Melbourne
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 with a range of conditions and obligations set out under Part 4 of Victoria's Water Act 1989 (the Water Act). 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.

More information regarding urban water restrictions in the Melbourne region can be accessed from the Bureau of Meteorology's Water Restrictions website.

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 and other statutory water rights

The Water Act  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 Water 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 Water Act for domestic and stock purposes by virtue of an individual's private ownership of, or access to, land.

The Water 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 Water 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 Water Act.

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

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

The irrigation supply system based on Pykes Creek, and the Melton and Merrimu reservoirs and operated by Southern Rural Water is a declared system under the Water Act. This means that irrigators and private diverters are supplied water under one or more of the following provisions:

  • A 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. 
  • A 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.
  • A water use licence: the right to use water on a specific piece of land, or water use registration or 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 Water 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 from August to 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.

Qualifications of rights

Rights may be suspended, reduced, increased or otherwise altered after a water shortage has been declared under Section 33AAA(2) of the Water Act. There were no qualification of rights in the Melbourne region during the 2012–13 year, probably as a result of continued average wet conditions and recovery of storage levels.

More information on qualification of rights is available on the water.vic.gov.au website.

Bulk entitlements

In Victoria, bulk entitlements are essentially equivalent to water allocation plans used in jurisdictions outside Victoria. They are established under the Water 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 and store water under detailed conditions and specifications up to a maximum volume granted to water corporations, the Victorian Environmental Water Holder (VEWH) and other specified bodies (e.g., electricity companies, see Section 34 of the Water Act). All bulk entitlements that apply to the Melbourne region are detailed in Table R1.

Table R1 Bulk entitlements in the Melbourne region
River Basin/Source Entitlement holder Bulk entitlement Purpose
Bunyip River basin Melbourne Water for City West Water Tarago and Bunyip rivers urban supply
Melbourne Water for South East Water Tarago and Bunyip rivers urban supply
Melbourne Water for Yarra Valley Water Tarago and Bunyip rivers urban supply
Gippsland Water Tarago River export water for urban supply outside the region
Southern Rural Water Tarago River service private licence/entitlement holders
Victorian Environmental Water Holder Tarago and Bunyip rivers environmental entitlement environment
Maribyrnong River basin Western Water Gisborne–Barringo Creek urban supply
Western Water Lancefield urban supply
Western Water Macedon and Mount Macedon urban supply
Melbourne Water Maribyrnong service private licence/entitlement holders
Southern Rural Water Maribyrnong service private licence/entitlement holders
Western Water Maribyrnong urban supply
Western Water Riddells Creek urban supply
Western Water Romsey urban supply
Yarra River basin Melbourne Water for City West Water Yarra River urban supply
Melbourne Water for South East Water Yarra River urban supply
Melbourne Water for Yarra Valley Water Yarra River urban supply
Victorian Environmental Water Holder Yarra River environmental entitlement environment
Werribee River basin Central Highlands Water Ballan urban supply
Central Highlands Water Blackwood and Barry's Reef urban supply
Western Water Myrniong urban supply
Victorian Environmental Water Holder Werribee River environmental entitlement environment
Southern Rural Water Werribee System–irrigation service private irrigation licence/entitlement holders
Western Water Werribee System urban supply
Melbourne Headworks system1 Barwon Water2 Melbourne Headworks system export water for urban supply outside the region
Westernport Water3 Melbourne Headworks system export water for urban supply outside the region
South Gippsland Water4 Melbourne Headworks system export water for urban supply outside the region
Western Water Melbourne Headworks system urban supply
Desalinated water  City West Water desalinated water urban supply
 South East Water desalinated water
 Yarra Valley Water desalinated water
Thomson River basin Melbourne Water for City West Water Thomson River import water for urban supply inside the region
Melbourne Water for South East Water
Melbourne Water for Yarra Valley Water
Goulburn River basin Melbourne Water for City West Water Silver and Wallaby creeks import water for urban supply inside the region
Melbourne Water for South East Water
Melbourne Water for Yarra Valley Water
City West Water Goulburn system import water for urban supply inside the region
South East Water Goulburn system
Yarra Valley Water Goulburn system
Murray River basin City West Water5 Murray system import water for urban supply inside the region
South East Water6 Murray system
Yarra Valley Water7 Murray system

1 Melbourne Headworks system includes storages that harvest water from protected water supply catchments: Thomson, Yarra, Silver and Wallaby Creeks, Tarago and Bunyip rivers. It also includes water from the Victorian desalination plant and the Northern Victoria Irrigation Renewal Project.

2–7 These entitlements only came into effect as of 1 July 2012.

For further information on all bulk entitlements refer to the Victorian Water Register website.
Water licence

In the Melbourne region, a water licence entitles the holder 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 shares

Water shares are issued for the Werribee and Bacchus Marsh irrigation districts. 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 irrigation districts.

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 irrigation districts are provided with a formal allocation against their entitlements.

Water share allocations

The volume of water made available to water share holders in the Werribee and Bacchus Marsh irrigation districts 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 share holder's seasonal allocation can be used at any time throughout the irrigation season. 

In the Werribee and Bacchus Marsh irrigation districts, the seasonal allocation is expressed as a percentage of high- and low-reliability water share entitlement. 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 Environment and Primary Industries 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, the ministerial policies for managing take and use licences and any approved local trading rules. The policies are available at the Department of Environment and Primary Industries website. Transfers may only occur within the same surface water catchment or groundwater management area.

General trends

Water management reforms for the Southern Victorian regulated water systems have been effective since 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 2012–13 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 2012–13 year.