Operating rules and constraints
The wide range of hydrological characteristics and water infrastructure existing within the Murray–Darling Basin (MDB) region has led to the development of varying administrative arrangements. In addition, inter-jurisdictional cooperation is required to manage water resources because they are shared by several jurisdictions. Inter-jurisdictional arrangements (in particular the Murray–Darling Basin Agreement [Murray–Darling Basin Commission 2007a]) and state water legislation (including state water management plans) are in effect to plan and manage the MDB region's water resources, and impose operating rules and constraints.
The Murray–Darling Basin Cap (the Cap), established in 1995, provided a new framework for water sharing in the MDB (Murray–Darling Basin Authority 2012h). The Cap aims to limit yearly diversions to the volume that would have been diverted at the 1993–94 development level in most valleys – plus allowances in some valleys (Murray–Darling Basin Commission 2007h). The Cap did not restrain groundwater diversions.
The Cap is being managed in accordance with the set of formal rules in Schedule E of the Water Act 2007 (Cwth). The Cap is managed based on diversion limits set at the valley level, with the designated Cap valleys defined in Schedule E to the Water Act. The implementation of the Cap within a state or territory is the responsibility of the concerned government. The Murray–Darling Basin Authority is responsible for monitoring, auditing and reporting of the Cap compliance.
Water access entitlements (WAEs), when added to other statutory (non-entitled) water rights (e.g. landowner basic rights) represent the total volume of water rights that have been granted for use. A percentage of an entitlement may be available for abstraction during the year, subject to allocations, announcements (see Water allocations) and other licence conditions. However, access to water conferred by statutory rights may not all be subjected to allocation announcements.
In each state and territory, WAEs and water allocation planning exist in a framework of state legislation and water management plans. Terminology and mechanisms for water sharing rules, WAEs, their granting, associated attributes and conditions, and the announcement of allocations vary between the states and territories. A comparison of jurisdictional WAEs and their attributes is made in Table R1.
WAEs may be issued within regulated (called supplemented in Queensland) and unregulated (unsupplemented in Queensland) systems in the Murray–Darling Basin (MDB) region. In a regulated system, licensees can call upon water against their available allocation from storages. In an unregulated system, licensees cannot order any water against their entitlement, but may extract water under specified flow conditions or events. WAEs in unregulated systems can specify maximum volumes that can be abstracted, either in one year or a period of several years.
In some MDB jurisdictions, diversions of water are possible in extreme events such as floods. Usually these flow events cannot be captured or retained within public storages. The corresponding diversions are known as off-allocation diversions, supplementary flows, water harvesting, overland flows or spillage sales.
It is possible that the 2011 Account categorisation of entitlements differs to jurisdictional definitions. Details about the 2011 Account entitlement categorisation are available in the Water rights, entitlements, allocations and restrictions note.
As part of their commitment to the National Water Initiative, states are separating the bundled components of the right to access a share of the water resource (WAEs, where they exist) from the land and from the other water rights such as the right to abstract water (or have it delivered), the right to use water for a given purpose and the right to build a work.
Across the MDB, licences have been issued for hydropower generators. They are not reported upon in the subaccount as they are non-consumptive and not expressed in terms of volume.
New South Wales
Australian Capital Territory
|WAE – name issued by state legislation||Water Access Licence 2000||Water share||Water access entitlement||Water allocation||Water access entitlement|
|Water Licence 1912||Bulk water entitlement||na||Water licence||na|
|Supplementary water access licence||Water licence||na||Interim water allocations||na|
|WAE – name issued by irrigation corporations from a state-conferred bulk entitlement||WAE issued by irrigation corporations/trusts||na||WAE issued by irrigation corporations/trusts||na||na|
|Term||Perpetual||Perpetual1||Perpetual||Water allocation – perpetual||Perpetual|
|na||na||na||Water licence has a term of between 5 and 10 years||na|
|Access priority||High security||High reliability||na||
|General security||Low reliability||na||
|na||na||9 classes of licences have been established||na||na|
|Water allocation determination name||Available water determination||Seasonal determination||Water allocation||Announced entitlement||na|
na = not applicable
1 Water shares are perpetual, but licences for unregulated surface water systems and groundwater have limited terms and must be reissued periodically.
Australian Capital Territory water access entitlements
The Australian Capital Territory operates an unbundled system of entitlements. The Water Resource Act 2007 (ACT) stipulates that a WAE is an entitlement to the amount of surface or groundwater stated in the entitlement. The amount must be stated as the lesser of the following:
- a percentage of the total amount of the surface water or ground water available for abstracting from time to time in the water management area stated in the entitlement
- a stated maximum volume.
A licence to abstract water, which specifies the location from which water can be abstracted, must accompany a WAE.
The water supply to Canberra is considered a regulated urban system, where water is diverted from storages.
New South Wales water access entitlements
- Water access licence: under the Water Management Act 2000 (NSW), a WAE that entitles its holder to a share in the available water resource (the share component) and to abstract water (the extraction component). It is separated from the land and is tradeable. The share component of an access licence may be expressed as a specified nominal volume over a specified period, specified proportion of the available water, or as a specified proportion of the storage capacity of a specified storage or other storage work, and a specified proportion of the inflow to that storage or work. Water access licences can exist in regulated and unregulated surface water systems and in groundwater systems. In regulated systems, they are defined as either high security, general security or supplementary access. There are also specific purpose water access licences on issue – for example, local water utility, stock and domestic, conveyance (held by irrigation corporations to account for losses in their distribution systems).
- Water licence: under the Water Act 2012 (NSW), a bundled entitlement that confers to its holder the right to abstract a specific volume of water. This licence includes the works to be constructed in those water sources (rivers, lakes and groundwater aquifers) where water sharing plans have not commenced.
- Supplementary water access licence: confers to the holders a right to abstract water during announced periods when flows exceed those required to meet other licensed obligations and environmental needs.
- WAEs: issued by irrigation corporations to its members through their membership agreements, these enable holders a right to access water as a proportion (as per their agreement with the irrigation corporation) of the irrigation corporation's WAEs conferred to it by the state. Holders of such WAEs are subject to the same terms and conditions of the WAEs conferred to the irrigation corporation by the state, and are also subject to the corporation's rules.
Queensland water access entitlements
- Water allocation: a permanent, unbundled (separated from land) and tradeable WAE that can exist in supplemented or unsupplemented systems. This is created only under a resource operations plan (ROP), either through the conversion of existing entitlements or issuing of new water allocations.
- Interim water allocation (IWA): all surface water systems within the MDB are covered by a ROP and a water resource plan (WRP), and there are currently four interim water allocations in the region.
- Water licence: a bundled WAE, attached to land and not tradeable without land, that is valid for a fixed period of time, usually between 5 and 10 years. Water licences include area-based licences and water-harvesting licences, which give access to unregulated flows in both supplemented and unsupplemented systems.
Supplemented WAE priorities are defined as either high priority or medium priority and represent water allocation security objectives.
South Australia water access entitlements
South Australia implemented the unbundling of water rights for the River Murray from 01 July 2009.
The River Murray Water Allocation Plan (River Murray WAP) has been amended to support unbundled water rights. Water licences were unbundled into four unbundled instruments – WAEs, water allocation, water resource works approval and a water use approval.
The new WAE provides the holder with an ongoing right to a share of a specific class of water. Classes have been established to reflect the reliability and transferability of the water in the South Australian section of the River Murray. Table R2 details the new classes and the previous purpose stated on the previously bundled water licence.
|Class 1||Domestic and/or stock watering|
|Class 2||Country towns reticulated public water supply|
|Class 3a||Irrigation and holding|
|Class 3b||Irrigation Qualco–Sunlands Groundwater Control Trust Area|
|Class 5||Industrial and industrial dairy|
|Class 6||Metro Adelaide reticulated public water supply|
|Class 8||Environmental land management|
|Class 9||Wetland management|
Source: Department for Water (2011a).
Victoria water access entitlements
Traditional water rights, and take and use licences in declared (regulated surface) water systems (Department of Sustainability and Environment 2011c) have been unbundled into three component rights:
- Water share: a WAE that gives access to a share of the water available to be abstracted from a defined water system. It is specified as a nominal volume of seasonal allocation that may be made against that share. Water shares are classified as high reliability or low reliability, according to the frequency with which full seasonal allocations are expected to be available.
- Delivery share: the right to have water delivered by a water corporation and a share of the available flow in a delivery system, expressed as a share in terms of unit volume per unit of time of the total amount of water that can be drawn from a water system at a certain point. Linked to land.
- Water-use licences: the right to use water on a specific piece of land for irrigation. Also water-use registration, which is an authorisation to use water for purposes other than irrigation.
The retail WAEs issued under bulk entitlements (see Water management plans) are recorded in the Victorian Register; their volumes are reported in this account, but the portion set aside for losses is not.
Volumes of environmental WAEs, held by the Minister for the Environment during 2010–2011, are also reported in this account. Since 01 July 2011, these entitlements are held by the Victorian Environmental Water Holder.
Volumes of surface water access entitlements in the MDB
As at 30 June 2011, the total volume of surface water entitlement and basic rights in the MDB region have been evaluated to be 17,337,473 ML. Details, including a breakdown of surface water right volumes on water resource plan area basis, and the data gaps and uncertainties affecting the volumes reported, are given in the Water rights, entitlements, allocations and restrictions note.
Groundwater water access entitlements in the MDB
As at 30 June 2011, the total volume of groundwater entitlements and basic landowner rights in New South Wales and Victoria was estimated at 1,430,515 ML. Details, including a breakdown of groundwater right volumes on water resource plan area basis, and the data gaps and uncertainties affecting the volumes reported, are given in the Water rights, entitlements, allocations and restrictions note.
The water sharing rules and water accounting policies in effect vary throughout the Murray–Darling Basin (MDB) region.
In the case of surface water, water allocation is the predominant mechanism to share regulated flows. It involves the initial determination of available water for consumptive use at the commencement of the water year (01 July across the MDB region). Responsible water authorities assess water in storage (the volume is carried over from the prior water year), and assess the outlook for future inflows and losses under a worst-case scenario. Announcements are then made by the relevant agency, ranging from 0% to 100% availability, depending upon the class of entitlement and water source. During the year, allocations may increase as water availability increases. Subsequent allocation announcements are made to adjust the volume that can be abstracted.
On 01 July each year, subsequent to allocation announcements and carry-over rules, the water account of entitlement holders is credited with their water allocation and the carried over volume from the previous year. This volume of water may be abstracted, traded or stored (for use later in the year or where allowed under the carry-over rules to be carried over to the following year). At the end of the water year, different carry-over rules in each state and management plan define the amount of allocation that can be carried over and accessed in the next water year. There are usually limits or rules that apply to the volume that can be carried over in any year.
Unregulated surface water flows, however, can only be accessed once predetermined flow conditions are met, and consistent with abstraction conditions specified in the works or use licences:
- In New South Wales, Victoria and Australian Capital Territory, there is no water allocation in unregulated systems and 100% of the water entitlement may be accessed by default, providing that all flow and abstraction conditions that may be specified by the plan or the licence are met, unless the water management plan is suspended because of insufficient water. In that case, water restrictions are imposed on the various reaches of the unregulated system.
- In New South Wales, in either regulated or unregulated systems, supplementary flow announcements may be made based on water availability that make additional water available to supplementary licence holders.
- In Queensland, announcements of water harvesting periods are made that allow access to unsupplemented flows, in either supplemented or unsupplemented systems.
An alternative water sharing methodology referred to as continuous accounting is operating in the Border Rivers, Namoi and Gwydir water resource plan areas (in New South Wales) and in the Condamine–Balonne (in Queensland).
Continuous accounting is an alternative approach to water allocation, where users are allocated a share of system storage capacity and a share of inflows.
In continuous accounting, a WAE holder's water account balance is updated automatically and daily for system losses, inflows, evaporation and storage capacity. Each WAE holder is assigned a share of the storage capacity.
This approach does not require water to be set aside for future losses. Instead, each WAE holder is responsible for their own evaporation losses from the storage. Inflows are credited to WAE in proportion to their share in the storage.
Under continuous accounting, water account balances do not need to be reset at the end of each water year and there is no requirement for an announced allocation (however, there are incremental allocation announcements).
Access to groundwater is either made under formal allocation announcement and/or is by default 100% of the entitlement unless restrictions apply.
Trades and water rights transfers
Water market rules: interstate trading
Water users are able to trade water entitlements and allocations in the Murray–Darling Basin (MDB) region. Trading of entitlements and allocations occurs between and within valleys, and across state borders, but not across the region boundary.
Interstate surface water trade is primarily available in the Southern Basin of the MDB region among New South Wales, Victoria and South Australia. In the Northern Basin, interstate surface water trade is available between New South Wales and Queensland within the Border Rivers water resource plan areas.
Trade in the Southern Basin is conducted under Schedule D of the Murray–Darling Basin Agreement, which appears as Schedule 1 to the Water Act 2007 (Cwlth).
The framework for interstate trade in the Border Rivers water resource plan areas is provided in the New South Wales – Queensland Border Rivers Intergovernmental Agreement 2008 (New South Wales Government and Queensland Government 2008) and managed through protocols established under the agreement. The New South Wales – Queensland Border Rivers Act 1946 provides the legislative framework.
Since July 2007, the interstate allocation trade market in the Southern Basin (inclusive of trade in the central and southern zone) has resulted in the net movement of water into South Australia, due in part to the extended drought. Some components of trade were South Australian Government purchases to assist permanent horticultural and viticultural plantings, and to underpin Adelaide and country town water supply.
Water market rules: inter-valley and within-valley trading
Inter-valley trading (IVT) rules are defined in state legislation, water resource plans and the Murray–Darling Basin agreement. Some interstate trading rules also cover inter-valley trading. Inter-valley water trading is generally available within the Southern Basin rather than in the Northern Basin.
Within valley trading, rules are also defined in state legislation and water resource plans. Surface water trading within valleys is usually available within regulated systems. Groundwater trading within an aquifer is available in limited areas, usually only where a water resource plan has been developed.
Restrictions on trade
Generally, trade of water entitlements between and within water resource systems is restricted if there are one or more of the following factors:
- physical constraints
- environmental constraints
- hydrologic connections and water supply considerations
- low hydraulic connectivity.
The National Water Commission's Australian Water Markets Report 2010–11 (National Water Commission 2011) reported restrictions as applicable during 2010–2011 including:
- An agreement between the South Australian and Victorian governments on Victorian rules on water trading restrictions. The Victorian Government voluntarily removed its 10% absolute cap on water trades out of an irrigation district. This allowed water purchases to be made more easily from Victoria, including purchases to meet critical human water needs.
- Changes to Victorian water trading rules to suspend some allocation trading from New South Wales to Victoria and from the Goulburn, Campaspe and Loddon systems to the Victorian Murray system or to interstate. This restriction was initiated to protect the next season's allocations to Victorian water entitlement holders in the Murray system. The suspensionwas the result of high Murray–Darling Basin storage levels, large volumes of unused irrigation water and Victorian carry-over rules.
- A 4% annual limit on the total entitlement volume able to be traded out of each Victorian irrigation district, with the intention to move to full and open trade by 2014.
- Buyback programs should continue without being constrained by the 4% limit or other trade barriers, in order to provide financial resources directly to entitlement holders and facilitate adjustment.