Melbourne
Water accounting policies

The information presented in the Melbourne region water accounting report is based on agreements between the Victorian Department of Sustainability and Environment, Southern Rural Water, Melbourne Water, City West Water, South East Water, Yarra Valley Water, Western Water and the Bureau of Meteorology.

This report has been prepared using an accrual basis of water accounting, with the exception of the physical water flow information. The water attribute being quantified is volume and the unit of account is megalitres (ML).

Only water that is held or managed by the state licensing authority or the urban retail water authorities, and from which future benefit can be derived by stakeholders of the region; is defined as a water asset. Water liabilities are constituted by present commitments to supply water, the discharge of which is expected to result in a decrease of the region's water assets or an increase in another water commitment to supply water.

Provided its volume can be quantified in a way that is complete, neutral and free from material error, the volume of the water asset or water liability is recognised in the Statement of Water Assets and Water Liabilities.

Water held in off-channel storages that has already been abstracted from the entitlement system is deemed not to be part of the region (no matter the size of the storage or its connection to the system). This is because the attendant water right has already been exercised.

The increases and decreases to the reported water assets and water liabilities consist of changes that can be quantified in a way that is complete, neutral and free from material error. These volumes are presented in the Statement of Changes in Water Assets and Water Liabilities or the Statement of Water Flows.

Precipitation and evaporation are recognised only in relation to the surfaces of open storage volumes (line items 9.1 Precipitation on surface water,  17.1 Evaporation from surface water and 19.1 Evaporation from urban water). They do not represent all precipitation, evaporation and evapotranspiration within the region (notably, these processes occurring from the landscape are not captured).

The portion of runoff that flows into the surface water store (storages and river channels) is quantified and recognised in the Statement of Changes in Water Assets and Water Liabilities. Runoff calculations include precipitation captured in the catchment less evaporation and infiltration, and is recorded as 9.4 Runoff to surface water.

Allocation announcements on regulated entitlements have been recognised as an increase in water liabilities. Note that the definition of regulated or unregulated entitlements for the purpose of the National Water Account (refer to Glossary) may be different to the meaning applied by the jurisdiction. Please refer to the Water rights, entitlements, allocations and restrictions note for more information on the allocations.

The volumes of some water assets and water liabilities in the Melbourne region were not recognised in the water accounting statements but replaced by dashes ('–') as they failed the recognition criteria specified in the Australian Water Accounting Standard 1, because:

• they could not be quantified in a way that is complete, neutral and free from material error, or
  
• in the case of water assets, they were unlikely to provide a future benefit to the region or the region's stakeholders, or
  
• in the case of water liabilities, they were unlikely to result in a decrease in the region's water assets or an increase in another water liability when the obligation was discharged.

The descriptions of those water assets and water liabilities that failed the recognition criteria are given in the following line item notes:

• 1.2 Unregulated river
• 1.3 Regulated river
• 3.1 Urban water supply system
• 3.3 Recycled water system.

The volumes of several changes to water assets and water liabilities identified in the Perth region were not reported in the water accounting statements but replaced by dashes ('–') as they 'failed the recognition criteria' specified in the Australian Water Accounting Standard 1 because:

• they could not be quantified in a way that is complete, neutral and free from material error; or
  
• in the case of changes to water assets, they were unlikely to provide a future benefit to the region or the region's stakeholders; or
  
• in the case of changes to water liabilities, they were unlikely to result in a decrease in the region's water assets or an increase in another water liability when the obligation was discharged.

A description of changes to water assets and water liabilities that failed the recognition criteria is given in the following line item notes:

• 9.10 Direct discharge by user
• 17.4 Leakage to landscape
• 17.6 Surface water diversions – other statutory rights
• 18.7 Groundwater extractions – other statutory rights
• 18.11 Entitled extraction of allocated groundwater to users.

Several comparative year volumes in the water accounting statements were restated from the 2011 Account in order to provide more useful information to the users. Restatements may be due to:

• error in the 2011 Account, referred to as 'prior period error'
• change in the presentation of the water accounting statements, where line items were generally simplified since the 2011 Account
• change in scope, for instance to include more of the region's area in the definition of a line item in order to present more complete information
• improvement in quantification methodology and
  
• increase in the data available to quantify a line item.

In accordance with the Australian Water Accounting Standard 1, comparative year volumes must be restated in the statements if there is a prior period error, a change in line item presentation or change in scope. According to the Standard, comparative year volumes are not required to be restated if there is a change in methodology or subsequent data availability for the quantification of a line item; however, for this account, these volumes were restated if the change was considered material. In particular, any change affecting the volume of allocation remaining was restated.

In the National Water Account, transactions between water assets and water liabilities within the region (e.g. between the surface water store and the groundwater store) are not reported in the water accounting statements for the following reasons:

• they do not affect the region's total water assets and water liabilities;
• feedback was received that presenting these internal transactions in the water accounting statements was confusing, as the same water appeared in the water accounting statements as both a claim to water and an obligation to deliver water, and as both inflows and outflows in relation to the various water assets and water liabilities.

To ensure this information was still reported, the Water resources and systems note was created. The water resources and systems note replicates the water accounting statements for each water store, including those internal transactions that were excluded from the consolidated water accounting statements. This ensures that between store flows and between store liabilities/claims are still reported.