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Water Markets

In the Murray–Darling Basin, irrigators can choose to trade water. Trade allows people to redistribute water among users:

  • if a person wants to use more water than they have, they can choose to buy it from another person
  • if a person does not want to use all the water they have, they can choose to sell it to another person.

In the Basin, water access entitlements and water allocations are two examples of water access rights that can be traded.

A person may choose to either:

  • sell their water allocation for a single year, but retain their water access entitlement. This is known as an allocation trade.
  • sell their water access entitlement (known as an entitlement trade).

During the year, water is distributed or 'allocated' against water access entitlements by state governments. For example, if a water allocation announcement is made giving entitlement holders 80% of their water entitlement; a person owning a 10 megalitre water share would be able to use eight megalitres of water that year.

Throughout the Murray–Darling Basin, there are different types of water systems. The majority of trade in the Murray–Darling Basin occurs in regulated surface water systems.

The southern-connected Basin is a connected resource comprising 13 interstate water trading zones covering parts of South Australia, New South Wales and Victoria. Inter-valley and interstate trade in the southern-connected Basin is possible because of the connected nature of the system. The establishment of irrigation schemes and the building of infrastructure have led to the southern-connected Murray–Darling Basin becoming one of the most mature water markets in the world.

Water access entitlements are an ongoing exclusive right to a share of water from a specified resource as defined in the relevant water resource plan.

Water allocation is the volume of water allocated to water access entitlements in a given season.

The northern Murray–Darling Basin is characterised by unregulated rivers or rivers regulated by single storages. Trades occur in the northern Basin, but in lower numbers and volumes than in the southern-connected Basin. Interstate trade occurs in the Border rivers area between New South Wales and Queensland. This arrangement is covered by a separate arrangement independent of the MDBA.

A range of rules operate at the state level governing trade in the Murray–Darling Basin. These can be found in state legislation and the policies of irrigation infrastructure operators (except interstate trade, for which the MDBA performs a coordinating role on behalf of South Australia, Victoria and New South Wales).

Regulated surface water systems generally have their water controlled by infrastructure. This infrastructure is used to store and release water. Seasonal allocations are made in these systems. These allocations determine the amount of water that can be taken from that system based on seasonal availability.

Unregulated surface water systems are generally systems where water is not controlled using infrastructure. Unregulated systems are based on seasonal flows. Once predetermined flow conditions are met, water may be taken. Extraction of water is limited by placing restrictions on maximum daily extraction, and the timing of extractions.

From 1 July 2014 new Basin Plan water trading rules provide greater clarity and consistency across the Basin's water market. They set out a consistent framework for water trading across the states, without duplicating existing state rules. The rules also contribute to the development of efficient and effective water markets by facilitating the movement of water to its most productive use.

The MDBA now has made information available on key characteristics and other key features of a selected set of water products across the Basin. Making this information publicly available makes it easier for water market participants to access the information.

Further Information

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