Water Allocations

Dorrian Law are experts in advisory and the negotiations surrounding Water Allocations.

Key things We Offer

  • We are experienced in the process of selling and buying water allocations, including preparation of the necessary documents with SunWater and the Department of Natural Resources
  • We are experts in Water Allocations Legislation, and so can rapidly and efficiently work with you to best understand and address your particular situation
  • In a country as water critical as Australia, Dorrian Law is primely situated to help businesses get the best out of their water allocations and how to challenge these as required
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Water Allocations: Service Details

Our firm has extensive experience with Water Allocations, Licences and Supply Arrangements.

​ We can assist you with:​

  • Buying, Selling, Transferring, Leasing or Subdividing a Water Allocation;  Recording Zone Changes 

  • Water Licences- transfers, subdivisions and Variations

  • Water Supply Arrangements

  • Transfer and subdivision applications

  • Advice as to rights and obligations associated with your water allocation or supply agreement

​

If you need assistance with the transfer of a water allocation, please contact us to arrange a confidential discussion with one of our solicitors.

A Brief history of Water Trading in Australia

The first time that water access entitlements were separated from land title in Australia was in 1983, when South Australia introduced a permanent water trading scheme. Like many other countries, Australia’s irrigation sector was subject to centralised control for more than a century. Many irrigation settlements were placed in inappropriate parts of the landscape where the risks of waterlogging, land salinisation or river salinisation were high and returns from production were low. Farm sizes on irrigated settlements were also initially based on non-commercial criteria like ‘the home maintenance area’ (the maximum area necessary to support one family – as judged by government). Irrigators were in this way condemned to a frugal existence from the start. Changing commodity markets and above all changing irrigation technologies amplified these initial errors and left Australian irrigation with difficult adjustment problems.

 

Australia’s institutions, and rhetoric, are now geared to the market with the benefits of trade between ‘willing sellers’ and ‘willing buyers’ extolled by policymakers. Irrigators who can generate higher returns are now buying water from those who believe they can make more money by selling their water entitlements rather than using them. Nonetheless, the instinct for central planning lives on and some policy makers are tempted to favour those crops deemed to produce high gross values per megalitre when economics teaches that it is marginal valuations that are important. This distinction is critical because many ostensibly water efficient crops have limited markets. Rather than make judgements about what crops should be grown on farms, economic orthodoxy is to let individual irrigators make their own judgements about whether they can profit from their investment in water entitlements. Australian governments mostly shy away from ‘picking winners’. Nevertheless, in popular discussion, there is considerable emphasis on the crops being grown when what matters most for public policy is the amount of water taken from rivers and any externalities associated with irrigation.

 

In 1994, Australia’s National Water Commission took the step in unbundling property rights, separating land from water rights. Upon doing this, steps were taken to increase the efficiency of water distribution. By 2010, the water rights market was valued at A$2.8 billion. Various kinds of market intermediaries facilitate the trade of water, including water brokers, water exchanges and message boards. Decentralized markets are created such that one water exchange does not process all trades. A trade may occur between a private buyer and seller, through a broker or through an exchange. Some brokers may use an exchange to locate buyers or sellers.

 

The Murray-Darling Basin is one area in Australia studied for its water trading schemes. The Murray-Darling Basin receives approximately 90% of the region’s water. In the 1990s, the Australian Government has shifted its emphasis from building dams and subsidizing water from area farmers to the establishment of prices and trading within the water market. Trading for these rights occur across Australian states, with caps being set for each area to assure that water is not being over-extracted from the Basin to another region. This method operates on estimated net benefits, including the return flow to the Basin. Additionally, this water is traded with the full cognizance of Australia’s highly varying climate. As the second driest continent on Earth, the water allocations are more valuable when distributed as seasonal allocation or temporary trades, to ensure that, should it be necessary, water can be returned to the Murray-Darling Basin region.

 

The Water Services Association of Australia operates on a volume-metering system. This means that market players do not simply apply to possess the water rights, but instead they are paying for the quantity of water they consume. Yet, recent reports raise concerns regarding over-allocation and the confusion between environmental outcomes and economic efficiency.

 

The sustainability of the present system for water marketing may be affected by the structure and the conditionalities of marketable rights. While in the US water marketing is limited to effectively used rights, and to historical water consumption, Australian water marketing accepts the marketing of sleeper rights that have not been utilized.

What is Water Rights?

Water is uniquely difficult to regulate, because laws are designed mainly for land. Water is mobile, its supply varies by year, season, and location, and it can be used simultaneously by many entities. As with property law, water rights can be described as a “bundle of sticks” containing multiple, separable activities that can have varying levels of regulation. For instance, some uses of water divert it from its natural course but return most or all of it (e.g. hydroelectric plants), while others consume much of what they take (ice, agriculture), and still others use water without diverting it at all (e.g. boating). 

 

Water law in Australia varies with each state. 

Commonwealth water legislation

​​​​Water legislation administered by the Department of Agriculture, Water and the Environment includes:

  • Water Act 2007
  • Water Regulations 2008
  • Water charge and water market rules
  • Water Efficiency Labelling and Standards Act 2005.

Water Act 2007

The Water Act 2007 provides the legislative framework for ensuring that Australia’s largest water resource—the Murray-Darling Basin—is managed in the national interest. In doing so the Water Act recognises that Australian states in the Murray-Darling Basin continue to manage Basin water resources within their jurisdictions.

The Water Act:

  • establishes the Murray-Darling Basin Authority (MDBA) with the functions and powers, including enforcement powers, needed to ensure that Basin water resources are managed in an integrated and sustainable way.
  • requires the MDBA to prepare the Basin Plan – a strategic plan for the integrated and sustainable management of water resources in the Murray-Darling Basin.
  • establishes a Commonwealth Environmental Water Holder to manage the Commonwealth’s environmental water to protect and restore the environmental assets of the Murray-Darling Basin, and outside the Basin where the Commonwealth owns water.
  • provides the Australian Competition and Consumer Commission (ACCC) with a key role in developing and enforcing water charge and water market rules along the lines agreed in the National Water Initiative.
  • gives the Bureau of Meteorology water information functions that are in addition to its existing functions under the Meteorology Act 1955.
  • gives the Productivity Commission a role in reporting on the effectiveness of the implementation of the Murray-Darling Basin Plan and water resource plans and the progress towards achieving the objectives and outcomes of the National Water Initiative.

See key features of the Water Act 2007.

 

Amendments to the Water Act

The Water Act has been amended several times since 2007. Key amendments include:

  • Water Amendment Act 2008 was enacted following a partial referral of powers by the Basin states (New South Wales, Victoria, Queensland, South Australia and the Australian Capital Territory) to the Commonwealth.
  • The amendments related to the transfer of functions from the former Murray-Darling Basin Commission to the Murray-Darling Basin Authority, strengthening the role of the ACCC by providing for the water charge and water market rules to apply to all water service providers and transactions, the inclusion of critical human water needs in the Basin Plan and other transitional matters. The referral of powers was negotiated between the Commonwealth and Basin states and formalised through two intergovernmental agreements:
    • Memorandum of Understanding on the Murray-Darling Basin Reform was signed in March 2008 by the Prime Minister and the premiers of New South Wales, Queensland, South Australia and Victoria, and the Chief Minister of the Australian Capital Territory
    • Intergovernmental Agreement on Murray-Darling Basin Reform was signed in July 2008 by by the Prime Minister and the premiers of New South Wales, Queensland, South Australia and Victoria, and the Chief Minister of the Australian Capital Territory. Building on the principles of the Memorandum of Understanding, governments in the Agreement committed to a new culture and practice of Basin-wide management and planning, through new governance structures and partnerships.

Independent Review of the Water Act 2007

The Water Act underwent its first statutory review in 2014, in accordance with section 253 of the Water Act 2007. The Review Report was tabled out of session on 19 December 2014. On 3 December 2015, the Minister for Agriculture and Water Resources tabled the Government’s Response to the Report of the Independent Review of the Water Act 2007, accepting all 23 of the Expert Panel’s recommendations in full or in part. These recommendations were incorporated into the Water Act 2007 through the Water Amendment (Review Implementation and Other Measures) Act 2016, which was passed by the Australian Parliament on 2 May 2016. See the Independent Review of the Water Act 2007 for the Review report and government response.

 

Water Regulations

Regulations can be made to prescribe certain matters as provided for under the Water Act 2007. On 19 June 2008 the Federal Executive Council approved the Water Regulations 2008, also referred to as the Principal Regulations. Any regulations made under the Act after the principal regulations will be Water Amendment Regulations.

  • Murray-Darling Basin Authority’s special powers
  • Extension of transitional coverage to state and territory water planning arrangements water information.

Water charge and water market rules

The Water Act 2007 provides for water charge and water market rules to be made to regulate the water market and water charges across the Murray-Darling Basin. The Minister for Agriculture is required to seek, and have regard to, advice from the Australian Competition and Consumer Commission (ACCC) in making, amending or revoking the water charge and market rules. The ACCC is also responsible for monitoring and enforcing compliance with the rules once they have been made.

 

Water charge rules

The ACCC undertook a review of the water charge rules in 2016. Based on the ACCC’s advice, the Minister for Agriculture, Water and the Environment amended the water charge rules through the Water Charge Amendment Rules 2019 and incorporated the three sets of rules into the Water Charge Rules 2010​. The rule changes streamline requirements and provide greater transparency for customers, including irrigators.

 

Water Efficiency Labelling and Standards Act 2005

The Australian Government’s Water Efficiency Labelling and Standards Act 2005 provides the legal framework for the Water Efficiency Labelling and Standards (WELS) scheme. See WELS scheme regulations and standards for more information.

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