volume (ML) Number Busselton-Capel Broadwater-Jindong, Perth-Lower Leederville 70.0 1 Elgin-Capel River, Perth-Leederville 120 1 Total 189 2

110 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.5.4: Groundwater licence transfers continued

Water management area Volume (ML) Number Perth City of Gosnells, Perth-Superficial 21 1 Quinns, Perth-Superficial 14 1 Total 35 2 Swan Central Swan, Perth-Superficial 6 1 South Swan, Perth-Mirrabooka 1 1 South Swan, Perth-Superficial 4 1 Swan Confined, Perth-Leederville 122 2 Total 133 5 Wanneroo Mariginiup, Perth-Superficial 44 3 Neerabup, Perth-Superficial 85 2 Total 129 5

Total all areas 486 14 summary — WA Trading

Source: Department of Water

Table 4.5.5: Prices for water licence transfers

Region Prices ($/ML) Standard Number of deviation trades Mean Median Mode Busselton-Capel - - - - 0

Perth - - - - 0 Section 4.5 Swan 1627 1000 n/a 1841 3 Wanneroo 3300 3300 3300 - 1 All regions 2046 2150 n/a 1630 4

Source: Department of Water

4.5.5 Western Australian water allocation markets Table 4.5.6: Water allocation trades in Harvey Water irrigation districts

Internal trades Trade in Trade out Net change ML Region No. ML No. ML No. ML Waroona 14 1770 0 0 0 0 0

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 111

Table 4.5.6: Water allocation trades in Harvey Water irrigation districts continued

Internal trades Trade in Trade out Net change ML Region No. ML No. ML No. ML Harvey 111 5450 0 0 105 4150 -4150 Collie 29 1799 0 0 0 0 0 Total 154 9019 0 0 105 4150 -4150

Note: All trades are for surface water allocation. Source: Harvey Water

Table 4.5.7: Prices for water allocation—surface water

Region Prices ($/ML) Standard Number of deviation trades Mean Mode Median Waroona 22 30 30 10 14 Harvey 24 30 30 12 111 Collie 11 10 10 5 29 Total 20 10 10 12 154

Source: Harvey Water Section 4.6 Trading summaries Northern Territory, Australian Capital Territory and Tasmania

112 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Section 4.6 Trading summaries 4.6.1 Summary 114 Northern Territory, 4.6.2 Northern Territory 114 Australian Capital 4.6.3 Australian Capital Territory 116 Territory and 4.6.4 Tasmania 116 Tasmania

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

4.6.1 Summary Water Act. Water trade is only possible in a WCD where a water allocation plan is made. As at 30 June 2008, there The following section presents trading data for the Northern were seven WCDs in the territory. Territory, Australian Capital Territory and Tasmania, made available for the purposes of this report. These jurisdictions While no trade occurred over the course of the 2007–08 have very small water markets and have therefore been dealt water year, the Water Act 1992 (amended 2004) (NT) makes with together in this one section. provision for two types of statutory dealings: As for the other jurisdictions, the water trading terminology ++ transfer of water licence (commonly referred to as used in each of the Northern Territory, Australian Capital permanent trade) Territory and Tasmania is used in this section (although it is ++ transfer of part water licence (commonly referred to as not consistent with the NWI or other jurisdictions). As with temporary trade). previous sections, further information can also be found at Appendix A. Trades must be approved by the Controller of Water Resources, an entity within the Department of Natural Each of the jurisdictions is presented briefly in Sections 4.6.2, Resources, Environment and the Arts. Trading is restricted 4.6.3 and 4.6.4 respectively. to within a WAPA boundary. Trade between WAPAs is not permitted while trade between WCDs and between a majority 4.6.2 Northern Territory of WAPAs is not physically feasible due to the dispersed In the Northern Territory, the Water Act 1992 (amended 2004) nature of water resources. (NT) provides the legislative framework for water resource However, water licences can be traded between WMZs, management and trading. Water licences are the statutory subject to caps on extraction from each zone. Only water instrument for managing access to the resource. A licence is allocated for consumptive beneficial uses in a water allocation required to take water from any waterway for uses other than plan may be traded. Within a WMZ in a WAPA, there are stock and domestic purposes. Licences are usually issued for generally no constraints on trading. up to ten years and can be renewed. ‘Temporary trading’ is facilitated by provisions in the Water Water allocation plans provide the planning framework for Act 1992 (amended 2004) (NT) that allow part of the determining consumptive, environmental and cultural shares entitlement of the licence to be traded in the period in which and trading rules within a defined Water Control District the licence holder is using less than the full capacity of water (WCD). Each WCD has two types of management areas: permitted by the licence. ++ Water Allocation Plan Areas (WAPA) To date, limited trade has occurred in the Northern Territory ++ Water Management Zones (WMZ). due to the relative abundance of water (the resource is not fully allocated) and the formative state of institutional Trading in water access entitlements in the Northern Territory arrangements governing trade. is restricted to WCDs that have been declared under the

Table 4.6.1: Groundwater licences on issue—by aquifer

Aquifer Number Volume (ML) Amadeus (other) 7 1247 Bathurst Formation-Koolpinyah Dolomite 13 21 954 Berry Springs Carbonate Layer 4 982 Cabbage Gum 1 200 Central Mount Stuart Formation 1 35 Chabalowe and Cainozoic Formations 1 2000 Chabalowe Formation 2 330 Coomalie Dolomite 4 2207 Dune Plains 1 1600

114 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Table 4.6.1: Groundwater licences on issue—by aquifer continued

Aquifer Number Volume (ML) Farm Basin Inner Alice Springs 8 83 Farm Basin Outer Alice Springs 8 96 Jinduckin 14 2201 Kelly Well 1 2000 Local Aquifer (Katherine) 3 83 Mereenie 6 9450 Oolloo Daly West 1 2150 Oolloo Katherine 8 96 493

Pacoota Lower 1 2000 Pacoota Upper 1 2000 Palaeo Channel 2 2400 Shannon 1 1000

Ti Tree Basin Central Zone 2 3000 summaries Trading NT, ACT and TAS ACT — NT, Ti Tree Basin Eastern Zone 1 100 Ti Tree Basin Western Zone 13 2199 Tindal Katherine 1 34 905 Tindal Limestone Mataranka 7 1309 Tindall Aquifer 1 130 Town Basin Alice Springs 7 1309 Total 151 199 613

Source: Natural Resources, Environment, the Arts and Sport Section 4.6

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 115

Table 4.6.2: Water entitlements on issue—by water control districts

Water control district Number Volume Surface water Darwin Rural 42 182 115 Gove 1 480 Katherine 39 15 054 Total 82 227 649 Groundwater Alice Springs 51 27 578 Darwin Rural 49 27 747 Katherine 124 198 121 Tennant Creek 3 4351 Ti-Tree 20 8401 Total 247 266 198

Source: Natural Resources, Environment, the Arts and Sport

4.6.3 Australian Capital Territory 4.6.4 Tasmania The Water Resources Act 2007 (ACT) contains the legislative The Water Management Act 1999 (Tas) and the Irrigation provisions for water management and trading in the Clauses Act 1973 (Tas) provide the statutory basis for water Australian Capital Territory. Water access entitlements are trading in Tasmania. There are two statutory instruments that the statutory instrument under the Water Resources Act give legal authority to take water: 2007 (ACT). They provide a right to take a specified volume ++ Water Licence—an authority under Part 6 of the Water of surface or groundwater. A water-use licence must also be Management Act 1999 (Tas) to take water from a held to use water at a particular location. watercourse, lake or well. The licence is held by a person Two types of statutory dealings are possible: as personal property. A licence includes one or morewater allocations(a quantity of water that a licensee is entitled to ++ transfer of whole or part of the water access entitlement take and use under a Water Licence). (known as ‘permanent trade’) ++ Irrigation right—a right under the Irrigation Clauses ++ transfer of whole or part of the water access entitlement Act 1973 (Tas) to be supplied with water for irrigation. for a limited period (equivalent to a ‘term transfer’). Irrigation rights are issued by an irrigation entity and are Trades must be approved by the territory’s Environment granted from the entity’s bulk water allocation. Irrigation Protection Authority (EPA). The EPA keeps a register of water rights are linked to land, and held by the occupier of the access entitlements held and transfers made. The Water corresponding land. Resources Act 2007 (ACT) allows trade both within the Seven irrigation schemes operate in Tasmania: territory and also interstate. • Meander Irrigation District The Australian Capital Territory has 14 statutory Water Management Areas, each of which has specified volumes of • Cressy-Longford Irrigation Scheme water available for use and for environmental purposes. • Winnaleah Irrigation Scheme In the 2007–08 water year only six water access entitlement • South-East Irrigation Scheme transfers were executed, with a total volume of 34.5 ML.

116 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

• Clyde Irrigation District but water allocations associated with the right may be assigned out of the district to another licence holder. • Lake Leake/Elizabeth/Macquarie River Irrigation District The volume of trade in Tasmania is physically constrained by the small scale of catchments and the limited connectivity • Tooms Lake/Macquarie River Irrigation District. between them. To date, licence transfers have predominantly Each scheme holds a bulk water licence under the Water occurred as part of a property sale. Over the 2007–08 water Management Act 1999 (Tas). year the following trades were executed: A number of types of trade transactions, including ++ 79 licence transfers, equalling a volume of 56 515 ML ‘permanent’ and ‘temporary’ trading, are permitted under the ++ 15 temporary transfers, equalling a volume of 2913 ML. Water Management Act 1999 (Tas). These are summarised in Table 4.6.2, including transfers of irrigation right, which are There is no requirement for price information to be reported governed by the Irrigation Clauses Act 1973 (Tas). Irrigation in Tasmania. rights cannot be transferred outside of an irrigation district,

Table 4.6.3: Statutory water dealings—Tasmania

Transfer of licence A change in the ownership of the licence. May be absolute or may be for a limited period. May include a change in the physical location of extraction. Transfer of water allocation The movement of water allocation from one licence to another. May be absolute or may Trading summaries summaries Trading be for a limited period. and TAS ACT — NT, Temporary transfer The short-term movement (maximum 21 days) of the right to take water allocation to a person who does not hold a licence. In this lease arrangement the water entitlement is retained by the seller and a temporary transfer to a person (who does not require a licence) is permitted to overcome a significant water shortage. Transfer of irrigation right A change in ownership of a right to be supplied water in an irrigation scheme. May be absolute or for a limited period. May include the transfer of the irrigation right from one property in the scheme to another. Approval is undertaken in accordance with section 23A of the Irrigation Clauses Act 1973 (Tas). Limited period transfer Enables a licensee to transfer part or all of a licence or water allocation for a limited period of time (equivalent to a lease). The length of time for such a transfer is governed Section 4.6 by the time remaining before the expiry of the seller’s water licence or the allocation. The purchaser will require a new water licence or a variation to an existing licence before the transfer can proceed. At the end of the ‘lease’, the control of the licence and/or water allocation automatically reverts to the transferor. Absolute transfer Involves the outright sale of all or part of a licence or water allocation. The seller reduces their water allocation and the purchaser will require a new water licence or a variation to an existing licence before the transfer can proceed.

Source: National Water Commission (2007) Dictionary of Terms for Water Access Entitlements and Transactions

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 117 Section 1 Executive Summary Market Highlights Section 5 Market performance 5.1 Summary 120 5.2 Transaction times for water access 120 entitlement transfers

5.3 Transaction times for water 120 allocation trades

5.4 Processing times in each jurisdiction 121

5.5 Market depth indicators 125

5.6 Other market indicators 126

5.1 Summary 1. Contract of sale The amount and value of trade that is presented in Sections 3 Buyer and seller locate one another and agree to a price. A and 4 of this report reflect the importance of efficient market contract of sale is drawn up between the parties. performance. 2. Lodgement of application to approval authority In its Update of Progress in Water Reform in February 2008, (where required) the National Water Commission noted that greater market Regulatory approval from the appointed authority(s) is efficiency can be achieved by: required for dealings that have a potential impact on the water resource and environment (specific assessment ++ improving pricing and information disclosure to promote requirements vary from one jurisdiction to another). These transparency include water access entitlement transfers involving a change ++ improving market confidence in water intermediaries in location, subdivisions, amalgamations and interstate transfers. An application is usually required from both the ++ streamlining transaction processes buyer and seller. Straight transfers without a change in ++ reducing approval times for water trades. location and/or subdivision or amalgamation can usually proceed without regulatory approval. The Commission has addressed the first two of these issues previously in its publications: 3. Settlement ++ Pricing and personal information disclosure consultancy Buyer and seller sign transfer papers and exchange the project, Final Report, August 2006 certificate of entitlement. Discharge encumbrances or the consent of the security interest holder is given to the dealing ++ Improving market confidence in water intermediaries, (where relevant) and consideration for the transfer is released Waterlines Occasional Paper no. 3 July 2007. from escrow account and paid to the vendor. This section focuses, therefore, on transaction and processing 4. Registration times. The Commission notes that substantial work has been undertaken in this area through COAG processes during 2008. At the conclusion of settlement, the buyer must lodge the transfer documents to the nominated water entitlement Sections 5.2 and 5.3 note the basic processes involved in registry. The transfer takes legal effect upon registration. some commonly occurring transactions in the jurisdictions, The timeframe for completing a transaction can be measured and then reflect processing data collected from the Basin and reported in a variety of ways. One metric is the time taken states with respect to these transactions (Section 5.4). from signing the sale contract, to registration of the transfer. Finally, Sections 5.5 and 5.6 present a number of market Another approach is to report timeframes for component performance indicators. tasks of the transaction for example: 5.2 Transaction times for water access ++ days elapsed from lodgement of an application for approval to trade and the issue of a certificate of approval entitlement transfers ++ days elapsed from lodgement of transfer documents with Transaction times in the water market are influenced by the the registry office to the date of registration. type of dealing being executed. These can include: This information allows identification of how long it takes ++ the transfer of a water access entitlement from one legal for regulatory authorities to assess the process of a trade, entity to another, without a change in location (as occurs separate to the time lags due to other parties (broker, when water entitlement is either sold as part of a property conveyancers, banks, vendor and buyer). For some or is traded within the same trading zone/water source) transactions, the regulatory authority may issue a requisition ++ the transfer of a water access entitlement from one legal for further information, particularly if documents have not entity to another, with a change in location (to a different been completed fully or accurately by the applicants. Clearly trading zone/water source) applicants may also be responsible for processing delays also. ++ subdivisions or amalgamations performed on the water 5.3 Transaction times for water allocation access entitlements prior to transfer trades ++ whether the transfer is an intrastate or interstate trade. Intrastate water allocation trades, also referred to as ‘seasonal assignments’ (in Queensland) and ‘assignment of water Water access entitlement transfers typically involve four main allocations’ (in New South Wales), involve fewer steps than steps (or three steps if regulatory approval is not required). a water access entitlement transfer. The transaction is less

120 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

complex as there is no change in ownership of the water 5.4 Processing times in each jurisdiction access entitlement and thus no settlement phase. 5.4.1 Queensland However, transfer of allocation typically requires regulatory approval—usually from the relevant water infrastructure No approval is required for water entitlement transfers (known operator (which is usually given delegated authority from as allocations in Queensland); the buyer lodges transfer the state to approve allocation transfers). In the case of documents at the Land Information and Titles Office. unregulated water sources, authority to trade must be sought If a trade involves a subdivision, amalgamation or a change to from the state government water agency. an entitlement’s attributes (such as its location) approval must Water allocation trades are typically ‘pre-assessed’ for most be sought from DNRW and a ‘dealing certificate’ obtained before trading zones. Only a subset of trades requires case-by- the dealing can be recorded on the water allocations register. case assessment. The three main steps involved in a water For supplemented water transfers, subdivisions, allocation trade include: amalgamations, changes and leases, confirmation of 1. Contract of sale a supply contract between the buyer and the resource operations licence holder is required for registration. If Buyer and seller locate one another and agree to a price. A an unsupplemented water allocation is to be transferred, contract of sale is drawn up between the parties. notification of the proposed transfer must be given to the 2. Lodgement of application to approval authority Department, and a dealing certificate obtained for a transfer to be registered. An application to transfer water allocation, signed by seller and buyer, must be submitted to the relevant approval During the 2007–08 water year over 80 per cent of authority. Upon approval, the water accounts of seller and dealings involving changes were approved within seven days buyer are adjusted and the transaction is registered. (Figure 5.1). 3. Sale finalised with payment of consideration The registration process takes an average of approximately four business days, subject to no requisition for additional Upon approval, the seller and buyer are advised in writing of information from the vendor or buyer. the determination and the consideration amount is exchanged from buyer to seller. Sunwater is the approval authority for most seasonal assignment trades in Queensland. Average processing time The timeframe for allocation transfers are typically reported as reported by Sunwater is one business day.

the duration of time between lodgement of an ‘application to performanceMarket trade’ and the issue of an approval.

Figure 5.1: Approval times for water allocation subdivision, amalgamation and location changes—Queensland

60 Section 5

40 Per cent of trades

0 0-7 8-14 15-30 31-60 61-90 >90

Days

Source: QLD Department of Natural Resources and Water

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 121

5.4.2 Victoria within Victoria were finalised (approved or disapproved) within Transfer of water entitlements (known as shares in Victoria) 15 days in the first half of the 2007–08 water year, and just require regulatory approval from an authorised Victorian seven days in the second half. water authority before the trade can proceed (irrespective of Shorter timeframes were achieved for trades within water whether the transfer involves a change of location or not). authorities as opposed to inter-authority trades. Approval Once approval is obtained, the buyer must submit a separate times for interstate trades were considerably longer, at about application to the Water Registrar to record the transfer. 35 to 40 days. The National Water Commission was not provided with Victoria’s convention for measuring processing time is the processing times for water entitlement (share) transfers for number of days elapsed between the date an application is this report. created in the register and the date it is approved or refused. Aggregate information was provided on the days taken to For interstate trades the processing time of both states process water allocation trades. Table 5.1 shows that, on is included. average, 90 per cent of applications to trade water allocations

Table 5.1: Approval times for water allocation trades—Victoria

Ninety per cent of applications were finalised within the specified number of days July to December 2007 January to July 2008 Interstate trade inbound 25 days 20 days Interstate trade outbound 40 40 Interstate total 40 35

Trade between Victorian rural water authorities 25 12 Trade within authorities 10 5 Intrastate total 15 7

All trades 20 10

Source: Victorian Department of Sustainability and Environment

5.4.3 South Australia transfer. South Australian authorities anticipate that following Regulatory approval to trade must be obtained for both water unbundling in the River Murray, processing times should access entitlement (licence in South Australia) transfers and approach those the states that are already unbundled. water allocation trades in South Australia. Trades that involve The Department of Water, Land and Biodiversity Conservation a change in location require an impact assessment. ‘Top-up’ measures processing time as the number of days between trades involve short processing times because no assessment an application being received and the time it is approved. Of is required. those entitlement transfers approved in South Australia in the South Australia operates under a ‘bundled’ system of water 2007–08 water year, just over half were finalised in 30 days rights, whereby the tradeable right to an annual allocation or less (Figure 5.2). has not been separated from the underpinning entitlement Approval times for water allocation intrastate trades are to a share of the available water source. This means that shown in Figure 5.4. Only 14 per cent of trades were transaction processing times for water allocation trades approved within seven days. The majority of applications in South Australia are typically longer than for the other (37 per cent) took between 15–30 days to process. Murray-Darling Basin states, because the trade is subject to a similar administrative process as a water access entitlement

122 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Figure 5.2: Approval times for water licence transfers—South Australia

Per cent of trades 20 Per cent of trades

0-30 31-60 61-120 121-180 181-365 >365

Days

Source: SA Department of Water, Land and Biodiversity Conservation

Figure 5.3: Approval times for water allocation trades—South Australia

30 Market performanceMarket 25

15 Per cent of trades

0 0-7 8-14 15-30 31-60 61-90 >90

Days Section 5

Note: Excludes interstate trades. Source: SA Department of Water, Land and Biodiversity Conservation

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5.4.4 New South Wales is, the time between lodgement and registration (Figure 5.4). A high proportion of trades involved requisitions for additional The transfer of ownership of a water access entitlement information and this contributed to the processing delays. (known as a Water access licence in New South Wales) within the same water source does not require regulatory approval. Transactions involving both a transfer and change of location Once settlement is complete, it is the buyer’s responsibility require approval from the Department of Water and Energy, as to lodge the transfer documents with the New South Wales do assignments of a water access licence share component Department of Lands for registration on the Water Access to another licence, subdivisions and consolidation. Approval Licence Register. In the 2007–08 water year approximately times for these dealings averaged 30 days in the 2007–08 40 per cent of transfers were registered within 60 days, that water year.

Figure 5.4: Processing times for water access licence transfers—New South Wales

20 Per cent of trades 15

0 0-30 31-60 61-120 121-180 181-365 More

Days

Source: NSW Department of Water and Energy

Assignment of water allocations also requires regulatory about 35 per cent of water allocation assignments were approval. The Department of Water and Energy has the approved within seven days. However, there was a long ‘tail’ authority to approve trades in unregulated water sources. in the frequency distribution of approval times, with about State Water is the approval authority for regulated water 20 per cent of trades taking more than 30 days to approve sources (for sources other than those owned and managed (Figure 5.5). by the irrigation corporations). In the 2007–08 water year

124 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008

Figure 5.5: Approval times for assignment of water allocations—New South Wales

Per cent of trades 15

0 0-7 8-14 15-30 31-60 61-90 >90

Days

Note: Excludes interstate transfers. Source: NSW Department of Water and Energy

5.5 Market depth indicators Table 5.2: Market depth indicators for each Australian state/territory Market performanceMarket QLD NSW VIC SA ACT WA TAS NT Entitlements on issue Volume (GL) 3567 9578 4202 1196 65 2515 1471 494 Number 12 280 14 613 51 200 9645 141 16 864 2826 329 Proportion of entitlements ‘on issue’ that are tradeable (subject to trading rules and conditions)

By volume 37% 98% 100% >95% n/a >95% >95% 4% Section 5 By number 23% n/a 100% >95% n/a >95% >95% 11% Total entitlement trade in the 2007–08 water year Volume (ML) 75 968 546 679 223 975 16 983 34 486 56 515 0 Number 611 874 2278 224 6 14 79 0 Proportion of tradeable entitlements ‘on issue’ that were traded in the 2007–08 water year By volume 2.1% 5.7% 5.3% 1.4% 0.0% 0.0% 3.8% 0.0% By number 5.0% 6.0% 4.4% 2.3% 0.0% 0.1% 2.8% 0.0%

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Table 5.2: Market depth indicators for each Australian state/territory continued

QLD NSW VIC SA ACT WA TAS NT Value of market turnover ($ million) Water access entitlements 57.7 470.5 272.4 38.3 n/a 1 n/a 0 Water allocations n/a 384.0 270.5 181.3 0 0.3 n/a 0 Number of entitlement 91 103 1263 n/a 0 n/a n/a 0 subdivisions Number of consolidations 2 53 2 n/a 0 n/a n/a 0

5.6 Other market indicators Table 5.3: Market indicators for each Australian state/territory

QLD NSW VIC SA ACT WA TAS NT % of water entitlement trades 44.5% n/a n/a n/a n/a 57% 100% n/a executed as part of a property sale % of water entitlement transfers n/a n/a n/a n/a n/a n/a n/a n/a that were accompanied by a change in location % of water allocation transfers that 8.25% n/a n/a n/a n/a n/a n/a n/a were accompanied by a change in location Volume of water access entitlement 44% 40% 31% 6% 100% 4% 95% 0% trades as a proportion of all trades Volume of water allocation trades as 66% 60% 69% 94% 0% 96% 5% 0% a proportion of all trades Volume of interstate water access 0% 0% 0% 0% 0% 0% 0% 0% entitlement trades as a proportion of all entitlement volume traded Volume of outbound interstate water 0% 21% 13% 1% 0% 0% 0% 0% allocation trades as a proportion of all allocation volume traded Volume (or number) of 524 39 692 (166) n/a n/a (66) n/a n/a entitlement trades in progress as at ML ML 30 June 2008 Number of irrigation districts within 100ML of reaching the 4% limit on net export of water access entitlement Low reliability entitlement - n/a 2 n/a - - - - High reliability entitlement - n/a 3 n/a - - - -

Note: Information provided as a volume in ML, or as a number of entitlements (in brackets) where volumes are not available.

126 National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 Appendix A

Australian Capital Territory: 128 Regulatory water markets

frameworks New South Wales: water markets 130

in each Northern Territory: water markets 134

jurisdiction Queensland: water markets 137

South Australia: water markets 141

Tasmania: water markets 144

Victoria: water markets 147

Western Australia: water markets 150

Australian Capital Territory: Water markets This diagram illustrates the governance arrangements for water trading in the Australian Capital Territory.

Water Resources Act 2007

Minister for Environment, Water and Climate Charge

Territory and Municipal Services (Environment Protection Authority)

Water Sharing Plan

Water access Register entitlements

Water licences

Water access entitlement holders

Legend

Legislation, regulation, statutory instrument, licences

Institutions or individuals, such as state ministers & departments, authorities, water customers, associations & activities

Non-statutory documents & activities

Document in draft form

Text Document or product under development

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Australian Capital Territory: Water markets

Legislation / regulation / statutory instruments / licences Water Resources Act 2007 Ensures efficient and equitable management of water resources in the Australian Capital Territory. The Act permits the permanent or temporary transfer of all or part of a water access entitlement, with the approval of the Australian Capital Territory Government’s Environment Protection Authority. www.legislation.act.gov.au Water sharing plan This plan has replaced the previous Water Resources Management Plan (Volume 3 of Think water, act water), which has been repealed. The water sharing plan includes two components: DI 2007–193—water management areas and DI 2007—volumes of water available. Both are disallowable instruments under the Water Resources Act 2007. Parts 1 and 2 of Think water, act water remain as policy documents. Water access entitlement A right to the amount of surface water or groundwater stated in the entitlement issued under the Water Act 2007. The holder of a water access entitlement may, with the approval of the authority, transfer the whole or part of the entitlement to someone else, either permanently or temporarily. The authority must not approve the transfer of a water access entitlement unless satisfied that the intended use of the water and the place it is proposed to be used is consistent with the conditions of the entitlement and the territory plan. As a result of the Water Resources Act 2007, there are tradeable and non- tradeable water access entitlements. The holder of a water ‘allocation’ and licence under the former Water Resources Act 1998 can either: ++ do nothing until such times as they want to deal with their water and/or land ++ surrender the allocation in exchange for a non-tradeable water access entitlement, or ++ surrender the allocation and buy a tradeable water access entitlement. Water licences Required under the Water Resources Act 2007 to take and use water associated with a water access entitlement. A licence to take water provides the location Regulatory Frameworks from which water can be taken and used. Non-statutory documents and activities Register The Environment Protection Authority maintains a register of licences and water entitlements. A hard copy of the register is available for inspection at the authority’s office. Minister / department / authority / organisation / individual Territory and municipal services The approval of the Environment Protection Authority is required to trade water (Environment Protection Authority) within and external to the Australian Capital Territory. www.tams.act.gov.au Appendix A Water access entitlement holder The holder of a water access entitlement may transfer the allocation in whole or part, on a temporary or permanent basis, with the approval of the Environment Protection Authority.

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New South Wales: Water markets This diagram illustrates the governance arrangements for water trading in rural and regional New South Wales.

Water Management Act 2000 Water Act 1912

Minister for Lands Minister for Water

Department of Lands (Land and Property Department of Water and Energy Information)

Access Licence Water sharing Plan Water Access Licence Dealing Principles (incl. water trading Water licences (WAL) Register Order 2004 rules)

Water access licences

Approvals (water use, LAS licensing system Water licence holders works)

Water Access Licence holders

Irrigators, Town Irrigation water Supply, Industry, major Corporations utilities, Power generators

Individuals/ businesses

Legend

Legislation, regulation, statutory instrument, licences

Institutions or individuals, such as state ministers & departments, authorities, water customers, associations & activities

Non-statutory documents & activities

Document in draft form

Text Document or product under development

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New South Wales: Water markets

Legislation / regulation / statutory instruments / licences Water Management Act 2000 Provides the legislative basis for water use, management and planning. The Water Management Act 2000 is gradually replacing the planning and management frameworks in the Water Act 1912. The Act provides for a range of water transactions known as access licence dealings or dealings. The most common water access licence dealings are the buying and selling of licences on a permanent basis and the sale of annual account water, and other dealings including splitting or consolidating licences or changing the category of the licence. The permanent trade of water entitlements is permitted in regulated streams and unregulated streams and those groundwater systems where groundwater trading areas have been declared. Assignment of account water (temporary trades) is only permitted in water sources where allocations are metered (essentially the regulated rivers and the major inland alluvial groundwater systems). www.legislation.nsw.gov.au Water Access Licence Dealings Set under the Water Management Act 2000, the Water Access Licence Dealings Principles Order 2004 Principles Order provides the state-wide rules that apply to any applications to undertake water dealings. The order provides the basis for system-specific trading rules set through water sharing plans. www.legislation.nsw.gov.au Water sharing plans Detail the rules that govern water sharing, extraction and trading. For regions (incl. water trading rules) where plans have not been developed, licensing remains under the provisions of the Water Act 1912. All water dealings must be consistent with the provisions in the Water Management Act 2000 and the system specific trading rules within water sharing plans. Water Act 1912 For regions in New South Wales where water sharing plans have not been developed, licensing remains under the provisions of the Water Act 1912. There are two types of water trades available under the Act. These are: ++ permanent transfers—the outright purchase of part or all of the volumetric

entitlement attached to a licence Regulatory Frameworks ++ temporary transfers—the purchase of allocation water from another licence holder on a seasonal basis. There are a number of state principles that apply to water trades under the Act, but as a general guide trading is permitted only: ++ in water sources and for purposes (essentially irrigation and industrial licences) that are subject to licence embargoes ++ in those groundwater sources subject to a declared transfer scheme, that is, most of the major inland alluvial aquifers ++ for temporary surface water transfers where usage is metered Appendix A if the purchaser already has a licensed work, or in the case of a permanent transfer, they should submit an application for a licence with the transfer application. www.legislation.nsw.gov.au

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New South Wales: Water markets continued

Legislation / regulation / statutory instruments / licences Water access licences (WAL) Water access licences, issued under the Water Management Act 2000, entitle holders to take a share of the available water as defined on the licence. WALs are specified as having a ‘share’ and ‘extraction’ component. The ‘share’ component of the licence specifies the shares in the available volume of water the licence holder is entitled to from the relevant water source. The ‘extraction’ component specifies the time, rate, circumstance and location of the extraction. Approvals (water use, works) Approvals are separate from water access licences; they are used to ensure that any impacts on the environment and other water users are minimised. A water user cannot take or use any water unless they hold a water access licence and the required water use and water supply works approvals. Water users can apply for a water supply works and a water use approval before purchasing a water access licence. Water licences The access entitlements allocated to surface water and groundwater users under the Water Act 1912 cover both the right to extract water, the right to construct and operate water supply works, and the right to use water for purposes such as irrigation or industry. These licences exist in river and groundwater systems that are not covered by a current water sharing plan. Non-statutory documents and activities Water access licence register All water access licences and water dealings (except allocation assignments) are to be recorded on the water access licence (WAL) register. The register, administered by the Department of Lands, records legal information about water access licences such as ownership, tenancy arrangements, encumbrances (such as mortgages held over the licence), water source, expiry date, licence category and share component. Water dealings are legally effective only when it is registered on the water access licence register. The exceptions are water allocation assignments that are effective from the time the water allocation accounts of the buyer and seller are adjusted. LAS licensing system The Department of Water and Energy is the custodian of a licensing system (LAS) that holds the records of all WALs and approvals under the Water Management Act 2000, and all licences and authorisations held under the Water Act 1912. Land and Property Information advises the Department of Water and Energy daily of all changes made to the WAL register, and the department manually updates its records in LAS. Minister / department / authority / organisation / individual Minister for Water Has overall responsibility for the management of New South Wales freshwater resources. The Minister is supported by the Department of Water and Energy. Consent is required from the Minister for Water to transfer a water access licence. Ministerial consent is also required for a permanent transfer that involves a change in extraction location.

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New South Wales: Water markets continued

Minister / department / authority / organisation / individual Department of Water and Energy (DWE) Accountable to the New South Wales Parliament, through the Minister for Water, for managing water resources in New South Wales. DWE is the lead state agency for administering the key natural resources legislation that governs water, namely the Water Management Act 2000 and Water Act 1912. The department assesses all dealings to ensure they are consistent with the Water Access Licence Dealings Principles Order and any additional rules that are specified in the relevant water sharing plan. In some cases this will require assessment of the local impacts. Licence holders do not need to apply to the department to transfer a water access licence or for the term transfer of a water access licence. These dealings require registration by the Department of Lands on the WAL Register for the transaction to be completed. www.dnr.nsw.gov.au Department of Lands (Land and Responsible for administering the New South Wales Water Access Licence Property Information) Register. All water dealings, other than a temporary assignment of account water, require registration with Land and Property Information (LPI) to complete the transaction. www.lands.nsw.gov.au Irrigation corporations Within irrigation areas, irrigation corporations hold bulk water access licences and provide a share of water to each individual irrigator within the irrigation district. Any trade in or out of the irrigation district must be done through the irrigation corporations. Trading rules that apply within irrigation schemes are largely set by the irrigation corporations. Regulatory Frameworks Appendix A

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Northern Territory: Water markets This diagram illustrates the governance arrangements for water trading in the Northern Territory.

Water Act 1992 (as amended 2004)

Water Regulations 1992 (as amended 2002)

Minister for Natural Resources, Environment and Heritage

Department of Natural Resources, Environment and the Arts (Controller of Water Resources)

Water Control District Declaration

Water Allocation Plans (incl. general trading rules)

Water licences Water licences register Consumptive Non-consumptive water uses water uses

Licence holders

Legend

Legislation, regulation, statutory instrument, licences

Institutions or individuals, such as state ministers & departments, authorities, water customers, associations & activities

Non-statutory documents & activities

Document in draft form

Text Document or product under development

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Northern Territory: Water markets

Legislation / regulation / statutory instruments / licences Water Act 1992 (as amended 2004) Provides for the investigation, allocation, use, control, protection, management and administration of water resources, and for related purposes. The Act also provides the legislative basis for water trading in the Northern Territory. www.nt.gov.au/dcm/legislation/current.html Water Regulations 1992 Provides the specific rules pertaining to the issuance of water licences and (as amended 2002) permits. It provides for the issue of permits and licences to take or use surface water and to take groundwater. Where it is assessed there is a need for closer management of water resources, to avoid stressing groundwater reserves, river flows or wetlands, a water control district may be declared. www.nt.gov.au/dcm/legislation/current.html Water control district declaration The Minister declares an area of the territory to be a water control district. This is done where there is sufficient current or potential competing demand for water to warrant water allocation planning and licensing. There are currently seven water control districts in the territory as of 30 June 2008. Trading in water access entitlements in the Northern Territory is restricted to water control districts that have been declared under the Act. www.nt.gov.au/dcm/legislation/current.html Water allocation plans (incl. general Direct the management of water in declared water control districts. The Water Act trading rules) 1992 requires that water allocation plans provide for the allocation of water within the estimated sustainable yield to beneficial uses (including the environment). Water trade is only possible in a water control district where a water allocation plan is made. The Act requires that trade in water access entitlements must be in accordance with the relevant declared water allocation plan. There are two general restrictions on trade within the territory including: ++ for river systems, upstream trade will be approved only after it has been demonstrated that there will be no impact on the environmental provisions of the relevant water allocation plan Regulatory Frameworks ++ for groundwater sources, trading will be restricted to within-aquifer transactions, reflecting physical and environmental constraints. Within a particular zone, within a control district there are generally no constraints on trading. Water licences Authorises the holder to take and use surface or underground water, subject to conditions. Water licences are issued, transferred or amended by the Department of Natural Resources, Environment and the Arts. In areas where a water allocation plan applies this must be done consistent with the requirements of that plan. Consumptive water uses Only that water allocated for consumptive beneficial uses in a water allocation

plan may be traded. Appendix A The Water Act 1992 does not provide for trade from non-consumptive to consumptive water uses in order to prevent environmental and cultural water allocations being traded to water irrigators and other water users.

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Northern Territory: Water markets continued

Legislation / regulation / statutory instruments / licences Non-consumptive water uses The Water Act 1992 does not provide for trade from non-consumptive to consumptive water uses in order to prevent environmental and cultural water allocations being traded to water irrigators and other water users. Non-statutory documents and activities Water licence register The Northern Territory Government maintains a register of water licences. The Water Regulations 1992 require the Controller of Water Resources to maintain a register of licences granted to use and trade surface water and take groundwater. A hard copy of the register is available from the Department of Natural Resources, Environment and the Arts. Minister / department / authority / organisation / individual Minister for Natural Resources, Responsible for the protection of the environment in the Northern Territory. The Environment and Heritage Minister administers the Water Act 1992 through the Controller of Water Resources. Department of Natural Resources, State government department responsible for water resource planning and Environment and the Arts (Controller of management as provided under the Water Act 1992. Water Resources) www.nt.gov.au/nreta

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Queensland: Water markets This diagram illustrates the governance arrangements for water trading in rural and regional Queensland.

Water Act 2000

Minister for Natural Resources and Water

Water Regulations 2002

Department of Natural Resources and Water (DNRW)

Water Resources Plans (WRP)

Resource Operations Plans (ROP) Where ROP specifies water licences and IWAs may be relocated via a process (include trading rules) under the Water Regulations 2002

Resource Operations Water allocations Water Allocation Licences (ROLs) register Supplemented Unsupplemented systems systems Regulatory Frameworks Supply Resource Operations Entitlement Entitlement Entitlements Registration DatabaseWater Licence holder contract Holders Holders (ie. water service providers such as SunWater

Legend Appendix A Legislation, regulation, statutory instrument, licences

Institutions or individuals, such as state ministers & departments, authorities, water customers, associations & activities

Non-statutory documents & activities

Document in draft form

Text Document or product under development

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 137

Queensland: Water markets

Legislation / regulation / statutory instruments / licences Water Act 2000 Provides the framework to deliver sustainable water planning, allocation, management and supply processes and to ensure improved security for water resources. The Water Act 2000 provides the legislative basis for the trading of water allocations. The Act establishes a water resource planning process, under which catchment-based water resource plans are developed and then activated through resource operations plans. Permanent trading of water allocations can occur upon completion of the relevant water planning process. The three main types of trade that are possible in Queensland are: ++ permanent trading of water allocations and interim water allocations ++ lease of water allocations ++ seasonal water assignments (temporary transfers). www.legislation.qld.gov.au Water Regulation 2002 Subordinate legislation to the Water Act 2000 that provides detail on the relevant procedures and fees required to transfer a water allocation or licence. The Water Regulations 2002 provide an interim trading regime, whereby the holders of interim water allocations or water licences may relocate their entitlements to other land. This process only applies in those areas prescribed in the regulation. www.legislation.qld.gov.au Water resource plan (WRP) Sets out the outcomes and strategies for sustainable management and efficient use of water in each catchment. In Queensland, permanent trading of water allocations can only occur upon completion of the relevant water resource planning process. Permanent trades are subject to trading rules specified in the catchment specific water resource plan and resource operations plan. Resource operations plan (ROP) Details how water resources will be managed day to day to implement the (incl. trading rules) strategies and objectives set out in water resource plans. The implementation of a resource operations plan creates tradeable water allocations, separate from land title, and specifies relevant trading rules that are designed to protect users and the environment. Trading rules are designed to protect the environmental flow and resource security objectives set out in the corresponding water resources plan. The rules detail how an allocation may be transferred, subdivided, amalgamated and changed. Under Queensland’s water management arrangements, resource operations plans are required to enable permanent trading and to define trading rules in an area. Resource operations licence (ROL) Authorises water service providers to operate water management infrastructure such as dams and weirs that interfere with the flow of water. Water allocations An authority to take water established under a resource operations plan. Water allocations are separated from land title upon finalisation of a resource operations plan. Water allocations are not subject to renewal and are registered on the Torrens based Water Allocations Register.

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Queensland: Water markets continued

Legislation / regulation / statutory instruments / licences Water allocations register (WAR) Queensland’s water allocations register is a secure register that centrally records ownership details, interests and encumbrances and details of water allocation dealings. Water allocation dealings do not take effect until they are registered on the WAR. The register is managed by the Registrar of Titles and Water Allocations within DNRW and is publicly searchable on a fee for service basis. Water allocation dealing certificates must be lodged on the Water Allocations Register along with other transfer documents. Seasonal water assignments are recorded on the operator’s database. SunWater also makes information on volumes traded available to the public, via DNRW. DNRW has online monthly and annual reports on weighted average price and volumes of trades. Water entitlements registration database Manages client details, applications, authorisations (licences and permits), works and development approvals, quarry allocations, interim water allocations, land and water management plans, conditions for authorisations and links to the water allocations register (water allocations and trading). Minister / department / authority / organisation / individual Minister for Natural Resources The Minister may prepare a water resource plan for any part of Queensland and Water to advance the sustainable management of water. The Chief Executive The Chief Executive may prepare a resource operations plan to implement a water resource plan. The resource operations plan is structured to ensure that water in a plan area is managed in a way that delivers the objectives and outcomes specified in the water resource plan for that area. The resource operations plan conversion of existing entitlements to tradable water allocations will be a key benefit. Department of Natural Resources and Responsible for preparing and implementing water resource plans as directed Water (DNRW) by the Minister and resource operation plans as directed by the Chief Executive. DNRW is also responsible for the administration of water licences, water Regulatory Frameworks allocations and resource and distribution operations licences. Permanent trades of water allocations are managed and approved by DNRW. Applications are assessed based on the trading rules specified in the relevant resource operations plan and if approved a water allocation dealing certificate is issued. The certificate must be lodged at the Land Titles Office along with other transfer documents. The water allocation dealing does not take effect until it is registered on the water allocations register. Transfers of ownership do not require approval from DNRW provided there is no change to the resource-related elements of the water allocation. If an unsupplemented water allocation is transferred, notification of the proposed

transfer must be provided via a dealing certificate issued by DNRW to Titles before Appendix A the transfer can be registered. If a supplemented water allocations is transferred evidence of a supply contract between the buyer and the resource operations licence holder is required for registration.

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Queensland: Water markets continued

Minister / department / authority / organisation / individual Resource operations licence holders Temporary water trades in Queensland are called seasonal water assignments. (i.e. water supply providers such as Seasonal water assignments in supplemented systems are managed and approved SunWater) by the resource operations licence holder. Temporary trading within water supply schemes is subject to trade rules in the relevant resource operations plan. Seasonal water assignments in unsupplemented systems are managed and approved by DNRW. A seasonal water assignment is the transfer of some or all of the water under a water entitlement in a water year, to another water entitlement. This is often referred to as a temporary trade. Seasonal water assignments are subject to trading rules specified in the catchment specific water resource plan, resource operations plan or the Water Regulations 2002.

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South Australia: Water markets This diagram illustrates the governance arrangements for water trading in South Australia.

Natural Resources Management Act 2004

Minister for Environment and Conservation

Department of Water, Natural Resource Land and Biodiversity Management Boards Conservation

Natural Resources Regional Natural resource Management Regulations Management (NRM) Plans (Prescribed areas)

Water Allocation Plans (incl. water transfer criteria)

Water Information and Licensing Water licences Management Application

Water licence holders Renmark Irrigation Irrigation Regulatory Frameworks (outside of irrigation districts) Trust Act 1936 Act 1994

Irrigation Trusts

Legend Irrigation customers (within

respective irrigation district) Appendix A Legislation, regulation, statutory instrument, licences

Institutions or individuals, such as state ministers & departments, authorities, water customers, associations & activities

Non-statutory documents & activities

Document in draft form

Text Document or product under development

National Water Commission • Australian Water Markets Report 2007–2008 National Water Commission • Australian Water Markets Report 2007–2008 141

South Australia: Water markets

Legislation / regulation / statutory instruments / licences Natural Resources Management Act 2004 Provides the legislative framework for managing South Australia’s natural resources, including the planning and management of the state’s water resources. The Act provides for the transfer of water licences and allocations. A hydro- geological assessment is required when a water (taking) allocation is transferred to a new location or is converted from a holding to a taking allocation. No assessment is required where a water (holding) allocation is transferred, or a water licence is transferred together with the associated land. The criteria for transfer are outlined in the relevant water allocation plan for the prescribed area. DWLBC charges a fee to process water trading applications. If the transferee does not have an existing water licence, they are required to apply for a new licence. www.legislation.sa.gov.au Natural resources management An area where the taking of water from identified water sources (surface and/ regulations (prescribed areas) or underground water) is managed through licensing consistent with a water allocation plan. Outside of these areas the taking of water is not regulated, though general obligations to minimise impacts apply. www.legislation.sa.gov.au Regional natural resource Prepared by regional natural resource management boards, regional natural management plans resource management plans include information, goals, strategies and business plans related to water and other aspects of natural resource management in the region. Water allocation plans Provide for both the environmental and consumptive requirements of users in a region where water resources are prescribed. Water allocation plans, once made, are taken to form part of the relevant regional natural resource management plan. The regulatory basis for South Australia’s trading framework is contained in water allocation plans. The criteria for water transfers for both surface water and groundwater are outlined in the relevant water allocation plan for the prescribed area. In addition, water users in irrigation districts in South Australia are subject to the trading rules stipulated by the area’s manager. Water licence Authorises the holder to take (or to hold) surface or underground water, subject to conditions. Water licences may have water (holding) allocations and/or water (taking) allocations. Water licences are transferred or amended by DLWBC, consistent with the rules and requirements of the Natural Resources Management Act 2004 and the relevant water allocation plan. The Natural Resources Management (Water Resources and Other Matters) Amendment Act 2007 will amend the Natural Resources Management Act 2004 to separate existing water licences into their main components: water access entitlements, water allocations, site use approvals, water resource works approvals, and delivery capacity entitlements. The Natural Resources Management (Water Resources and Other Matters) Amendment Act 2007 has been assented, but is yet to be enacted.

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South Australia: Water markets continued

Legislation / regulation / statutory instruments / licences Renmark Irrigation Trust Act 1936 Governs the supply and distribution of water within the Renmark irrigation trust district Irrigation Act 1994 Provides for the irrigation of land in government and private irrigation trust districts within South Australia. Non-statutory documents and activities Water information and licensing The Natural Resources Management Act 2004 requires the Minister to maintain management application a register of all licences issued in South Australia. The register records all water licences and transfers, and includes provision for the registration of third party interests. Registered third parties must be notified, and their approval provided before a licence transaction may proceed. Minister / department / authority / organisation / individual Minister for Environment and Conservation Responsible for (among other things) management of water resources, including approval of all water trades, throughout the state under the Natural Resources Management Act 2004, through the Department of Water, Land and Biodiversity Conservation and regional Natural Resource Management Boards. It is important to note that the Minister for the River Murray has responsibility for the NRM Board, Regional NRM Plans and Water Allocation Plan for the River Murray, but not approval of water trades. Department of Water, Land and Principal agency responsible for the sustainable and integrated management Biodiversity Conservation (DWLBC) of the state’s natural resources. It develops water policies, collects information, conducts research and investigations and implements water licensing arrangements. Formal approval to trade is required from DWLBC. An application to transfer or vary a licence must be in a form approved by the Minister and accompanied by the prescribed fee. www.dwlbc.sa.gov.au Natural resource management boards South Australia has eight natural resource management regions, each with

a natural resource management board. These boards are responsible for the Regulatory Frameworks development and implementation of regional natural resource management plans and water allocation plans. www.nrm.sa.gov.au Irrigation trusts South Australia’s irrigation trusts have particular rules and arrangements relating to water trading, in addition to those in water allocation plans. Trading rules within areas managed by the trusts include limits on the volume of water in a district that may be transferred out each year. Appendix A

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Tasmania: Water markets This diagram illustrates the governance arrangements for water trading in Tasmania.

Water Management Act 1999

Minister for Primary Industries and Water

Department of Primary Industries and Water

Guilding Principles for Water Management Plans Water Trading-Water (incl. system specific Resources Policy #2003/2 trading rules)

Irrigation Clauses Act 1973 Water licences Water Information Management System Irrigation Schemes Water licences holders Transfer Irrigation rules Rights

Irrigation rights holders

Legend

Legislation, regulation, statutory instrument, licences

Institutions or individuals, such as state ministers & departments, authorities, water customers, associations & activities

Non-statutory documents & activities

Document in draft form

Text Document or product under development

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Tasmania: Water markets

Legislation / regulation / statutory instruments / licences Water Management Act 1999 Provides the statutory basis for the use and management of freshwater resources in Tasmania. The Act provides the legislative foundation for issuing and transferring licences and allocations in the state. Transfers of licences and water allocations can be permanent (absolute) or for a limited period (through a lease arrangement for a stated period). The Act also details the conditions under which a proposed transfer may be refused. www.thelaw.tas.gov.au Water management plans (incl. system Where a greater level of guidance is necessary to facilitate water trading specific trading rules) at a local level, trading rules are established that provide location specific interpretation of the general guidelines. Trading rules may be outlined in the relevant water management plan made under the Water Management Act 1999 or as specific regional trading rules under theGuiding Principles for Water Trading—Water Resources Policy #2003/2. Water licences Give the holder the right to take and use water from a water source. They include site and use conditions and a water allocation normally expressed in volumetric terms. There are several irrigation districts where the district operator holds the water licence for the whole district, while individual irrigators within the district hold entitlements (irrigation rights), as provided for in the Irrigation Clauses Act 1973. In Tasmania, all of the water licences under the Act are tradeable property rights, separated from land titles. Entitlements that do not require a licence are not tradeable. Approval to transfer a water licence or water allocation may not be allowed where: ++ the proposed transfer is not consistent with a relevant water management plan or the objectives of the Act ++ the transfer would have a significant adverse impact on any licensee or a person taking water under Part 5 of the Act Regulatory Frameworks ++ the proposed taking or use of water may contravene the Environmental Management and Pollution Control Act 1994 ++ the proposed transferor or transferee has been convicted of an offence against the Act or has accepted a water infringement notice, or ++ the proposed transferor or transferee has not paid any fee or other amount payable under the Act. Irrigation Clauses Act 1973 Provides the statutory basis for the construction, operation and funding of irrigation schemes by irrigation authorities. It also provides for the supply of water for irrigation under the system of irrigation rights, or general availability.

The Act allows for temporary and permanent transfers or rights within irrigation Appendix A schemes, and non-landholders or occupiers the right to hold irrigation rights. www.thelaw.tas.gov.au

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Tasmania: Water markets continued

Legislation / regulation / statutory instruments / licences Irrigation rights Each user within an irrigation district is provided with an irrigation right (the entitlement to take water from the irrigation scheme) that is separated from land title and transferable within the irrigation district, subject to conditions imposed by the management authority under its transfer rules. Non-statutory documents and activities Guiding Principles for Water Trading in Water trading in Tasmania is supported by the Guiding Principles for Water Tasmania—Water Resources Policy Trading in Tasmania. The policy provides the basis for the assessment of all #2003/2 applications for the transfer of water licences and allocations under the Water Management Act 1999. Trading zones and exchange rates for trade within and between the zones are also addressed in the principles. The guiding principles detail issues to be considered in the approval of licence and water allocation transfers. The policy supports the requirements of the Water Management Act 1999 to ensure adverse impacts on the rights of other water users and the environment do not occur. The principles provide the context for how water trading can be managed to achieve positive socio-economic benefits without impacting unacceptably on water resources or ecosystems that depend on the resource. Water information management system A change in ownership following an approved transfer is to be recorded on the water information management system immediately after approval. Transfer rules Transfer rules cover the physical constraints of the scheme infrastructure and the protection of third parties and the environment (including water quality). Minister / department / authority / organisation / individual Minister for Primary Industries Oversees the sustainable use and development of all freshwater resources in the and Water state. The Minister is supported by the Department of Primary Industries and Water. Department of Primary Industries and State government agency responsible for sustainable management of water Water (DPIW) resources. It is also responsible for preparing and implementing water management plans, including environmental provisions. The Minister has delegated statutory functions such as granting of water licences and allocations and approval of water transfers to specified positions within the Water Resources Division in DPIW under the Act. www.dpiw.tas.gov.au Irrigation schemes Seven irrigation schemes operate in Tasmania (Meander Irrigation District, Cressy- Longford Irrigation Scheme, Winnaleah Irrigation Scheme, South-East Irrigation Scheme, Clyde Irrigation District, Lake Leake/ Elizabeth/Macquarie River Irrigation District and the Tooms Lake/ Macquarie River Irrigation District). Each scheme holds a bulk water licence under the Water Management Act 1999, but users within the scheme are subject to the provisions of the Irrigation Clauses Act 1973.

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Tasmania: Water markets continued Victoria: Water markets This diagram illustrates the governance arrangements for water trading in rural and regional Victoria.

Water Act 1989

Minister for Water

Department of Sustainability and Environment (DSE)

Groundwater Streamflow State Management management management plans Bulk entitlements Rules (unregulated plans (inlc. trading (unregulated rivers) rivers) conditions) (incl. trading conditions)

Take and use Water shares/ Rural Water licences (bundled water use licences Authority systems only)

Water shares/ Licence holders delivery shares/ (irrigation/ water licences commercial) Regulatory Frameworks

Irrigators outside district within district

Legend Appendix A Legislation, regulation, statutory instrument, licences

Institutions or individuals, such as state ministers & departments, authorities, water customers, associations & activities

Non-statutory documents & activities

Document in draft form

Text Document or product under development

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Victoria: Water markets (rural and regional)

Legislation / regulation / statutory instruments / licences Water Act 1989 Provides the legislative basis for the planning and management of Victoria’s water resources, including water trading. The Act provides for either the permanent or temporary transfer of a water entitlement issued under the Act, with different arrangements for regulated, unregulated and groundwater systems. The Act also provides the legislative basis for both the permanent and temporary transfer of water shares in irrigation districts. Under the Act the owner of a holding within a prescribed irrigation area is permitted to transfer that water share to an Authority or any owner or occupier of land. Under the Act, a trade generally requires the approval of the water authority or the Minister or their delegate. The requirement to obtain approval enables various rules and conditions to be applied to trade, in order to forestall any of the hazards that can arise from trade. www.legislation.vic.gov.au Bulk entitlements Define the amount of water in the consumptive pool and contain rules for sharing available water within the system. The Water Act 1989 provides the legislative basis for issuing bulk entitlements to water in Victoria. In regulated systems, bulk entitlements are expressed as a share of the resource. In unregulated systems, bulk entitlements are given a volumetric allocation. Bulk entitlements are held by water authorities. Both permanent and temporary transfers of bulk entitlements are possible, either between authorities (water corporation or a catchment management authority), or an authority and a person who owns a water share, take and use licence or land in an irrigation district. Authorities may also acquire water shares and licences and convert them to a bulk entitlement or add them to an existing bulk entitlement. It is also possible to have a bulk entitlement to temporarily divert water that obligates the user to return water to the stream. Such non-consumptive rights could be in the form of a licence (e.g. for a fish farm) or a bulk entitlement or a legal agreement (e.g. a hydro-power company). These rights are fundamentally different from consumptive ones and cannot normally be sold for consumptive use. Water shares / delivery shares / water Under a bulk entitlement, rural water authorities provide water shares to use licences individuals within the irrigation district. Water shares are a share of the water available for consumption; they can be owned independently of land and are tradeable. Trade of water shares and allocations is subject to the ministerial trading rules and the approval of the relevant rural water authority. Delivery shares are rights to have water delivered to a property within an irrigation district. They remain attached to the land (even if all water shares are traded away) although they can move, subject to approval, to other land within an irrigation district. Water use licences are an authority to use water on a property for irrigation purposes. Streamflow management plans Developed under the Water Act 1989 to manage the water resources of (unregulated rivers) unregulated waterways that are under stress, or where there is a demand for (incl. trading conditions) more development, and are prepared by consultative panels in accordance with guidelines provided by the Department of Sustainability and Environment. System-specific arrangements, including trading rules, are tailored to manage local supply and environment issues through a streamflow management plan. For unregulated sources, where specific streamflow management plans have not been completed generic state management trading rules apply.

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Victoria: Water markets (rural and regional) continued

Legislation / regulation / statutory instruments / licences Groundwater management plans (incl. Developed for groundwater management areas that are over-allocated. These trading conditions) plans set out how water will be shared to ensure they are used sustainably. These plans are made under the Water Act 1989 for declared water supply protection areas, and are prepared by consultative panels in accordance with guidelines provided by the Department of Sustainability and Environment. Groundwater trading can occur only under the trading conditions specified under the relevant groundwater management plan. State management rules Apply to all unregulated rivers that do not have a stream flow management (unregulated rivers) plan. They aim to maintain and improve the reliability of supply to existing users, reduce the ecological stresses caused by summer diversions by encouraging water diversions to be moved to winterfill, and establish a minimum level of protection for river health. Take and use licences (bundled A take and use licence is required for all commercial and irrigation uses in systems only) bundled systems. Licences are used to allocate surface and groundwater for commercial and irrigation purposes outside irrigation districts. Transfer of surface or groundwater take and use licences is permitted under the Water Act 1989. The transfer can be either permanent or temporary and the owner does not have to be a landholder in Victoria. Minister / department / authority / organisation / individual Minister for Water Responsible for state-wide policy and strategic planning. The Minister is supported by the Department of Sustainability and Environment. Under the Water Act 1989 Ministerial approval is required to trade bulk entitlements. The Minister can also approve the transfer of water shares, but has delegated this function to rural water authorities (specifically, to the boards and certain senior officers of Goulburn-Murray Water, Sunraysia Rural Water, Southern Rural Water, Wimmera-Mallee Water; also of Coliban Water and Melbourne Water). Department of Sustainability State government agency responsible for the sustainability and integrity of

and Environment Victoria’s water catchments, management of the state’s waterways (surface and Regulatory Frameworks groundwater) and allocation of water shares, under the direction of the Minister for Water. www.dse.vic.gov.au Rural water authority Practically all trade within Victoria requires the approval of rural water authorities. Under the Water Act 1989, these authorities need to approve any trade within, into, or out of their own irrigation districts. The Minister can approve transfer of water shares, but has delegated this function to rural water authorities (specifically, to the boards and certain senior officers of Goulburn-Murray Water, Sunraysia Rural Water, Southern Rural Water, Wimmera-Mallee Water; also of Coliban Water and Melbourne Water). Appendix A

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Western Australia: Water markets This diagram illustrates the governance arrangements for water trading in rural and regional Western Australia.

Rights in Water and Irrigation Act 1914

Minister for Water Resources

Department of Water

Sub-regional Management Statewide Policy No. 6 Water Licences (within Plans/Local Area Transferable (tradeable) Water Resource Management Plans Water Entitlements for Management Units) (incl. rules for assessing Western Australia trading applications)

Legend

Legislation, regulation, statutory instrument, licences

Institutions or individuals, such as state ministers & departments, authorities, water customers, associations & activities

Non-statutory documents & activities

Document in draft form

Text Document or product under development

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Western Australia: Water markets

Legislation / regulation / statutory instruments / licences Rights in Water and Irrigation Act 1914 Provides the legislative basis for the regulation, management, use and protection of water resources. The Act provides for the permanent transfer of a licence or water entitlement (i.e. part of a licence), and also temporary transfer (called Agreements with licensees). Water transfers are at the discretion of the Department of Water. Under the Act, the department may refuse a water trade in order to: ++ protect the environment and other users from damage ++ ensure outcomes continue to be beneficial to the state ++ prevent non-efficient uses and monopolies in water ++ meet policy objectives ++ encourage or preserve complementarity and diversity in the market ++ preserve the trading market from distortion. Western Australia’s legislative reform program aims to consolidate 11 Acts (including this Act) into two during 2008: the Water Services Act, and the Water Resources Management Act. Under the Water Resources Management Act, water trading will be supported by water allocation plans, and conducted in accordance with rules in the plans. www.slp.wa.gov.au/statutes/swans.nsf Water licences (within water resource Water licences to take water are granted under the Rights in Water and Irrigation management units) Act to allow holders to take water in proclaimed or prescribed areas. Under the Rights in Water and Irrigation Act, licences can be traded within water resource management units (WRMU). A WRMU is a defined area containing an aquifer or stream basin. Trades of licences and/or entitlements must occur within the limits of water availability and physical constraints of the relevant WRMU. Accordingly, in Western Australia, currently trades are only possible within WRMUs. Trades upstream in river systems may be further constrained by the

availability of water. Permanent trades are where the entitlement is permanently Regulatory Frameworks traded to a second party. Non-statutory documents and activities Statewide Policy No. 6, Transferable Provides the statewide rules to facilitate water trading within water systems in (tradeable) Water Entitlements for Western Australia. For water trading to occur, the following conditions are necessary: Western Australia ++ access to additional water resources is restricted ++ the seller holds title to a recognised, tradeable licence or water entitlement. Sub-regional management plans / local Non-binding plans under the Rights in Water and Irrigation Act prepared by area management plans (incl. rules for the Department of Water. The plans guide the specific management of water

assessing trading applications) resources in the region, including matters for consideration by the department Appendix A when assessing applications for approval of transfers of licences and water entitlements. No such plans have been made under this Act to date.

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Western Australia: Water markets continued

Minister / Department / Authority / Organisation / Individual Minister for Water Resources Has responsibility for the Department of Water. The Minister has delegated the power to administer the Rights in Water and Irrigation Act 1914 to the Department of Water. Department of Water Has prime responsibility for water allocation planning and administration of water entitlements and water rights in Western Australia. The Department of Water is also responsible for approving the permanent and temporary trading of licences or water entitlements (i.e. part of a licence), in accordance with the Rights in Water and Irrigation Act 1914 and State-wide policy No. 6. www.water.wa.gov.au

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