Trading of Commonwealth environmental water
Discussion paper and request for information - call for public comment
In order to help inform the development of water trading arrangements, a discussion paper on trading Commonwealth environmental water was released for public comment in November 2011. The period for submissions of responses to the discussion paper closed on 11 May 2012. However, as the process of developing trading arrangements is ongoing, we welcome feedback, both formal and informal, on trading arrangements at any stage.
Feedback can be sent to: ewater@environment.gov.au, or by mail to the following address:
Commonwealth Environmental Water
Department of Sustainability, Environment, Water, Population and Communities
GPO Box 787
Canberra ACT 2601
Background
Trade of Commonwealth environmental water is an important management option that will assist in improving the capacity of the Commonwealth environmental water holdings to meet environmental objectives.
Commonwealth environmental water can be actively managed and this means that there are many possible options and decision points. Active management assists in improving the capacity of the holdings to meet the objectives of the environmental watering plan to protect or restore environmental assets of the Basin. Active management includes the trade of water. The Act provides authority for the trade of the holdings including the power to purchase, dispose of and otherwise deal in water and water access rights, water delivery rights or irrigation rights. Trade can occur both for allocations and entitlements.
There are a number of scenarios where trade of allocations or entitlements may assist in achieving the environmental objectives of the water holdings. For example, trade may assist in:
- establishing capacity to meet future environmental needs
- responding to varied conditions across the Murray-Darling Basin
- adapting to changing circumstances and information
- dealing with delivery constraints and / or opportunities, and
- realising value where immediate environmental water requirements have been met and carryover is not available.
In addition to the trade of allocations and entitlements, there are a number of alternative water products which may be considered in the future. These include option contracts, covenants and other agreements including leases. As the water market is still developing it is expected that some of these approaches will take time to fully mature.
Trade may be conducted in a number of ways. There are alternatives for engagement with the water market including using tenders, expressions of interest, water brokers or on-line water trading platforms. The preferred approach, or mix of approaches, will depend on the circumstances and will be assessed against criteria such as value for money, transparency / consistency of application, and timeliness.
The opportunity for trade arises because of differences in demand for water between agricultural users and the environmental water holdings. There is potential for mutually beneficial trades between the environment and consumptive users.
There is a legitimate public interest in Commonwealth environmental water trading both because the water is a publicly owned resource and because of the size of the holdings. The discussion paper sets out proposed arrangements to address these issues.