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National Water Account 2017

Melbourne: Water rights

Water supply in the region is governed by the specific conditions of the bulk entitlements, environmental entitlements, water licences and water shares. Annual water allocations are provided depending on the type of entitlement held by user.


For further information about the region's water rights scroll down this page or click on the links below:


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 authority, and groundwater (Section 36).


Urban water restrictions

In times of severe water shortages, the urban water authorities in the Melbourne region can implement a regime of water restrictions ranging from Stage 1 (mild) to Stage 4 (severe). These restrictions are in accordance with their drought response plans. The drought response plans 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 authorities are responsible for declaring water restrictions. Water restrictions are enforced by the relevant water authority.

More information regarding urban water restrictions in the Melbourne region can be found under Water Restrictions on the Bureau's website. 


Water licence restrictions

Melbourne Water and Southern Rural Water manage licence restrictions in the Melbourne region. More information regarding licence restrictions are available under 'Water access restrictions' in the Water access and use note.


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 authorities 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, 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: this is 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 authority 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.


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 2016–17 year.

More information on qualification of rights is available on the Department of Environment, Land, Water and Planningwebsite.


Bulk entitlements

In Victoria, bulk entitlements have been established under the Water Act to 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 authorities, the Victorian Environmental Water Holder (VEWH) and other specified bodies (e.g., electricity companies, see Section 34 of the Water Act).

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


Water licence

In the Melbourne region, a water licence can be held by any individual, business, or authority 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. 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. Southern Rural Water is responsible for supplying water to shareholders in the Werribee and Bacchus Marsh irrigation districts.


Water allocations

Annual water allocations are provided depending on the type of entitlement held by user. Within the Melbourne region, only water shareholders 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 shareholder'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, carryover commitment from the previous year, 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, Land, Water and Planning 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 water within zones and between trading zones within the Werribee system.

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 that 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, Land, Water and Planning 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 gradually increased until the 2012–13 year. Thereafter, volumes of allocation trade were around or above 3,000 ML per year.


Restrictions on trade

Trading restrictions did not apply in the Melbourne region during the 2016–17 year.