Murray River Water Trading

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Water Trading is simply the buying and selling of water access entitlements. The term of the trade can either be permanent or whatever time frame is agreed between the buyer and seller. This 'temporary' trading arrangement may vary from some months to a number of years.

South Australia led the nation when permanent water trading was first introduced in this State in 1983. This was the first time in Australia that water access entitlements were separated from land title.

An open and effective water trading market is critical to achieving a sustainable balance in water resource management. Allowing water access entitlements to move between users in an open market ensures that the water allocated for consumptive use progressively moves to a higher value user. This not only results in greater production from the same (or less) volume of water but also accrues environmental benefits where water is traded from degraded areas and/or low value, low efficiency production to areas more suited to irrigation using improved management practices on higher value crops.

Naturally water can only be traded within identified physical, social and environmental constraints. The water “Transfer Criteria” are clearly explained in the relevant Water Allocation Plans for all the prescribed areas detailing the general principles applying to the transfer of surface and/or groundwater within that area. These Water Allocation Plans can be viewed at www.catchments.net (SA)

A water trading website has been developed to provide useful water trading market information. The site details every water trade in the current financial year for every prescribed area in South Australia. The information is updated on a daily basis. In addition, annual summaries of water trading activities in the prescribed areas are provided for every year from 2000/2001. The website also allows potential buyers and sellers to post advertisements for their respective water requirements. This is a free service and “Wanted to Buy” and “For Sale” advertisements remain on the site for eight weeks. Source

Muddy states
George Megalogenis
Source: The Weekend Australian, May 19-20, 2001

Water may be scarce in sunburnt Australia, but not water licenses. There are 15 types of water that irrigators can use. Each state has its own set of rules, which means that a bucket of water in one area does not equate to a bucket of water in another. Trading water between farmers is more difficult than buying and selling any other product.

It all depends on availability. In Victoria and South Australia, a licence to pump a set amount of water from a river, dam or the ground is more reliable than in NSW, where governments had given out more water than there was in the system. The Victorians and South Australians can expect to get the full amount of the water on their licence in most years. In some areas of NSW – the Gwydir Valley, for instance –  farmers would be lucky to get half their allocation in any one year because of over-allocation in the past.

If there is water left over after irrigators take their permanent allocation, a second licence kicks in: the temporary allocation, which is decided on a yearly basis. Queensland has a different system again, which allows farmers to trap water in private dams. So where water is concerned, that is as if there are four countries with four languages operating in the Murray-Darling basin.

Water has been traded within the three southern states for years. In the past, farmers needed to buy the land to get the water attached to it. Now, in NSW, South Australia and parts of Victoria, they can acquire the water on it's own. Water has been allowed to be sold across state borders only since September 1998. The trial market along the Murray starts at Nyah, in northern Victoria, and finishes at Goolwa, at the river's end in South Australia.

A CSIRO audit of the first lot of sales reveals most of the water has gone to grapes in South Australia, the sector that can can afford to pay the most for the liquid asset because it uses the least amount. "Virtually all [99 per cent] of the water sold was not being used by sellers," the report says.