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Water Holdings

The Commonwealth environmental water holdings comprise of both a portfolio of assets (water entitlements) and the accumulated annual yield of water (allocations) against those entitlements.

The Commonwealth Environmental Water Holder (CEWH) has legislated responsibility under the Water Act 2007 (Water Act) for decisions relating to Commonwealth environmental water, including the management of the portfolio so that it maximises environmental outcomes across the Murray-Darling Basin over time. The portfolio needs to be managed in accordance with the Water Act and the Environmental Water Plan.

The portfolio is diverse and includes most types of water entitlements in the Basin, including unregulated system entitlements. The water entitlements in the holdings retain the same characteristics as existed before acquisition. The portfolio is managed within the State government rules that apply to other equivalent entitlement holders (typically agricultural users). For example, the Commonwealth pays the same fees and charges for the holdings, receives the same annual allocations as equivalent entitlements, and operates within the same rules including the rules relating to carryover of water between years.

Barmah Choke transfer update

The Commonwealth Environmental Water Holder has recently transferred 135.6 GL of Victorian allocation from below the Barmah choke to above the choke. This was a non-commercial (zero dollar) transfer for an environmental release out of Hume dam between August and September 2015. This has increased opportunity for other water users to trade allocation downstream of the choke.

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What are the options?

To maximise the benefits of Commonwealth environmental water, the Commonwealth environmental water portfolio is actively managed which means the water may be:

  • delivered within the current year to meet environmental needs;
  • carried over to future years to meet future environmental needs; or
  • traded (disposal or acquisition).

Use of water within the current year. Decisions to use water are made after assessment against a Framework for Determining Commonwealth Environmental Water Use that focuses on the expected environmental outcomes.

Carryover water to future years. Decisions to carryover water for future use is based on current and future environmental needs and the carryover rules that exist for particular entitlements. Carryover arrangements vary significantly across the Basin. As a general principle water use is prioritised from entitlements where there is less capacity for carryover. For more information see carryover of Commonwealth environmental water.

Trade of the holdings. The Water Act 2007 provides for the disposal and acquisition of Commonwealth environmental water (entitlements and allocations). Such trade needs to be directed to achieving an improved environmental outcome and in most cases any proceeds from a disposal will be required to be spent on future acquisitions. For more information see Commonwealth environmental water Trading Framework.

Water allocations may be transferred between various accounts to implement the above management options. For example, when a decision is made to use water it is generally transferred to a delivery partner for the purpose of the agreed use. The water required for a particular water use action may be sourced from a range of entitlements. Transfers of allocation may also take place to improve the opportunities for carryover and facilitate trade of the holdings.

For further information about how water use, carry over and trade decisions are made please refer to the factsheet.

For more information on portfolio management, and future trading options, see the Portfolio Management Updates.

How does this compare to other water users?

The various portfolio management options are comparable to the type of options available to other owners of water entitlements. In some cases the decision may be to not pursue any of the above options and in these cases the rules associated with the particular type of entitlement would apply. In this circumstance the water that would otherwise have been available would typically be reallocated under the rules of a particular water sharing plan. This may result in reallocation of the water across all entitlement holders in a subsequent year.

Management of the Commonwealth environmental water holdings is subject to the same uncertainties that affect other owners of water entitlements. In making portfolio management decisions, the best available information is taken in to account including climatic, hydrological, environmental, market and catchment information. Continuous assessment of options occurs but the potential for changes in conditions (for example a sudden change in weather conditions) may mean that plans for the use of environmental water can change during the course of the year.

Portfolio management update - October to December 2015

The CEWH currently has no plans to trade permanent water entitlements.

Trading options under investigation

Opportunities to establish capacity to meet future environmental needs

The potential for trade (disposal or acquisition) of temporary water to help meet environmental demands has been actively considered as part of 2015-16 integrated planning for the use, carryover and trade of Commonwealth Environmental Water. The Commonwealth Environmental Water Holder (CEWH) is further investigating opportunities to trade water allocations during October to December 2015.

Due to prolonged drought, there are a number of northern Basin catchments where there is low water availability and high environmental demands (e.g. Macquarie Marshes and Narran Lakes) and supplementing supplies could assist in meeting these demands. However, there is currently limited market opportunity for allocation purchase and acquisition is unlikely to occur until water availability improves.

In the southern Basin carryover from 2014-15, along with current and forecast allocations in 2015-16 may provide the opportunity to sell 20 GL of regulated allocations held in the Goulburn river catchment without a material impact on the achievement of environmental  watering objectives. This would provide an opportunity to set aside the proceeds for a later purchase of allocations that will result in a net improvement in environmental outcomes in other areas of the Murray-Darling Basin.

The CEWO has been investigating the best mechanism for undertaking temporary trades. In line with key findings from the Scoping study into the use of intermediaries conducted by Marsden Jacob Associates (refer to Current Trade & Consultation) the CEWO is currently implementing improvements to streamline and automate its open tender processes.  Once system improvements are complete, anticipated by mid-late October 2015, the CEWO will consider preferred timing of potential trade actions. The CEWO will provide further information to the water market prior to undertaking any trading action, based on decisions made by the CEWH.

Trade with the objective of building capacity for future environmental needs would be implemented under Section 106(2) of the Water Act 2007.

More information

For further information regarding the trade of Commonwealth environmental water refer to the Commonwealth environmental water Trading Framework, which includes operating rules, procedures and protocols.

Other information regarding the management of the Commonwealth environmental water portfolio can be found on the following pages: