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Published by Murray-Darling Basin Commission
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This report may be cited as:
Permanent Interstate Water Trading
MDBC Publication No. 23/06
ISBN 1 921038 89 6
© Copyright Murray-Darling Basin Commission 2006
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used for commercial beneﬁt and its source (Permanent Interstate Water Trading) is acknowledged.
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material contained in it.
Prepared by the Murray-Darling Basin Commission, Canberra as per the requirement of the Murray-Darling Basin
Agreement (Schedule C, Clause 32).
Photo credits:
Forage Sorghum ﬁeld at Wylarah (photo: Regional Reach Advertising, May 2006)
Hattah Lakes (photo: Andrew Keogh)
Local produce (photo: John Baker)
Dairy Cows grazing at Woodlands Dairy (photo: Regional Reach Advertising, May 2006)
Prepared by the
Murray-Darling Basin Commission
15 Moore Street
Canberra City
GPO Box 409
Canberra ACT 2601
Telephone: (02) 6279 0100
Fax: (02) 6248 8053
Contents
New South Wales
23
Purpose of this Manual
2
The area covered by the Permanent
Interstate Water Trade Market
3
Water products that can be traded
3.1
New South Wales
6
12
Specialised Water Trading web sites 24
3.2 Victoria
6
13
Contacts
3.3 South Australia
6
13.1 New South Wales
25
4
Trading rules
7
13.2 Victoria
25
4.1
General principles
7
13.3 South Australia
25
4.2 River Murray Supply Constraints
8
13.4 Murray-Darling Basin Commission
25
4.3 Trade Up before Trade Down
8
14
4.4 Stranded Assets and Exit Fees
8
4.5 Speciﬁc State Rules
8
5
Conversion factors and
exchange rates
4
11.1
1
11.2 Victoria
23
5
11.3 South Australia
23
6
11.4 Murray-Darling Basin Commission
23
9
6
Environmental clearances
10
6.1
New South Wales
10
6.2 Victoria
12
6.3 South Australia
14
7
Accounting for salinity impacts
17
8
Procedures for managing the
Cap implications
18
Administrative procedures for
Permanent Interstate Exchange
Rate Water Trade
19
Steps in the Interstate Exchange
Rate Trade Process
19
9
9.1
9.2 Murray-Darling Basin Commission
(MDBC) Procedures for Approving
Permanent Interstate Water Trades
10
11
20
Administrative Procedures for
Permanent Interstate Water Trade
22
State and Murray-Darling Basin
Commission (MDBC) Registers
23
25
Roles and responsibilities of
Government Agencies in Interstate
Water Trading
26
14.1 National Water Commission
26
14.2 Murray-Darling Basin Commission
26
14.3 Victoria – Department of Sustainability
and Environment
26
14.4 New South Wales – State Water
26
14.5 New South Wales – Department of
Natural Resources
26
14.6 New South Wales – Land and
Property Information
26
14.7 South Australia – Department of
Water, Land and Biodiversity
Conservation
26
14.8 Rural Water Authorities and Irrigation
Companies
26
15
Appendix 1 forms used by states
27
15.1 New South Wales
27
15.2 Victoria
27
15.3 South Australia
27
Appendix 2 – Schedule E to the Murray
Darling Basin Agreement
27
Appendix 3 – Protocols to Schedule E
27
3
1 Purpose of this Manual
This Manual is intended for use by state
Fact Sheets
agencies, their water authorities and other
informed individuals who have an active
•
Interstate Water Trading
interest in permanent interstate water
trading. It provides a range of detailed and
Fact Sheet 1: Overview of Permanent
•
technical information about the water market,
Fact Sheet 2: Permanent Interstate Water
Trading Process - Exchange Rates
trading rules and reporting requirements. The
structure of the manual has been designed to
•
Trading Process - The Tagging Process
allow for regular updates to be inserted.
The Manual is part of a suite of documents
that explains interstate trade in permanent
•
Fact Sheet 4: Exchange Rates
•
Fact Sheet 5: Environmental and other
clearances for new developments
water entitlements. The other relevant
documents are:
•
Fact Sheet 6: Interstate Water Trade
and Salinity
Schedule E and Protocols
•
Fact Sheet 3: Permanent Interstate Water
•
Fact Sheet 7: Trading Rules
•
Fact Sheet 8: From the pilot program to
Schedule E to the Murray-Darling
Basin Agreement: Transferring Water
expanded interstate water trade –
Entitlements and Allocations
what are the differences?
–
Schedule E Protocol: Restriction of
Transfers Between Trading Zones
–
Schedule E Protocol: Conversion
Factors and Exchange Rates
•
Fact Sheet 9: For more information
The Schedule, its protocols and the Fact
Sheets can be found as Appendices to this
Manual.
–
Schedule E Protocol: Access and Exit
Fees
–
Schedule E Protocol: Calculating Cap
Adjustments
This Manual seeks to provide more detailed
information than can be found in the Fact
Sheets but the primary source of information
is Schedule E and Protocols.
–
Schedule E Protocol: Processing
Interstate Exchange Rate Transfers
–
Schedule E Protocol: Adjusting Valley
Accounts and State Transfer Accounts
4
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
2 The area covered by the Permanent
Interstate Water Trade Market
The map below shows the area covered by interstate trade in permanent water entitlements.
Schedule E speciﬁes the area as:
a the upper River Murray and the River Murray in South Australia; and
b regulated reaches of the Goulburn, Campaspe, Loddon and Murrumbidgee river systems.
The Schedule allows the area where trading can occur to be varied.
5
3 Water products that can be traded
Schedule E speciﬁes the water products
3.2 Victoria
(by the product’s water source) that can be
traded permanently interstate. In summary
Legislation: Water Act 1989 (Victoria)
these are:
Source:
3.1
(New South Wales)
Source:
Murrumbidgee Regulated and
Murray Valley Regulated
Products:
•
High Security (HS) Access Licence
•
General Security (GS) Access Licence
•
Conveyance access Licence (but only
after it has been converted to HS or GS
equivalent)
•
Campaspe and Loddon river
New South Wales
Legislation: Water Management Act 2000
Local Water Utility Access Licence (but
River Murray and Goulburn,
systems
Products:
•
Water licence granted under section 51
•
Irrigation water right
•
Bulk entitlement
•
Sales Allocation
Water (Resource Management Act 2005
(Victoria)
•
High-reliability water share
•
Lower reliability water share
•
Allocation under a water share
•
Allocation under an environmental
only if it has proved that it satisﬁes the
DEUS Total Water Cycle Management
entitlement
criteria)
•
Allocation under any type of water access
3.3 South Australia
licence (but in the case of Local Water
Utilities, only if it satisﬁes the DEUS Total
Legislation: Natural Resources Management
Act 2004 (South Australia)
Water Cycle Management criteria)
Source:
River Murray Prescribed
Watercourse
Products:
6
•
Water licence
•
Water allocation under a water licence
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
4 Trading rules
The objective of water trading is to
maximise the beneﬁcial use of water accessible
by licence holders by facilitating its reallocation to higher-value uses providing
greater returns to water entitlement holders
and the wider community. The aim is to
achieve this without any signiﬁcant impacts on:
a the environment and identiﬁed cultural,
heritage and conservation values; and
b landholders exercising basic water rights
and their ability to exercise those rights;
and
c other entitlement holders with respect to
their ability to exercise rights granted under
water licences; and
d inter-government agreements such as the
Murray-Darling Basin Cap.
Schedule E allows for a protocol to identify
trading zones and to specify rules that cover
which zones transfers can occur between.
These rules are necessary to take account
of channel capacity constraints and the ability
to transfer water between different systems.
Information within the Interstate Water
Trading Zones Map in Fact Sheet 1 and
supporting text that identiﬁes trading zones
and the rules that enable trades into and out
of zones have been developed for large scale
constraints such as the Barmah Choke. Local
delivery constraints may apply when trading
water into and out of speciﬁc trading zones
and it is important that you check with your
local operator ﬁrst to ensure that any water
purchased can actually be delivered.
The protocol also outlines the concept of
back trade between zones. Trade can occur if
the net volume of water transferring between
speciﬁed zones is zero. This allows some
ﬂexibility to work around channel constraints.
Essentially a trade must occur in one direction
(either up-stream or down-stream depending
on the constraint) ﬁrst before a similar quantity
of water can be traded in the opposite
direction.
4.1
General principles
In developing trading rules the following
principles are applied:
a transfers within a trading zone should
not be restricted, except where
local circumstances, such as salinity
management, delivery channel capacity or
environmental factors, so require;
b downstream transfers between
hydrologically connected systems should
generally be possible;
c where a downstream transfer is impeded by
a physical constraint to channel capacity, it
should only be approved as back trade;
d where an upstream transfer is made into a
separate hydrological system, it should only
be approved as back trade;
e transfers should be possible between
the upper reaches of river systems that
converge downstream, provided that any
supply obligations of the transferor’s river
below the point of conﬂuence, which may
be affected by the transfer, are assumed by
the transferee’s river; and
7
f
upstream transfers from a location
4.4 Stranded Assets and Exit Fees
supplied by more than one source should
be possible to a location supplied by only
Maintenance of irrigation supply
one of those sources, but may be subject
infrastructure costs are largely ﬁxed
to special limits and conditions.
– the maintenance costs do not change
appreciably if there are 10 or 50 irrigators
4.2 River Murray Supply Constraints
in a particular supply area. A ‘stranded
asset’ situation may arise where signiﬁcant
The delivery of traded water may place
additional demands on river ﬂows at certain
points in the river system. As a result, it
may not always be possible to supply the
additional demand without affecting supplies
to existing water users and meet minimum
river ﬂow requirements.
Consequently, in planning the operation of
quantities of water are traded out of an
irrigation area, leaving fewer entitlement
holders to cover the ﬁxed costs of the
irrigation infrastructure. The question then
arises of how to equitably cover the cost of
maintaining the water delivery infrastructure.
Through the National Water Initiative,
governments are considering the concept
the River Murray system, the Murray-Darling
of exit fees as a possible mechanism for
Basin Commission (MDBC) must consider
addressing this issue.
the magnitude and location of proposed
water transfers and their effects on river
operation. If the proposed water transfers are
manageable in terms of river operations,
they will be endorsed by the MDBC.
4.3 Trade Up before Trade Down
The challenge is to develop an approach
that; can be consistently applied across
jurisdictions; appropriately address third
party impacts; ensure no additional barriers
to trade are created; and facilitate an
economically efﬁcient means for enabling
adjustment in irrigation systems.
Some states allow trade to occur around
system “bottlenecks” if the net effect of the
trade is zero. For example on the Goulburn
River system in Victoria at the peak of the
irrigation season it is not possible to supply
more water downstream, but trade can occur
4.5 Speciﬁc State Rules
Speciﬁc rules are in place in many
trading zones. It is important to consult the
relevant local water authority to assess the
implications for a proposed trade.
if there is a water user trading an equivalent
amount upstream to the amount that is to be
traded downstream.
8
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
5 Conversion factors and exchange rates
Water products across the states have
been developed over many years and each
product is different in terms of “security” of
supply. Some have very high reliability and
others low reliability. New South Wales does
not permit exchange across state borders
or across water sources. New South Wales
implements this via tagged trade instead.
In addition to reliability there are also
water losses due to transporting water
downstream. The combined result of these
factors is that the buyer (depending on
their location) does not always receive the
quantity of water purchased.
Conversion and Exchange rates have been
developed to deal with this issue.
Conversion factors are used to convert an
entitlement of one type into an entitlement of
another type, in the same valley, for example,
from General Security to High Security in
New South Wales.
Exchange rates are used when transferring
water between valleys. New South Wales
permits conversion from General to High
Security within its valleys but any transfer
across valleys or interstate is facilitated using
tagged trade.
In both cases the aim is to minimise
the impact on water users, other than the
transferor or transferee and the environment.
Exchange rates have been developed by
the MDBC for application between Victorian
and South Australian entitlements. The rates
are based on complex modelling and use the
following assumptions:
a The fundamental assumption in modelling
exchange rates focuses on utilising
previously collected data of climatic
conditions which reﬂects river conditions
in order to deﬁne the future (act of
faith). Past data represents 109 years of
sequences.
b 95% uptake of rights - existing utilisation
levels are in some cases quite a long way
from full uptake. For example, Sunraysia
uses an average of 68% of the water
allocated to it in the long term.
c 10% of entitlement rights move - the
exchange rate that is produced from the
modelling is affected in most cases by the
size of the transfer from the selling to the
buying location.
d No climate change - resource modelling
relies on the last 109 years of historical
climatic data, so in effect it assumes no
climate change to the past.
e Ceding reliability - current modelling
assumes that for trades involving South
Australia, water moves between states
as increases or decreases to the South
Australia entitlement ﬂow. For trades
between New South Wales and Victoria,
the valley accounts are adjusted with the
reliability of Victoria Water Rights.
Under Schedule E the MDBC can from
time to time vary the exchange rates
and conversion factors by amending the
relevant protocols. The variations cannot
be applied retrospectively. The protocol
covering exchange rates can be found in the
Appendices to this manual.
9
6 Environmental clearances
Environmental clearance procedures are
Within New South Wales a range
different in each state, but all aim to minimise
of state policies and other legislation
third party environmental impacts.
requirements also exist which must be taken
into consideration in the environmental
6.1 New South Wales
The Department of Natural Resources is
responsible for the environmental assessment
of any water licence. It is bound by the
Environmental Planning and Assessment
Act 1979 to consider a range of issues. The
Department must also take into consideration
any planning instruments that may apply
to the area under review or any other plans
such as Land and Water Management Plans;
Regional Vegetation Management Plans;
Recovery and Threat Abatement Plans.
Along the River Murray the main planning
instrument is Murray Regional Environmental
Plan No. 2 which contains a range of planning
10
assessment of a water licence. These
include the New South Wales State Rivers
and Estuarine Policy, the New South Wales
Wetland Policy, the State Groundwater
Policy, Threatened Species Conservation Act,
Fisheries Management Act, National Parks
and Wildlife Act as it relates to Aboriginal
sites and artefacts, and endangered ﬂora
and fauna), the Environmental Protection
and Biodiversity Conservation Act 2000, the
Protection of the Environment Operations
Act 1997, the Water Act 1912, the Rivers and
Foreshores Improvement Act 1948 and the
Water Management Act 2000.
The key considerations for environmental
principles relating to ﬂooding, water quality,
clearances are listed in Table 1 on the
river related uses and wetlands.
following page:
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
Table 1: Environmental Clearances for Water Trading in New South Wales
Stage
Issue
Response
Point of
Destination
Increased accession to
groundwater resulting in
local water-logging and
salinity impacts
Irrigators are required to submit comprehensive plans that
address environmental protection issues. All applications
for development are subject to a comprehensive
environmental impact evaluation process. Issues including
water supply, water quality, land capability and suitability,
environmental and nature conservation and cultural
and heritage matters are considered as part of a single
assessment and approval process.
In relation to groundwater accessions a Drainage and
Irrigation Management Plan (DIMP) is required to consider
groundwater accessions by identifying drainage hazards
and potential management options.
In the preparation of a Drainage and Irrigation
Management Plan (DIMP) the preferred irrigation system is
considered for the soil type and crop type in question.
The Drainage and Irrigation Management Plan (DIMP)
is also required to include soil type descriptions, water
holding capacity and signs of soil salinity. The irrigation
method and how the system will account for varying soil
water holding characteristics also needs to be detailed.
Increased salt and
nutrient load in drainage
waters
Any discharge of drainage water to a watercourse will
require approval under the Protection of the Environment
Operations Act 1997.
The Drainage and Irrigation Management Plan (DIMP)
is required to enable an assessment of the impacts of
drainage to be undertaken before the determination of a
licence under the Water Management Act 2000.
If there is any potential to adversely impact on the quality
or quantity of water of the River Murray, the development
must also be considered under the Murray-Darling Basin
Agreement 1992. Applications are also assessed under a
State-wide Basin Salinity Management Strategy.
Loss of native vegetation
and habitat due to land
use change
If there is the potential to harm threatened species,
populations, ecological communities or their habitats,
consideration of the proposal will be required under the
Threatened Species Conservation Act 1995. It may also
be necessary to prepare a property management plan to
take threatened species into account or prepare a Species
Impact Statement.
Clearance of native vegetation is controlled by the Native
Vegetation Act 2003. Applications can either be made to
DIPNR (through a development application) or through
CMAs (as apart of a Property Vegetation Plan.
Impact of development
of landscape amenity and
cultural heritage values
Assessed as part of the Drainage and Irrigation
Management Plan (DIMP).
Must be considered under the Department’s assessment
under the Environmental Planning and Assessment Act.
If the development will destroy or damage any sites
of Aboriginal or cultural signiﬁcance, a permit must be
obtained under the National Parks and Wildlife Act 1974.
Protection for Wetlands
Wetlands are considered in all applications, and the
State’s Wetland Policy and the Planning Principles in
the Murray Regional Environment Plan No. 2 are applied
in the determination of any application. Wetlands may
also be considered under the Environmental Protection
and Biodiversity Conservation Act 2000 if a migratory
species or RAMSouth AustraliaR listed wetland is involved.
Identiﬁcation of wetlands is a routine part of the licensing
assessment process.
11
Stage
Issue
Response
Cumulative impact of a
large number of smaller
developments on issues
listed above
Between Point
of Destination
and Point of
Origin
Increased ﬂows in
rivers and streams to
downstream destination
(exacerbating unseasonal ﬂow patterns)
Permanent interstate water trade is a very small
percentage of the overall water market and its
contribution to changed ﬂow patterns is negligible.
Decreased ﬂows in rivers
and streams to upstream
destinations
Water Sharing Plans (established under the Water
Resources Management Act 2000) set minimum ﬂow
requirements for rivers and streams to ensure that
environmental needs are met.
Permanent Interstate water transfers are only permitted
from the regulated zone of the River Murray - implying a
substantial ﬂow exists.
Point of Origin
Environmental clearances
are not required for the
removal of irrigation
water at the point of
origin. However there
are considerations
relating to speciﬁc areas.
Reduced accessions to
the groundwater leading
to less water logging (soil
and vegetation impact)
and less salinity impact
(over time)
Limits may be placed by water authorities on the quantity
of water traded out of districts because of the need to
retain irrigation for leeching salt to prevent localised land
salinisation problems.
6.2 Victoria
The Department of Sustainability and Environment is the lead Victorian agency. Victoria’s
Guidelines for New Irrigation Developments describe the various approvals required.
Developments are assessed for their ﬂora and fauna impact and consistency with state salinity
and water quality policies. Salinity impacts are assessed against the requirements of the
following irrigation based salinity management plans:
•
Nyah to the Border Salinity Management Plan
•
Nangiloc/Colignan Salinity Management Plan
•
Mallee Dryland Salinity Management Plan
•
Loddon Murray Land and Water Management Plan
•
Shepparton Irrigation Region Land and Water Management Plan
The key considerations for environmental clearances are listed in Table 2 on the following
page:
12
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
Table 2: Environmental Clearances for Water Trading in Victoria
Stage
Issue
Response
Point of
Destination
Increased accession to
groundwater resulting in
local water-logging and
salinity impacts
Irrigators are required to prepare comprehensive
plans. The intent of these plans is to ensure that the
development involves no net conservation loss; no
increase in river salinity; no loss of wetland values
and no net loss of vegetation. There is a strong
set of minimum standards and the Department of
Sustainability and Environment (DSE) and Rural Water
Authorities are responsible to ensure all requirements
have been completed.
Design of on-farm systems must be by an accredited
engineer. Soil surveys must be carried out to assist
in the design of the irrigation system. The designer
must take into account the RAW values and make
optimum use of the soil survey results. Department of
Sustainability and Environment (DSE) is responsible for
checking this aspect of development.
Test wells are required to be installed and monitored
by the irrigator. If the water table becomes a problem,
the developer is required to install sub-surface
drainage as planned for in initial development.
Soil surveys are required to be carried out as part
of the development requirements. Department of
Sustainability and Environment (DSE) ensures the
results meet expected standards.
Increased salt and nutrient
load in drainage waters
All new developments must fulﬁl salinity and drainage
requirements, any re-development are required to
complete an environmental checklist. Allocation of salt
disposal entitlements and credits to irrigation areas are
addressed on a statewide basis.
Comprehensive hydro geological studies have been
carried out to identify High and Low Impact Zones
(HIZ/LIZ) in the Mallee region). Water trade and
development is restricted in the HIZ and incentives
given to promote development in the LIZ.
Loss of native vegetation
and habitat due to land use
change
An ofﬁcer of Department of Sustainability and
Environment (DSE) ensures species and communities
listed as threatened under the Flora and Fauna Guarantee
Act, and action plans developed under this Act are not
compromised by development.
Clearance of native vegetation requires a permit
under the Planning and Environment Act 1983. The
application is assessed against priorities identiﬁed in
regional vegetation plans. The plans describe how the
Government’s policy of a net gain in net vegetation will
be achieved.
Impact of development
of landscape amenity and
cultural heritage values
Must be considered in assessments of major projects
under the Planning and Environment Act 1983.
Protection for Wetlands
The protection of wetlands is a minimum requirement.
Department of Sustainability and Environment (DSE)
is responsible for completing the checklist as well as
highlighting any relevant legislative requirements.
Wetlands must not be used to store, convey or be used
to dispose of drainage or supply water.
Guidelines have been developed to assist in the siting
and design of pump houses on the Murray River.
13
Stage
Issue
Response
Cumulative impact of a
large number of smaller
developments on issues
listed above
Between Point
of Destination
and Point of
Origin
Point of Origin
Increased ﬂows in rivers
and streams to downstream
destination (exacerbating
un-seasonal ﬂow patterns)
Decreased ﬂows in rivers
and streams to upstream
destination
The Bulk Entitlement process (under the Water Act
1989) shares water between users and ensures an
allocation for the environment. Flow levels can be
set for various points along the river. The White
Paper enhances these provisions by proposing the
establishment of an environmental reserve which will
be determined following the development of stream
ﬂow management plans.
Environmental clearances
are not required for the
removal of irrigation water at
the point of origin. However
there are considerations
relating to speciﬁc areas.
Reduced accessions to the
groundwater leading to
less water logging (soil and
vegetation impact) and less
salinity impact (over time)
Investigations are underway into options for managing
salinity levels in the Kerang Lakes following the
movement of water out of the Torrumbarry area.
6.3 South Australia
The Department of Water, Land and Biodiversity Conservation leads the environmental
clearance processes in South Australia. The impacts of irrigation development have mostly been
addressed through the Water Resources Acts of 1976, 1990 and 1997 and the Natural Resources
Management Act 2004.
South Australia is concerned with the maintenance or improvement of the river water
quality, the enhancement of the ﬂoodplain and wetlands, and the preservation of river cliffs.
The conservation of the landscape of the river valley is also a concern. It is recognised that
past irrigation development both in South Australia and the upstream states has signiﬁcantly
contributed to the decline of these aspects.
The key considerations for environmental clearances are listed in Table 3 on the following page.
14
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
Table 3: Environmental Clearances for Water Trading in South Australia
Stage
Issue
Response
Point of
Destination
Increased accession to
groundwater resulting in
local water-logging and
salinity impacts
Irrigators are required to demonstrate 85% water use
efﬁciency (WUE) by submitting irrigation plans based
on soil survey criteria under the provisions of the River
Murray Water Allocation Plan (RMWAP). Such plans are
often produced by professional consultants and involve
detailed investigations at the site and detailed design
of the irrigation systems and management methods.
RMWAP requires that monitoring wells be constructed
and water levels monitored for new development.
Supporting information with applications must include:
• A description of the proposed “on farm” irrigation
system, including tailoring the system to the available
soil classiﬁcations.
• Details of the proposed irrigation system to the
property and arrangements for metering.
• A description of the proposed management system
including soil moisture monitoring and irrigation
scheduling. Irrigators must report annually on their
irrigation management by demonstrating WUE of 85%
as required by the RMWAP.
• Soil surveys including an estimate of readily
available water are required in transfer application.
Areas of poor drainage or ground water levels close to
the surface are required to be excluded from irrigation.
• A summary report of the management of existing
plantings, including water systems, soil conditions,
management methods, crop water allocations in mm or
ML/ha over the last 5 years, estimate of crop water use
efﬁciency, estimate of drainage ﬂows, and indication of
any drainage bores in use is required.
• Information on shallow clay or tight carbonate
layers that could result in a drainage hazard is also
necessary.
Increased salt and nutrient
load in drainage waters
South Australia is a signatory to the Murray-Darling Basin
Salinity and Drainage Strategy and is represented on the
Murray-Darling Basin Salinity and Drainage Strategy register.
The RMWAP sets out speciﬁc policies for offsetting
salinity impacts arising from irrigation development.
Rules are being ﬁnalised to guide development to
areas of low salinity impacts and for irrigators to be
accountable for salinity.
Areas that are irrigated now or in the future are being
deﬁned by Global Positioning System (GPS) reference.
It is anticipated that these will become part of the
licence thus conﬁning irrigation to speciﬁc areas.
High and Low salinity impact zones have been
identiﬁed using hydro geological models. These are
used in developing strict guidelines for use in the
assessment process of new development.
The River Murray Act 2004 requires the approval of the
Minister before development can occur in sensitive
areas.
15
Stage
Issue
Response
Loss of native vegetation
and habitat due to land use
change
Endangered species issues are dealt with under
the National Parks and Wildlife Act 1972. Issues are
identiﬁed through referrals under the Development
Act or by application under the Native Vegetation Act
1991. Water transfer applications are referred to the
Native Vegetation Management Branch if clearance is
indicated. The Native Vegetation Council considers all
clearance requests.
Species threatened nationally are dealt with under
the Federal Environmental Protection & Biodiversity
Conservation Act 1999 (EPBC), and referred to
Environment Australia.
Impact of development
of landscape amenity and
cultural heritage values
Dealt with under applications under the Development
Act 1993.
Protection for Wetlands
Wetlands recognised in the South Australia Wetlands
Atlas are identiﬁed in the Water allocation Plan for
the River Murray prescribed area. Water transfers
resulting in new development on the ﬂoodplain are not
approved. Development in recognised wetlands would
not be approved.
The River Murray Act will require any works including
pump houses meet strict environmental and aesthetic
standards.
Cumulative impact of
large number of smaller
developments on issues
listed above
Between Point
of Destination
and Point of
Origin
Point of Origin
16
Increased ﬂows in rivers
and streams to downstream
destination (exacerbating
un-seasonal ﬂow patterns)
Decreased ﬂows in rivers
and streams to upstream
destination
South Australia receives a guaranteed minimum
entitlement ﬂow under the Murray-Darling Basin
Commission Agreement. Water trade downstream from
New South Wales and Victoria would enhance this ﬂow.
Environmental clearances
are not required for the
removal of irrigation water at
the point of origin. However
there are considerations
relating to speciﬁc areas.
Reduced accessions to the
groundwater leading to
less water logging (soil and
vegetation impact) and less
salinity impact (over time)
A speciﬁc Environmental Land Management Allocation
of water is made available to irrigators in the Lower
Murray Swamps area. The allocation is intended to
prevent land salinisation and while it can be used for
irrigation, it cannot be traded out of the area.
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
7 Accounting for salinity impacts
An essential condition of permanent
interstate water trading is that it must not
lead to signiﬁcant increased levels of salinity
in the River Murray. The transfer of a water
entitlement from one location to another has
the potential to affect salinity levels in the
River Murray in three ways:
•
•
•
New irrigation developments can result
in increased salt loads in the River Murray
either through discharge of irrigation
drainage waters or through the increased
pressure on groundwater systems causing
saline groundwater to discharge directly
into the River Murray. Both actions
result in a salinity debit for the state of
destination of the water trade on the
salinity register.
Removal of irrigation water from highly
saline areas can reduce the River Murray
salinity impact from those areas. This
results in a salinity credit for the state of
origin of the water trade on the salinity
register.
Transferring water entitlements changes
the volume of water in the river at
different locations. This affects the river’s
dilution capacity and so changes the
salinity level of the water. Under the
current arrangements:
– salinity debits or credits resulting from
the dilution effects brought about by the
transfer of entitlements to or from South
Australia will be assigned to the upstream
state involved in the transfer, i.e. New
South Wales or Victoria;
– salinity debits and credits resulting
from the dilution effects brought about
by transfers of entitlements between New
South Wales and Victoria will be shared
equally by the two states;
The states are responsible for the
internal management of salinity impacts
from individual transfers of entitlements.
In Victoria, for example, it is necessary for
an individual to pay a salinity levy prior to
receiving approval to trade into the Nyah to
the South Australia border region. A water
entitlement can only be transferred interstate
if the proposed transfer is consistent with
Schedule C of the Murray-Darling Basin
Agreement.
For the purpose of calculating
salinity credits or debits arising from the
dilution effects of temporary transfers of
entitlements, the Commission must, within
one month after the end of each year:
a determine the average net volume of
temporary transfers of entitlements out
of New South Wales into Victoria, out of
New South Wales into South Australia and
out of Victoria into South Australia, for the
preceding ﬁve years; and
b assess the dilution effect of each of those
net volumes as if the volume had been
transferred permanently; and
c attribute any consequential salinity credits
and debits in accordance with this clause
for the period of the current year.
d The MDBC must attribute salinity credits
and debits arising from changes to salt
accession attributable to permanent
and temporary interstate or inter-valley
transfers of entitlements, to the state in
which the change occurs.
17
8 Procedures for managing the
Cap implications
The MDBC must, from time to time, adjust
Adjustment of the Cap on diversions for
the Cap on diversions for each designated
temporary transfers requires the MDBC to
river valley to reﬂect interstate and inter-
determine whether the long-term diversion
valley transfers of entitlements, in order to
Cap has been exceeded in a designated river
ensure that diversions within the Murray-
valley, the relevant annual diversion target
Darling Basin do not exceed the total
for that year must either be increased or
diversions under baseline conditions referred
reduced, as the case requires, by the volume
to in Schedule F of the agreement.
of any temporary interstate or intervalley
Where an entitlement has been
permanently exchanged between designated
river valleys, the MDBC must, from the
beginning of the following year:
a reduce the Cap on diversions for the
designated river valley out of which the
transfer was made by the volume of that
entitlement multiplied by the appropriate
exchange rate applying at the date of the
transfer; and
transfers into or out of that designated
river valley in that year multiplied by the
appropriate exchange rate.
In the case of tagged trade, the annual
Cap accounts must be corrected by the
amount of water actually used in the state
of destination by the interstate tagged
entitlements. During the interim period until
1 July 2007 during which formal tagging is
facilitated using the temporary trade facility
of the Schedule, Cap will be accounted as
b increase the Cap on diversions for the
described above.
designated river valley into which the
transfer was made by the volume of that
entitlement multiplied by the appropriate
exchange rate applying at the date of the
transfer.
18
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
9 Administrative procedures for Permanent
Interstate Exchange Rate Water Trade
A protocol to Schedule E has been
developed that outlines the procedures for
interstate trade. The steps are reproduced
below. The process involves several parties:
•
The buyer (or agent)
•
The seller (or agent)
•
The relevant authority from the state of
origin of the water
•
•
The relevant authority from the state of
destination of the water
The MDBC - for assessing River Murray
supply considerations, determining the
exchange rate to be applied and recording
the trade to determine the implications for
the Cap and state government ﬁnancial
contributions.
9.1 Steps in the Interstate Exchange
Rate Trade Process
Water users in the upper River Murray, the
River Murray in South Australia and regulated
reaches of the Goulburn, Campaspe, Loddon
and Murrumbidgee river systems consider
the option to buy or sell a permanent water
entitlement.
The water user seeks a potential buyer,
either through personal contacts or through
an intermediary, such as a broker. Other
sources of information regarding potential
buyers and sellers include specialised web
sites such as Watermove and Waterﬁnd etc.
The seller and especially the buyer must
satisfy the particular requirements of the
states and agencies involved. Information
should be sought from these agencies
regarding eligibility to trade before any further
steps are taken.
A contract is agreed between the buyer
and the seller. The contract should note that
completion of the terms of the contract is
subject to the approval of the trade by the
relevant licensing authorities.
The main steps in the processing
of the application are:
Step 1: The seller lodges an
application with the licensing
authority in the state of origin and
the buyer lodges an application to
transfer water with the licensing
authority in the state of destination.
Both applications must be
accompanied by any fees required
in both the state of origin and the
state of destination.
Step 2: The seller’s licensing
authority determines whether the
seller has an entitlement to the
water being sold and if selling the
water breaches the 4% rule (see
Trading Rules Fact Sheet). If the
water can be sold the authority
advises the buyer’s licensing
authority and the MDBC.
Step 3: Following receipt of advice
of the proposed trade from the
state of origin the MDBC determines
whether or not the proposed water
transfer can be delivered and
the relevant exchange rate to be
applied to the transfer.
19
Step 4: If the MDBC advises that
the trade can proceed, the state
of destination licensing authority
advises of the buyer of environmental
clearances and development
standards and any other matters
required to be addressed
(development applications etc)
before the transfer can proceed.
The authority must also determine
whether it can deliver the water to
the buyer.
Step 5: If the application is approved,
the state of origin cancels or reduces
the licence of the transferred
water entitlement of the seller. On
conﬁrmation of the cancellation
or reduction in the state of origin,
the state of destination ﬁnalises
the approval of the application and
issues a new licence to the buyer.
In the case of a sale of part of an
entitlement, a revised licence is
issued to the seller. The buyer and
seller are notiﬁed accordingly and the
transfer is ﬁnalised.
Step 6: The state of destination
advises the MDBC once the transfer
has been approved.
Step 7: The MDBC records the
transfer of the water entitlement
in the MDBC Trade Register and
makes the necessary adjustments
to the delivery of the states water
entitlements, the states Caps, and the
states ﬁnancial contributions to the
MDBC Water Business.
The above description outlines the
main steps involved in the permanent
interstate trade of a water entitlement.
In going through the steps, the
following points need to be noted:
20
•
A trade can involve all or part of a seller’s
water entitlement;
•
Applications must satisfy the particular
requirements of the states and agencies
involved and the details and requirements
of each application will vary;
•
This description does not cover all of
the processes and requirements that
are speciﬁc to the individual licensing
authorities;
•
Not all of the steps involve action by the
buyer and/or seller;
•
Responsibility for processing the transfers
lies with the licensing authority in the state
of destination, i.e. the state in which the
purchaser of the water is located; and
•
Traders should consider obtaining
independent professional advice before
entering into any contractual trading
arrangements. The material contained
herein is intended as a guide only.
9.2 Murray-Darling Basin Commission
Procedures for Approving Permanent
Interstate Water Trade
Within the MDBC the following steps will
be followed:
•
Completed notiﬁcation form received from
state of destination.
•
Review application. Determine applicable
exchange rate. Sign and date notiﬁcation
form.
•
Enter trade on Permanent Interstate Water
Trading Register.
•
Seek approval signatures from Manager
Water Resources and Manager Production
River Murray Water.
•
When notiﬁcation form returned with 3
signatures, fax to state of origin and state
of destination.
•
Update trade register with MDBC date
approved.
•
State of destination will provide ﬁnal
notiﬁcation advice in due course. Final
update of the trade register.
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
Permanent Trade Approval Process
State of origin
State of destination
Seller lodges application form (transferor)
Buyer lodges application form (transferee)
Step 1 - Preliminary processing of
application
seller’s authority notes application in its
records and checks zoning protocol
COPY
Step 2 - Transferor's Authority
considers application
seller’s authority considers and verifies
that the application can be processed
Notify:
1. buyer’s authority
2. buyer
3. seller
4. any brokers
NOT
GRANTED
Decision to
process
application
Step 1 - Preliminary processing of
application
buyer’s authority notes application in its
records
Step 5 - Transferee’s Authority
considers application
assessment and processing - e.g.
1. environmental clearances
2. cultural heritage
3. local delivery issues
Step 5
Determination/
approval of transfer
MAYBE
GRANTED
Step 6 - Authorities finalise
transfer arrangements
cancel or amend entitlements
Step 6 - Create new
entitlement
Step 7 - Commission
adjusts its records
notification of finalisation
Step 3 - Commission
considers proposed
transfer
notification of application
WATER CAN BE
DELIVERED
Step 3 - Commission
considers notice with
respect to:
1. delivery
2. exchange/conversion rates
3. trade identification number
WATER CANNOT
BE DELIVERED
MDBC water
Trade register
Notify:
1. buyer’s authority
2. seller’s authority
3. any brokers
Basin accounting - e.g.
- delivery procedures,
flows
- charges
- adjusts state and valley
caps and accounts
- salinity accountability
Murray-Darling
Basin Commission
(MDBC)
21
10 Administrative procedures for
Permanent Interstate Tagged Water Trade
What is tagging?
Tagging is the method by which the water
that becomes allocated to entitlements
issued in one state can be physically taken
The Process
BUYING FROM SOUTH AUSTRALIA OR
NEW SOUTH WALES.
Step 1: Find a seller and negotiate a price.
in another. In essence the state boundary
is removed. The entitlement remains issued
Step 2: Using the application form of the
by and maintained by the selling state. The
selling state, transfer the entitlement into
only difference is that the water is measured
your name.
by the authorities in the receiving state.
Step 3: Using the appropriate form arrange
This information is conveyed to the selling
with the selling state to have the water
state for the purpose of managing the water
delivered to your home state diversion point.
account. The water bills are issued by the
[Note that you must have a legally authorised
selling state – although there may also be a
work permit in your home state and you
service charge by the water retailer for the
must notify your retailer of the tagged trade.
water delivery and meter reading.
During the interim period until 2007, other
New South Wales already allows interstate
than in New South Wales, you may need to
ownership of entitlements. South Australia
also hold a current water entitlement in your
allows interstate ownership of its ’hold’
home state].
entitlements but not its ‘take’ entitlements.
Victoria, although having legislated to allow
interstate ownership of its ‘water rights’
entitlements has a commencement date
of 1 July 2007. This means that an interim
arrangement is required for tagging from
Victoria until that date.
BUYING FROM VICTORIA.
For the interim period until 1 July 2007 a
non-Victorian cannot own Victorian water
rights. In order to facilitate tagged trading
in the interim, a special contract will be
available in Victoria which will bind the sale
of the entitlement to completion after the
1 July 2007. In the interim period the water
becoming available to that entitlement will be
temporarily transferred to the buyers license
in his home state under the contract.
All other steps are the same as above.
22
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
11
State and Murray-Darling Basin
Commission Registers
11.1 New South Wales
A number of public registers have been
11.2 Victoria
Register currently being developed.
established by the Department of Natural
Resources to provide information for water
users and the general public that can be
widely and simply accessed. The general
public can access up-to-date information
11.3 South Australia
The South Australian licensing system
is run on the Water Information Licensing
Management Application (WILMA).
on various consents and activities under the
Water Management Act 2000, including:
Summaries of trade are available from the
Department of Water, Land and Biodiversity
•
approvals
•
status of applications for approvals,
www.dwlbc.sa.gov.au/licensing/trading/
including current advertisements
index.html
Conservation website:
•
issued approvals, including conditions
•
water access licences
•
licence conditions
•
available water determinations
is maintained by the MDBC in a spreadsheet
•
water allocation assignments (formerly
format.
known as temporary trades)
•
11.4 Murray-Darling Basin
Commission
A record of all permanent interstate trade
A number of web-based water trading
assignment of shares (formerly known as
permanent trades)
•
water access licence and use statistics
•
summaries by water source of number of
licences, available water determinations
and water usage
•
summaries by water source of water
allocation assignments
The web address is:
www.natural resources.nsw.gov.au/water/
index.shtml
23
12 Specialised Water Trading web sites
sites are available to potential water traders.
The primary purpose of these sites is to
match buyers with sellers of water. Trade
does not occur on-line and the process
described in this document will need to be
followed for the trade to be enacted.
Web sites include:
Watermove – www.watermove.com.au
Waterﬁnd -www.waterﬁnd.com.au
24
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
13 Contacts
13.1 New South Wales
FIRST MILDURA IRRIGATION TRUST
PO Box 5024, Mildura, Victoria 3502
STATE WATER
For general enquiries about temporary
transfers contact your State Water Customer
Service Ofﬁcer, or State Water
PO Box 717, Dubbo
New South Wales 2830
Tel: 02 6841 7523 Fax: 02 6884 2603
[email protected]
www.statewater.com.au
DEPARTMENT OF NATURAL RESOURCES
For enquiries into permanent trade of
entitlement contact the Resource Access
Ofﬁcer at your local Department of Natural
Resources (DNR) ofﬁce (contact details are
available on the DNR website) or the
Tel: (03) 5021 1811 Fax: (03) 5023 6253
[email protected]
www.fmit.com.au
LOWER MURRAY WATER AUTHORITY
P0 Box 817
Irymple, Victoria 3498
Tel: (03) 5021 9777 Fax: (03) 5021 9778
www.lmw.vic.gov.au
GOULBURN MURRAY WATER
40 Casey Street, (PO Box 165) Tatura 3616
Tel: (03) 5833 5500 Fax: (03) 5833 5501
[email protected]
www.g-mwater.com.au
13.3 South Australia
Water Dealings Ofﬁcer on 1800 353 104
or e-mail: [email protected]
Refer to the individual information sheet
on each type of dealing available on the DNR
website:
www.dnr.nsw.gov.au or from regional ofﬁces.
DEPARTMENT OF WATER, LAND AND
BIODIVERSITY CONSERVATION
PO Box 240
Berri, South Australia 5343
Tel: (08) 8595 2244 Fax: (08) 8595 2232
www.dwlbc.sa.gov.au/water/wrm/index.html
13.2 Victoria
DEPARTMENT OF SUSTAINABILITY
13.4 Murray-Darling Basin
Commission
AND ENVIRONMENT
Gerry Egan
Water Sector Group, Melbourne
Tel: (03) 9637 8779
www.dse.vic.gov.au
Manager Interstate Water Trade
Murray-Darling Basin Commission
15 Moore Street, Canberra City
GPO Box 409 Canberra, ACT 2601
Tel: (02) 6279 0100 Fax: (02) 6279 0557
www.mdbc.gov.au
25
14 Roles and responsibilities of Government
Agencies in Interstate Water Trading
14.1 National Water Commission
14.5 New South Wales DNR
Responsible for helping to drive national
water reform and advising the Prime Minister
and state and territory governments on
water issues. The National Water Commission
is also responsible for managing the
implementation of the National Water
Initiative and implementing two programmes
of the Australian Government Water Fund.
The DNR administers water licences
including all permanent trade in New
South Wales; The DNR charges a resource
management fee and the administration
costs of permanent trades.
14.2 Murray-Darling Basin
Commission
The MDBC plays a key role in interstate
trade through the coordination of state
processes, advising on exchange rates and
the management of an interstate register of
trades that informs adjustment to the Cap.
14.3 Victoria – Department of
Sustainability and Environment
With respect to water trading the
department advises the Minister on the
development of bulk entitlements and
matters of water policy. The department also
plays a key role, at the regional level, in the
environmental clearances processes.
14.4 New South Wales – State Water
State Water delivers water to licence
holders on regulated rivers, manages
all water allocation accounts including
temporary trade. State Water charges for
water delivered and the administration costs
of temporary trades.
26
14.6 New South Wales – Land and
Property Information
Land and Property Information New South
Wales (LPI) which registers all water access
licences and any changes to these licences on
the Water Access Licence Register.
14.7 South Australia – Department
of Water, Land and Biodiversity
Conservation
In relation to water, the Department
oversees the development of Water
Allocation Plans prepared by Catchment
Boards and manages the allocation of water
licences.
14.8 Rural Water Authorities and
Irrigation Companies
Authorities play a key role in the
trading process through the adjustment of
entitlements to give effect to the transfer
process and through implementation of
Government endorsed rules with respect to
trade.
P E R M A N E N T I N T E R S TAT E WAT E R T R A D I N G
15 Appendix 1 - forms used by states
15.1 New South Wales
15.2 Victoria
15.3 South Australia
Appendix 2 – Schedule E to the Murray-Darling Basin Agreement
Appendix 3 – Protocols to Schedule E
27