How allocations work in the Murray–Darling Basin

This guide explains how water allocations work in the Murray–Darling Basin. It gives an overview of the allocations process, explains how each state approaches allocations differently, and outlines what can affect allocations.

Reading time: 11 mins

Learn

• What an allocation is
• Who is responsible for allocating water
• What a catchment is
• How allocations are calculated
• How climate and crops affect allocations
• How environmental water allocations work

The difference between an entitlement and an allocation

Water entitlements or licenses are a permanent right to take up to a certain amount of water from the river system.

Water allocations are the percentage of water against an entitlement that can be taken each year. Allocations change depending on how wet or dry the year is. For example, in a wet year, crops are watered directly through rainfall, meaning less water is used for irrigation. In a dry year, there is less rainfall, meaning water from the river may need to be used to grow crops.

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How allocations are calculated

Step 1. Working out how much water is available for entitlement holders

Each state government is responsible for calculating how much water is available in each of the catchments in its state.

It will also take into account the amount of water available from the River Murray system according to the rules of the Murray–Darling Basin Agreement. The MDBA calculates the shares available to the states, because water from the River Murray is shared between New South Wales, Victoria and South Australia.

Availability is calculated fortnightly or monthly depending on the location of the river and current weather conditions.

Not all the water in a catchment is allocated to entitlement holders. Water can be set aside for:

• critical human needs (like drinking and washing)
• water that will be lost from the system to evaporation or seeping into the ground while delivering water to entitlement holders, called ‘conveyance water’
• future reserves of water that can be used to meet high priority entitlements in the next water year or if there is a severe drought.

Water also needs to remain in the river to keep the environment healthy.

Each state has different rules about how much water they allocate to entitlement holders.

Their approach to allocating water reflects the needs of local communities, food producers, and industries in each catchment.

Key differences include:

• New South Wales generally allocates more of the available water to its entitlement holders and tries to provide access to as much water as possible each year. Rainfall in New South Wales also varies, meaning water can be plentiful in 1 year, but less may be available the following year.
• Generally, Victoria reserves more of its water for the following year, to improve future water reliability. Victorian tributaries flowing into the River Murray receive more consistent rainfall than New South Wales and South Australia each year, so most Victorian catchments usually have more water to allocate. This means Victorian entitlement holders are generally more likely to receive a consistent allocation from year to year. It can take several dry years in a row for Victorian water users to receive a very low water allocation.
• South Australia receives an agreed maximum amount of water from New South Wales and Victoria in most years. Although South Australia generally receives a smaller share of the total water in the Murray system than New South Wales and Victoria, it has greater certainty that this volume will be available. Sharing water this way has been agreed by New South Wales and Victoria as part of the Murray–Darling Basin Agreement.

Once the amount of water available to entitlement holders has been calculated, it can be allocated to them.

Step 2. Allocating water to entitlement holders

Water entitlements work differently in each state. The amount of water an entitlement holder receives (their ‘allocation’), depends on which state and catchment they are in, as well as the type of entitlement they hold.

Water entitlements in New South Wales

In New South Wales, the volume of water licensed users can have, known as an allocation or available water determination (AWD), varies from year to year based on the licence category and size of their individual entitlement. This allocation is dependent on a range of factors including dam storage levels, river flows and catchment conditions.

Available water determinations for groundwater rely on a different range of factors.

The main licence categories, in order of priority are:

1. domestic and stock
2. town water supply
3. high security
4. conveyance
5. general security.

This means domestic and stock licence holders and town water supply is supplied first before water is allocated to those with high security or general security licences

During a severe drought, high security entitlement holders can usually depend on at least a partial allocation of water, whereas general security holders may not receive any water until conditions improve. Most water entitlements in New South Wales are general security entitlements.

Find out more about water allocations in New South Wales.

Water entitlements in Queensland

There are 2 main types of water allocations in Queensland – high priority and medium priority. The priority group indicates the reliability of the water allocation and the frequency with which water can be supplied in full.

The ‘priority’ of water allocation is important in the water sharing rules of the relevant water supply scheme. The rules specify how the available water will be shared between each of the water allocation priority groups throughout the water year.

• High priority water – these allocations are the most reliable water allocation and are typically used for town water supply, industrial use, including mining and power generation, and for high-value cropping. High priority water allocation holders can usually access water more frequently and with fewer restrictions than holders with medium priority water. During extended dry periods, high priority water allocations are the last group to be placed on restrictions. High priority water allocation holders pay higher fees and charges than those with medium priority water allocations so they can have more reliable access.
• Medium priority water – Medium priority water allocations generally have lower reliability than high priority water allocations and are mainly used for agriculture. This means during drier conditions, and when storage levels are low, these water allocations are the first to be restricted. Medium priority water allocation holders pay lower fees than those with high priority water allocation holders. The fees and charges for medium priority water allocation are regulated and set by the Queensland Competition Authority.

Find out more about water allocations in Queensland.

Water entitlements in South Australia

In total, South Australia has an annual Entitlement of 1,850 gigalitres (GL) under the Murray–Darling Basin Agreement.

South Australia does not receive 1,850 GL every year. While access to the full 1,850 GL is available at the start of most water years, it may be reduced when conditions are dry and water availability is limited.

In these years, South Australia receives a third share of the available River Murray resources.

Water is allocated in South Australia in priority order:

1. Dilution flows – the first water available to South Australia is 696 GL for dilution and loss purposes. This volume is part of the broader system conveyance requirements. It is needed to ‘run the river’ from the South Australian border to Wellington and to ensure that salinity levels do not exceed limits set out in the Basin Plan. Under extremely dry conditions, the water for dilution and loss may be used to make an initial 2% allocation to Class 3 (High Security) (irrigation) and Class 8 (environmental land management allocations) entitlement holders. This is provided to ensure access for critical human water needs (stock, domestic or industrial) from irrigation systems.
2. Critical human water needs – the second priority is water for critical human water needs. Over 1 million people rely on water from the River Murray for critical human water needs – in metropolitan Adelaide, regional country towns across much of the state and along the River Murray itself. South Australia requires a maximum of 204 GL for critical human water needs each year. However, in dry times, the initial volume for metropolitan Adelaide from South Australia’s River Murray Entitlement is limited to 100 GL (instead of 150 GL) to allow earlier allocations to irrigators and other water users. This is because there are a number of water sources to provide water to metropolitan Adelaide, including the local reservoirs, the Adelaide Desalination Plant and water set aside in Basin Storages for critical human water needs.
3. Class 3 and Class 8 entitlements – once the requirements for dilution and loss and critical human water needs are met, the next water available is allocated to Class 3 (High Security) (irrigation) and Class 8 (environmental land management allocations) water access entitlements.

Find out more about how water is allocated in South Australia.

Water entitlements in Victoria

In Victoria, water entitlements are called water shares.

• A high reliability water share has a high chance of receiving the full seasonal allocation.
• A low reliability water share has a low chance of receiving a full seasonal allocation.

Water in Victoria is allocated to high reliability entitlement holders first. However, because Victoria keeps more water in reserve, and because water flowing into Victoria is usually more reliable than the water flowing into New South Wales, entitlement holders are more likely to receive water every year compared to New South Wales entitlement holders.

Find out more about water entitlements in Victoria.

Step 3. Ordering and delivering water

The entitlement holders place their water orders with their state agency, which then adds up the total amount required and places water orders with the river system operators for each area.

The river system operators for each storage then release the amount of water required to fulfill the orders, while making sure there's enough water that remains in the river, to keep it flowing.

Depending on where the water is required, and which dam or storage the water is being released from, it can take anything from a day to several weeks for the water to arrive.

Learn more about how water is delivered.