Water rights

Operating rules and constraints

Bulk entitlement conditions

Each bulk entitlement contains specific conditions governing the abstraction of water. Typical bulk entitlement conditions include:

  • maximum annual and daily limits on the volume of water taken from a specific diversion point or water storage
  • minimum passing flow requirements.

Conditions contained within each bulk entitlement are specific to that entitlement. All bulk entitlements are listed on the Victorian Water Register website.

Bulk entitlements are issued along with a range of conditions and obligations set out under Part 4 of the Water Act 1989 (Vic). Bulk entitlements can be held in relation to water in a waterway, water in storage works of a water corporation and groundwater (section 36).

Urban water restrictions

In times of severe water shortages, the urban water corporations in the Melbourne region can implement a regime of water restrictions ranging from Stage 1 (mild) to Stage 4 (severe) in accordance with their Drought Response Plans. All of Melbourne's retailers have prepared Drought Response Plans, which incorporate four stages of water restrictions and specify what can and cannot be done when each stage of restriction is in place.

The Victorian Minister for Water approves Drought Response Plans and water corporations are responsible for declaring water restrictions. Water restrictions are enforced by the relevant water corporation.

Water licence restrictions

Melbourne Water and Southern Rural Water manage licence restrictions in the Melbourne region.

Seasonal allocations to irrigators

The amount of water made available to irrigators in regulated systems in each year is determined by seasonal allocations.  Southern Rural Water makes seasonal allocations to Werribee and Bacchus Marsh irrigators.

Water entitlements

The Water Act 1989 (Victoria) is the legislation that governs the way water entitlements are issued and allocated in the Melbourne region and throughout Victoria. It defines water entitlements and establishes the mechanisms for managing Victoria's water resources.

The water allocation framework is set out in the act, including:

  • Section 7, which provides that the Crown has the right to the use, flow and control of all water in a waterway and all groundwater
  • Section 8, which provides for an individual's rights to water
  • Section 9, which sets out rights of water corporations to water.

There are a range of entitlements that may be issued by the Victorian Minister for Water including bulk entitlements, environmental entitlements, water licences and water shares. Other statutory rights to water are not formally issued but exist under the act for domestic and stock purposes by virtue of an individual's private ownership of, or access to, land.

The act allows individuals to abstract water for domestic and stock purposes from a range of surface water and groundwater sources without a licence. These domestic and stock rights are defined under section 8(1) and section 8(4)(c) of the act and are not formally issued. They include farm dams for domestic and stock purposes.

Rights to access water for domestic and stock purposes via emergency water supply points are also covered by statutory rights under section 8 of the act.

Some rights to water exist under separate legislation. For example, under the Country Fire Authority Act 1958 (Victoria) firefighters have the right to use and control the delivery of water for firefighting purposes.

The act also defines water that is set aside for the environment under the Environmental Water Reserve.

The irrigation supply system based on Pykes Creek, Melton and Merrimu storages and operated by Southern Rural Water is a declared system under the act.  This means that irrigators and private diverters are supplied under:

  • water share – a legally recognised, secure share of the water available to be abstracted from a defined water system: a water share is specified as a maximum volume of seasonal allocation that may be made against that share. 
  • delivery share – the right to have water delivered by a water corporation and a share of the available flow in a delivery system; 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. Delivery shares must be linked to land.
  • water use licences – the right to use water on a specific piece of land, or water use registration; an authorisation to use water for purposes other than irrigation. Water use licences must be held by an owner–occupier of land.

Elsewhere in the Melbourne region, individual private diverters (including irrigators) abstract their water from streams under a licence issued under section 51 of the act.  A section 51 water licence grants the holder the right to abstract and use water from:

  • waterways
  • dams, both onstream and offstream
  • springs and soaks
  • works of an authority
  • groundwater.

Water shares are classed according to their reliability, which is defined by the frequency with which full seasonal allocations are expected to be available. Most water shares are classified as either high-reliability or low-reliability. High-reliability water shares are those against which seasonal allocations are made as a first priority. High-reliability water shares are expected to reach 100% allocations in 95 years out of 100. Low-reliability water shares are those with a lower reliability of supply.

A seasonal allocation is the percentage of the water share volume that is actually available to water share holders in a given water system during a given irrigation season (typically August–May). Allocations in each water system are set by the managing authority at intervals throughout the irrigation season after assessment of the available water resources. Allocation determinations and announcements in the Melbourne region are made by Southern Rural Water.

Bulk entitlements

In Victoria, bulk entitlements are essentially equivalent to water allocation plans used in jurisdictions outside Victoria. They are established under the act and regulate how a party can abstract and use water. The onus is on entitlement holders to demonstrate compliance with conditions in the bulk entitlement.

A bulk entitlement is a right to use, supply, abstract or store water under detailed conditions/specifications up to a maximum volume granted to water corporations, the Minister for Environment and other specified bodies (e.g. electricity companies, see section 34 of the act). The water corporations that hold bulk entitlements in the Melbourne region are detailed in Table R1.

Table R1. Bulk entitlements
Water corporation Purpose of bulk entitlements held
Melbourne Water Supply of licence holders in part of the Maribyrnong catchment
Yarra Valley Water Supply of metropolitan Melbourne
South East Water
City West Water
Southern Rural Water Supply of licensed diverters
Supply to water share holders in regulated Werribee and Bacchus Marsh system
Supply bulk water to Western Water for supply to Myrniong
Western Water Supply of regional towns (including Sunbury, Gisborne, Macedon, Melton and Bacchus Marsh)
Central Highlands Water Supply of regional towns (including Ballan)
Gippsland Water Supply of regional towns (including Drouin)

All bulk entitlements are available on the Victorian Water Register website.

Environmental entitlements

An environmental entitlement is a right to water made by the Victorian Minister for Water and held by the Victorian Environmental Water Holder, established in July 2011. As with bulk entitlements, environmental entitlements provide a range of conditions and obligations relating to the abstraction and use of water. 

During the 2010–11 year the Victorian Minister for Environment held three environmental entitlements in the Melbourne region:

  • Yarra Environmental Entitlement 2006
  • Tarago and Bunyip Rivers Environmental Entitlement 2009
  • Werribee River Environmental Entitlement 2011.

The three entitlements are managed by Melbourne Water.

Environmental entitlements are available on the Victorian Water Register website.

Water licence

In Melbourne region, a water licence is a licence to abstract and use water. A water licence can be held by any individual, business or corporation and allows water to be abstracted from a range of surface water and groundwater sources. Small catchment dams used for purposes other than domestic and stock use also require a licence.

Melbourne Water and Southern Rural Water are responsible for managing water licences in the Melbourne region.

Water share

Water shares are issued for the Werribee and Bacchus Marsh irrigation water system. Shares may be high-reliability, or low-reliability, and are specified as a maximum volume of seasonal allocation that may be made against that share. Southern Rural Water is responsible for supplying water share holders in the Werribee and Bacchus Marsh system.

Water allocations

Annual water allocations are provided for differently depending on the type of entitlement held. Within the Melbourne region, only water share holders in the Werribee and Bacchus Marsh system are provided with a formal allocation against their entitlements.

Water share allocations

The volume of water made available to water shareholders in the Werribee and Bacchus Marsh system each year is determined by seasonal water allocations. A seasonal allocation is a determination of the water available in the current season to meet water shares. Water share allocations will vary from year to year. A water shareholder's seasonal allocation can be used at any time throughout the irrigation season. 

In the Werribee and Bacchus Marsh system, the seasonal allocation is expressed as a percentage of high- and low-reliability water shares. Southern Rural Water makes initial allocations early in the irrigation season based on the current volume of water in storage, estimated inflows during the season and the amount of water required to provide for subsequent years. Allocations are reviewed fortnightly and increased if the available water exceeds previous forecasts. Initial seasonal allocations can be low as it is often unknown until late spring how much water may be available.

Bulk entitlement and environmental entitlement allocations

A formal annual allocation process does not apply for environmental entitlements. The volume of water available for bulk entitlement and environmental entitlement holders in any year is governed by the amount of water in their share of the water system and the conditions and obligations included in their entitlement.

Water licence allocations

No annual allocations are made for water licences. Water availability under water licences is directly related to streamflow rates. When streamflows drop below a specified threshold, managing authorities have the power to impose restrictions, rosters and bans on the water abstracted by licence holders. Rosters and restrictions set out the order in which licence holders are allowed to take water and the quantity allowed to be taken (e.g. 75% of licensed volume). When water is particularly scarce, bans are imposed on water take.

More information on water shares and water allocations are explained on the Victorian Department of Sustainability and Environment website.

Trades and water rights transfers

Water market rules: interstate trading

The trading rules (applicable to the trade in water shares and allocation trade in regulated water systems) and policies (applicable to trade of take and use licences in unregulated systems) do not currently allow interstate trade from the Melbourne region.

Water market rules: inter-valley and within-valley trading

Within the Melbourne region, water entitlements and allocations in the Werribee system and take and use licences in unregulated systems can be traded. The trading rules allow trade of Werribee water system water within zones and between trading zones.

Trading rules

In the Werribee and Bacchus Marsh regulated systems, both trade of allocation and entitlement are possible. Trade of entitlement may involve:

  • a transfer of ownership (with or without a change in location) or 
  • a change in location (with or without a transfer of ownership).

Changes in location occur by tagging. Under this system, the source of an entitlement never changes, however it may be tagged for use in another trading zone which may be in a different water system.

Trading rules for both trade of allocation and entitlement within, to and from regulated water systems in Victoria are defined in the Trading Rules for Declared Water Systems.

In general, trade between zones within the Werribee water system is possible however there are restrictions on trades from Zones 31BD (Werribee District) and 31BR (Lower Werribee Diverters).

Trade to and from the Werribee water system to other Victorian water systems is possible as defined by the trading rules. Currently, trade of allocation is permitted from the Thomson/Macalister system (outside the Melbourne region) to the Werribee system under special conditions.

In unregulated systems, take and use licences may be traded in full or part, on a permanent or temporary basis. Approval to transfer a licence is subject to the requirements of the Water Act 1989 (Vic), the Ministerial Policies for Managing Take and Use Licences and any approved local trading rules. The policies are available at the Department of Sustainability and Environment website. Generally transfers may only occur within the same surface water catchment or groundwater management area.

General trends

Reform of the southern Victorian regulated water systems occurred on 1 July 2008. Since this date, trade of allocation within the Werribee system has been limited and the number of applications to transfer ownership or change location of water shares has also been low. During the 2010–11 year, all the allocation trade and trade of water shares in the Melbourne region occurred within the Werribee system. Trades of licences occurred in delivery systems in the Bunyip catchment.

Restrictions on trade

Trading restrictions did not apply in the Melbourne region during the 2010–11 year.