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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

What is an allocation?

A water allocation is the right to access a volume of water in a water year (1 July to 30 June). That water can be used, traded or carried over.

  • A water ‘entitlement’ is the right to receive up to a certain volume of water in a year.
  • A water ‘allocation’ is the percentage of a water entitlement that can be taken from the river that year. The amount of water in an allocation changes depending on how much water is available.

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.

Two buckets show the difference between an entitlement holder’s allocation in a dry year and in a wet year. It shows that in a wet year, an entitlement holder will have access to a bigger allocation of water.

State governments are responsible for allocating water

Basin state governments allocate water within each water catchment, depending on how much water is available. The MDBA is not involved in deciding on the amount of water to allocate to entitlement holders.

In the River Murray system, however, the MDBA calculates how much water belongs to each of New South Wales, Victoria and South Australia before the states calculate water availability for allocations. Learn more about water-sharing between the states.

Each state government has a bodies or agencies which is responsible for working out how much water is available and for getting it where it needs to go. Some state bodies are state-owned, while others are statutory corporations which have been nominated by the state. There are different arrangements for different states, but in some instances one state agency is responsible for allocating water, while a separate agency is responsible for ensuring that water is delivered where it needs to go.

Water allocations are calculated separately for each catchment

Water availability isn’t the same across the Basin. Water allocations are calculated individually for each catchment according to availability. This means that the amount of water allocated to entitlement holders in different catchments can vary greatly, even between those who hold similar entitlements.

For example, a catchment in southern New South Wales may receive a high amount of rainfall compared to a catchment in northern Victoria. In this case, entitlement holders in the southern catchment would get higher allocations.

The location of the catchment will also determine:

  • who calculates the availability of water
  • who is responsible for operating and delivering the water.

Generally, a catchment area is managed by the state it is in, although some parts of the River Murray system are managed by the MDBA.

Why allocations vary

Allocations within a catchment can vary greatly over time depending on weather conditions within the catchment. This means that an entitlement holder can receive different amounts each year.

Allocation amounts can also change throughout the year, building as more rain falls and water availability increases. Calculations are made fortnightly while allocations are less than 100% and allocations are adjusted accordingly. An entitlement holder can continue to receive additional water until they have received a 100% allocation (their ‘full entitlement’).

A map that shows and names all the catchments in the Basin. It shows that each catchment is a different size and shape.
A map of the Murray–Darling Basin showing the borders and names of catchments.

Find out more about catchments in the Basin

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 one 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.

A picture of a church surrounded by a wheat crop

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 NSW are general security entitlements.

Find out more about water allocations in New South Wales.

Water entitlements in Queensland

There are two 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 GL under the Murray-Darling Basin Agreement.

South Australia does not receive 1,850 GL every year. Whilst 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 per cent 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 one 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 & 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 NSW, entitlement holders are more likely to receive water every year compared to NSW entitlement holders.

Find out more about water entitlements in Victoria.

Step 3. Ordering and delivering water

A landscape picture of the Hume Dam at sunset

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.

What affects allocations: crops and climate, sustainable diversion limits, environmental allocations, carryover, droughts

Crops and climate and how they affect allocations

Climate and water availability are different in different parts of the Basin. The types of crops grown in particular areas of the Basin reflect these conditions. The conditions also affect the way allocations are determined.

Annual crops, such as rice, cotton and wheat, are planted each year. A decision about whether to plant these crops, or how much to plant, can be made once growers are confident that enough water is going to be available. A farmer can choose not to plant in a dry year.

Permanent crops such as nuts, grapes, citrus and stone fruit as well as dairy farms need to have reliable water from year to year or the trees can lose many years of growth. For example, grapes can take many years to be mature enough to harvest for wine production or for eating.

In New South Wales, farms have tended to produce annual crops such as rice, cotton and wheat. These types of crops have been more common in New South Wales because they are appropriate for the climate, given it is warmer and the climate varies a lot, and water is less reliable.

In Victoria, rainfall and water availability is more reliable. This means there are more permanent plantings such as grapes, citrus and stone fruit, which depend on regular water from year to year.

Sustainable diversion limits and how they affect allocations

The Murray–Darling Basin Plan sets limits on how much water can be taken from the rivers for towns, industries and farmers. This makes sure there is enough water left for the environment to keep our rivers, lakes and wetlands healthy. These limits are called ‘sustainable diversion limits’.

These limits came into effect in 2019 and are binding on all states in the Basin.

The amount of water available to allocate changes from year to year and depends on storage levels and weather conditions.

Water for the environment and how it affects allocations

Australian or state government environmental water holders can purchase water entitlements from existing entitlement holders. They use this water to provide water for improving the health of river, wetlands, floodplains, forests or other ecosystems.

Environmental water holders are subject to the same state rules on water allocations as other entitlement holders. So, for example, if other holders of the same kind of entitlement are only allocated 50% of their maximum amount, the environmental water holder will also only get 50%.

Carryover and how it affects allocations

In some cases, entitlement holders don’t use all of their allocations because they save their water for the following year. This is called ‘carryover’. Entitlement holders can choose to carry over water to give them more flexibility and predictability, or as a strategy to get through dry times.

There are rules in place to make sure that carryover water doesn’t unfairly impact on other entitlement holders’ allocations.

Droughts and how they affect allocations

During a drought, less water is allocated because there is less water available. It is important to note that all water is allocated in the same way for all users with the same type of entitlement, including environmental water holders.

Because allocations and entitlements are different in each state and rainfall is variable across the Basin, some entitlement holders can have more of an allocation than others. The amount of water allocated to licence holders is dependent on the amount of water available and the individual licence type.

Planning for the future

The Basin Plan is a plan for the future. It is a safeguard against overallocation, making sure enough water remains in the system to support the environment. The Plan was created to improve the health of the Basin so that future generations can be sustained by its resources.

Building a sustainable future is everyone’s responsibility. The MDBA and Basin state governments work together to set out goals and meet them using water sharing plans and water resource plans.