Commonwealth Environmental Water Trading Framework
The Commonwealth environmental water holdings are actively managed which means 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).
To support trade, the Commonwealth Environmental Water Holder (CEWH) has developed the Commonwealth environmental water Trading Framework, which includes operating rules, procedures, and protocols. The trading framework has been developed to ensure that the CEWHs trading activities:
- support enhanced environmental outcomes;
- have regard to social and economic outcomes;
- consider impacts on the market, including any third-party impacts;
- are undertaken in a manner which meets legislative requirements;
- are financially responsible, fair, equitable, transparent and accountable; and that
- the CEWH and Commonwealth Environmental Water Office (CEWO) staff act with integrity and high ethical standards.
The development of the Trading Framework took into account submissions received in response to the Commonwealth Environmental Water – Trading Arrangements discussion paper which was released for public consultation in November 2011.
The Operating Rules provide clear guidelines on how the CEWH and CEWO staff will behave through the trading process including:
- The CEWH will not trade if aware of a water announcement that has not been made generally available.
- All trades will be undertaken using a competitive process.
- Decisions to trade will be informed by a market assessment.
- Price limits will be used in every trading action.
- Trade offers will be based on consistent, equitable and transparent assessments The CEWH will provide regular guidance on trading intentions.
- Trading actions will be announced prior to trade.
- Market information will be released prior to each trading action.
- Public reporting will occur following trading actions.
The protocols have been developed to assist the CEWH and CEWO staff in meeting their requirements as per the Basin Plan water trading rules and to reflect the CEWOs corporate values as an Australian Public Service agency.
The Basin Plan water trading rules govern how persons or agencies are to behave if they are aware of a water announcement that has not been made generally available that could materially affect a person’s decision to trade water. These rules come into effect on 1 July 2014.
The Protocols include:
- Chinese wall arrangements;
- avoiding exposure to inside information and conflicts of interest;
- disclosing and managing inside information and conflicts of interest if they arise ;
- record keeping and information management;
- being aware of water announcements and decisions to trade; and
- sanctions for breaches of the APS Code of Conduct.
Discussion paper and request for information
In order to help inform the development of water trading arrangements, a discussion paper on trade of Commonwealth environmental water was released for consultation over the period November 2011 to May 2012. Forty three submissions were received on the discussion paper from a range of stakeholders including national and state industry groups, irrigation corporations, state government agencies, water brokers and individuals.
A Request for Information was sent to water market intermediaries on 23 February 2012 seeking information on the services they could provide to support trading by Commonwealth Environmental Water Office.
Seven submissions were received on the request for information from water market intermediaries.
As indicated in the discussion paper, the next step in the process will be the public release of a position paper outlining our responses to the issues raised in the submissions. The position paper will inform development of operating rules which will establish the general framework within which trade will occur.
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: email@example.com, or by mail to the following address:
Commonwealth Environmental Water Office
Department of the Environment
GPO Box 787
Canberra ACT 2601