Basin Plan water trading rules

The Basin Plan water trading rules commenced on 1 July 2014.

The Basin Plan water trading rules operate alongside existing Basin state rules and irrigation infrastructure operator rules. The rules aim to:

  • reduce restrictions on trade
  • improve transparency and access to information
  • improve market confidence through a more effective water market.

The Basin Plan water trading rules contribute to achieving the Basin water market and trading objectives set out in Schedule 3 of the Water Act 2007. They address the following:

  • reporting of trading prices
  • removing surface water trade restrictions
  • rules for irrigation infrastructure operators
  • approval processes for trade of water access rights
  • trading restrictions
  • information and reporting requirements for Basin states
  • the use of exchange rates
  • restrictions on the delivery of tagged water
  • the trade of groundwater.

The rules apply to the Australian Government, the Basin states, irrigation infrastructure operators (IIOs) and individual market participants. The rules only apply to water access rights that can be traded under state water management law. For more information on the application of the Basin Plan water trade rules see the Guidelines to the water trade rules.

The Murray–Darling Basin Authority (MDBA) has assessed the relative importance that each rule under the Basin Plan water trading rules has on the achievement of water market and trading objectives.  These objectives are set out in Schedule 3 of the Water Act 2007 and include:

  • facilitating the operation of efficient and effective water markets
  • minimising transaction costs
  • protecting both third party interests and the needs of the environment.

The Strategic Priorities – Basin Plan water trading rules are used by the MDBA to prioritise its regulatory and compliance activities. Priorities may be adjusted over time, and the MDBA will endeavour to review these bi-annually.

Trading prices to be made available

People who sell their water must declare their sale price to their approval authority when they trade.

These rules increase the amount of pricing information available. Improved price information helps market participants make informed trading decisions.

Managing surface water trade restrictions

Free trade of surface water is required except where a restriction meets certain criteria. These criteria include where there is a physical constraint, lack of connectivity, or the environment may be harmed.

These rules remove barriers to trade and facilitate trade opportunities for market participants.

Rules for irrigation infrastructure operators

Irrigation infrastructure operators must not unreasonably restrict the trade of water delivery rights.

They must:

  • specify water delivery rights and give this information to the holders of these rights
  • specify irrigation rights and give this information to the holders of these rights
  • document their trading rules and make them available.

These rules increase the amount of information available to market participants so they can make informed trading decisions.

Approval processes for trade of water access rights

Approval authorities must:

  • notify the parties involved in a trade if it is restricted or refused. In the notification, the reasons for the decision must be listed
  • disclose any legal, commercial or equitable interest they have in a trade to those involved in the trade when processing it
    • publish information about the trade on their website after it has been approved including the type of access right, volume and price.

These rules improve information flows and create a transparent process for approvals.

Restrictions on trade when water announcements are not generally available

The Basin states and the Australian Government must make water announcements generally available. A water announcement includes allocation and carryover announcements and trading restrictions. A water announcement can be expected to have a material effect on water prices.

A person or organisation must not trade when they are aware of a water announcement that has not been made generally available.

When an organisation is responsible for multiple roles in the market, eg. water announcements and trading approvals, the rules allow both activities to continue provided arrangements to manage information are put in place.

These rules restrict inappropriate sharing of information and trading on the back of this information. These restrictions enhance confidence in the water market.

Information and reporting requirements

Basin states are required to provide us with:

These rules increase the amount of information available to market participants so they can make informed trading decisions.

Use of exchange rates

The use of exchange rates is restricted within and between systems.

We are able to allow the use of exchange rates in certain conditions.

These rules assist in managing possible impacts on water availability for third parties.

Restrictions on the delivery of water under a tagged water access entitlement established on or after 22 October 2010

Water delivered under a tagged water access entitlement receives the same treatment that would apply to water delivered by a trade of a water allocation.

These rules ensure there is equality in the market.

Trade of groundwater water access rights

Groundwater trade is not permitted unless certain conditions are met.

These rules limit potential negative impacts on groundwater resources.

Guidelines for the water trading rules

We have developed a series of guidelines to help you understand the water trade rules. These guidelines are technical documents for people familiar with the water market. They contain a degree of assumed knowledge and familiarity with technical terms. The guidelines contain a high degree of detail due to the complex interaction of the rules with existing state‑based trade policies and operations.

The Basin states, industry bodies, irrigation infrastructure operators, the Department of the Environment and the Australian Competition and Consumer Commission assisted in the development of these guidelines.