The Australian water market has grown and is recognised intentionally for its success. You can buy or sell your water rights permanently or temporarily. This helps control water usage by ensuring water is only used where it’s needed most. Like other water markets, the Australian water market undergoes regular reforms to make it efficient and effective. The Australian Competition and Consumer Commission (ACCC) controls the market to ensure traders adhere to the outlined regulations.
How the Market Works
Water trading in Australia operates on a demand and supply basis. The Water Act regulates this market under the authority of the ACCC and specific local governments. The markets are located in the regions including the Southern Murray-Darling basin, Northern Murray-Darling basin, and the area outside the basin’s boundaries. Unlike other businesses, traders determine the prices themselves. The government is only a facilitator and tracks the prices.
In the northern Murray- Darling basin, users can’t trade water from different rivers. You can only trade from the same river. In the Southern basin, the markets allow trading across states and different rivers, making it the largest market.
Ownership
To sell or buy water in the Australian water market, you must own it in terms of entitlements. Individual water users in a basin or catchment have entitlements by default. These entitlements define the amount of water used by each individual depending on the amount available in the basin or catchment. Entitlements can be described as water rights and are permanent. The water market involves buying and selling these rights either permanently or temporarily through a lease. Foreign water rights owners must register with the government.
Allocations
Apart from water rights, you can buy allocations from an individual. Allocations are small portions of an entitlement. In short, you pay an individual to use a portion of their water in a certain period, mostly one year.
Also read: Australian Water Markets And Its Benefits
Pricing
The prices of water in Australia are largely determined by demand. When there’s high demand, the prices go up and vice versa. The prices usually go high when the government is involved in buying water. The Australian government buys water in large volumes to maintain the environment. This causes the prices to escalate. When it rains, the prices go down since the water volumes are high. Traders agree on the prices, and these are the main pricing strategies
High-security rights
Larger farms with vineyards and orchards hold these rights. They guarantee a permanent water supply at any given time.
General-rights
These are for annual crops farmers. Those who grow cotton, rice, and other seasonal crops possess these rights. The water supply under these rights depends on the river from where the water is drawn.
Low-security rights
People have irrigation water for sale when the volumes in rivers are high due to high rainfalls.
Regulation
The state and territory governments stipulate the water rules. The rules are set following the water act of 2007. Commonwealth rules are also used to bring uniformity to the water market. These rules are designed to eliminate barriers in trade and enhance transparency. Additionally, they protect the markets from negative trading effects.
Water operators must define their water supply schedules and charges clearly. This transparency is important in keeping buyers from exploitation. They also determine the elimination fee limits when a buyer terminates water supply from an operator. To encourage uniformity in infrastructure, operators must adhere to infrastructure charges rules. The operator or water buyer can engage with the ACCC to be exempted from infrastructure rules.
The ACCC must enforce these rules and ensure traders operate within their jurisdiction. This commission must publish yearly reports concerning charges, infrastructure, and revenue on the water markets. In addition, the commission informs and advises the minister on different water operations.
The Australian water market plays a vital role in distributing water to different farmers. It’s responsible for the success of many farms within the country. Any individual within a water basin is entitled to permanent water rights. As an owner, you can sell your water rights to an individual, a corporation, or the government.
The government usually buys water from the citizens to maintain the environment. The traders determine the pricing, which can be high or low depending on supply and demand. Regulation of the market is by the state and local government. The ACCC acts as a watchdog in ensuring rules are followed and provides feedback to the government.