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Bulk water trade adjustments trials

To continue to support the efficient functioning of water markets in the River Murray system, the Murray–Darling Basin Authority (MDBA) and water agencies and authorities from New South Wales, Victoria and South Australia have been investigating better ways to make trade adjustments.

Trade adjustments are made to New South Wales’ and Victoria’s bulk water accounts in water storages to match the volumes of water traded between these States. For most trades, the adjustments are gradually made over the irrigation season to match the expected demand.

New ways to make trade adjustments have been trialled by the MDBA, since July 2019, as requested by New South Wales and Victoria with support from South Australia.

Prior to the trials, all trade adjustments between New South Wales and Victoria occurred in Hume Reservoir. These trade adjustments change the States’ water shares in storage which can result in a State closing trade if their share of Hume Reservoir gets too high.

Two of the 3 trials which commenced on 1 July 2019 will continue after 1 July 2022. The trials will effectively reduce the volume of trade adjustments to be made in Hume Reservoir, and will better align water accounting with both the location and time of the trade delivery.

The aim of the trials is to reduce the frequency of water trade closures and thereby increase opportunities for inter-state water trades for the benefit of water market participants. With the significant growth in inter-state trade seen in recent years, rules such as the New South Wales to Victoria trade limit have the potential to be triggered and close trade more often.

The trials only change how the States’ bulk water accounts are adjusted for trade. There is no change to the processes for retail trades between water market participants.

The trials

The 2 trials to continue from 1 July 2022 have been endorsed by the Basin Officials Committee (BOC) and agreed by the New South Wales and Victorian governments with support from the South Australian government. The trials are called:

  • Hume to Dartmouth triggers
  • In-stream adjustments for return flows

A third trial, known as the directed inter-valley trade trial, ceased on 30 June 2022.

The MDBA and partner states will continue monitoring the ongoing trials. Arrangements for the Hume to Dartmouth triggers trial will be incorporated into the relevant legislative protocols to formally adopt the new and improved methods. If the trial of in-stream adjustments for return flows is successful, these arrangements may also be incorporated into legislation.

A brief description of each trial follows.

Hume to Dartmouth triggers

Trade adjustments will be moved from Hume to Dartmouth Reservoir when the State receiving the net trade adjustment has more than a 50% risk of spill in Hume Reservoir.

Moving a trade adjustment between reservoirs is a bulk water accounting process. The physical volume of water stored in each reservoir, and the volume of water transferred from Dartmouth to Hume Reservoir, will not change – only the distribution of States’ shares in each storage would change. There is no change to water held in South Australia’s Storage Right as a result of this trial.

This trial enabled trade from New South Wales to Victoria to continue during the latter half of 2021 and into early 2022. Without these trial arrangements, trade from New South Wales to Victoria was likely to have been restricted during this period.

This trial has been successful and is continued. The trial arrangements will be incorporated into legislation.

Directed inter-valley trade

The effectiveness of this trial was limited due to the small volumes traded from the valleys to inter-state and it is expected that this trend will continue for the foreseeable future. Therefore, the directed inter-valley trade trial ceased on 30 June 2022.

In-stream trade adjustments for return flows

This trial seeks to change the location of trade adjustments for return flows to move them in-stream, closer to the source and timing of such trades.

A return flow is defined here as a volume of water that has previously been ‘used’ and accounted for at one location within the southern Murray–Darling Basin and has subsequently been returned to the River Murray. Examples of return flows can include held environmental water delivered from a tributary or a flow entering the River Murray system from a recognised return flow point.

This trial could not be tested during 2019–2022 due to prevailing conditions and limited resourcing. However, the trial arrangements will continue for 2022–23.

Project contributors

This project is an initiative of the joint jurisdictional program for managing the River Murray system and arose from two prior reviews of the Murray–Darling Agreement.

The project team includes Basin state representatives from New South Wales, Victoria, South Australia and the Australian Capital Territory, along with Australian Government representatives from the MDBA, Department of Climate Change, Energy, the Environment and Water and the Australian Competition and Consumer Commission.

Updated: 28 Sep 2022