Buying and selling water

Water rights

Water rights are property assets and the ability to trade these rights offer a range of risk management benefits to individuals and water-using industries.

Why trade water?

• Increase your flexibility to manage variation in water availability (water allocations) within and across seasons. For example: (a) Water rights holders who are not currently using their full water allocation may sell or lease the unwanted allocation to another water user; or (b) Farmers and businesses who need more water allocation in the current year or water entitlement and/or allocation for future growth can purchase their requirements on the water market.
• Increase your flexibility to change water use and production arrangements in response to changes in resource availability, other external factors and business objectives
• Expand your business opportunities arising from the use of water rights to increase cash flow in the short-term and/or long-term
• Allow new farms and other water dependent industries to establish in areas where there is no unallocated water available. For example: Landholders that do not have any rights to access water but want to obtain water entitlement and/or water allocation for use on their property may purchase these rights through trade.
• Facilitate business contraction or exit by individuals from irrigation enterprises.

Water trade also ultimately sees water move to its highest value use, and by putting a dollar value on water, trade promotes water use efficiencies and reduced wastage.

Ways to trade

The department is the approval authority for transactions relating to water rights in South Australia.

Trade may occur by submitting a transfer application to the department as the approval authority accompanied by the transfer fee, which is specified on the transfer application. Further information about your region can be found via the links below:

• Adelaide and Mount Lofty Ranges transfer application information
• Eyre Peninsula transfer application information
• Northern and Yorke transfer application form
• SA Arid Lands transfer application information
• SA Murray-Darling Basin transfer application information
• South East transfer application information

Or please visit Water Licence and Permit Forms and click on the link for your prescribed water resource.

Information about what is required to complete an application form is on the form itself. A broker may also be able to assist with trade and transfer processes.

Tradeable water entitlements in the SA River Murray

All South Australian River Murray water access entitlement shares are tradeable except:

• Class 6 shares within the Metropolitan Adelaide Consumptive Pool
• Class 8 shares within the All Purpose Consumptive Pool (that is, Class 6 and Class 8 shares under the previous WAP).

Of the remaining share classes, the main tradeable consumptive entitlements are in Classes 1, 3 and 5 of the All Purpose Consumptive Pool. The total volume on entitlement in these classes is 621.736 GL (assuming allocations of 1 kilolitre per share or 100 per cent), and 98 per cent of that volume is within Class 3. The remaining share classes include:

• Class 2 in the All Purpose Consumptive Pool: these entitlement shares are held by SA Water to deliver water to country towns along the River Murray in SA
• Class 9 in the Wetland and Environmental Consumptive Pools: these entitlement shares are predominantly held for land and environmental water management purposes.

The separation of Class 9 entitlement shares across the Wetland and Environmental Consumptive Pools reflects differences in the ownership of the entitlement shares. i.e. shares in the Wetland Consumptive Pool are owned by the SA Minister for the River Murray, and the shares in the Environment Consumptive Pool are owned by the Commonwealth Government under Agreements with the South Australian Government.

• See a summary of the key characteristics of each SA River Murray water access entitlement share class in Table 2 of the Consumptive Pools fact sheet, developed by the former Natural Resources SA Murray‑Darling Basin.

Buying River Murray entitlements and allocations

You may be able to locate a willing seller of water allocation or water entitlement yourself; in which case you can submit the appropriate water transfer application form to the department, either by post or online, and pay the required fee.

A water broker can help you to buy or sell water rights through their website and client databases. Most water brokers use an electronic exchange, which can provide a good indication of market price, volume, depth and liquidity.

Buying River Murray water entitlements

There are many different water entitlement types available for purchase throughout the southern-connected Murray Darling Basin’. The ‘type’ of entitlement relates to its key characteristics including in relation to:

• the resource type that the entitlement belongs to i.e. watercourse water
• the flow regime of the particular resource, i.e. regulated (by dams and weirs) or unregulated
• the average annual reliability of water allocations that are made to the entitlement i.e. high reliability entitlements might receive an average annual allocation of close to 100 per cent of the entitlement volume, while low reliability entitlements may only receive some level of annual allocation in the wettest of years
• the tradeability of the entitlement/allocation to other regions or interstate
• whether unused water allocation is able to be ‘carried over’ from one year to the next and to what extent.

The characteristics of an entitlement type will determine its price. Because the characteristics vary greatly among entitlements within each state and between states, price differences can also be quite dramatic. As an example, as at January 2018, prices ranged from around $400 for low reliability entitlements in the Victorian Murray (interstate trading zones 6 and 7) to more than $5,000 for the highest reliability River Murray entitlements in South Australia (interstate trading zone 12).

Information and/or links to information about the most commonly transferred entitlement types within the southern-connected Murray Darling Basin is available here. Water brokers can help you to understand the main differences between the types of water entitlement on offer and which entitlements have the characteristics that may suit your personal or business needs.

Note the main tradeable consumptive water access entitlements in South Australia (Classes 1, 3 and 5) make up only a small proportion of the total volume of consumptive entitlements on issue throughout the southern-connected Murray Darling Basin. This means that as a South Australian water user, you have lots of options available to you in terms of purchasing additional water rights from, or selling surplus water rights to, a broader range of users across the system, including those in New South Wales and Victoria.

Buying River Murray water allocations

Unlike entitlements, water allocations have no defining characteristics other than they are available for use or trade in the current water year (or carried over, where permitted).

From a practical perspective, there are not different types of water allocation, and water allocation does not usually vary in price among states or trading zones in the River Murray system unless a restriction on trade between two places leads to differences in supply and demand within each of those places. You may purchase water allocation from another SA Murray water holder, or from a water holder in any connected state or trading zone in the Southern Connected System ― so long as there are no water allocation trade restrictions in place that would prevent such a transfer.

Interstate River Murray water allocation trade opportunities

Into South Australia

Generally, SA River Murray water users are able to purchase water allocation from within SA, or from water rights holders in NSW and Victoria with few restrictions.

This includes transfers from zones in the NSW and Victorian tributaries that are connected to the River Murray.

An exception is the purchase of water allocation from above the ‘Barmah Choke’ for extraction downstream of the choke. In this regard, the default position is that net trade is not allowed from upstream to downstream of the choke ― so from Zones 6 and 10 ― but it has been allowed in the past under particular circumstances.

• More information on the Barmah choke trade restriction
• Graphical illustration of the general water allocation trade opportunities into South Australia

Out of South Australia

Generally, water allocation transfers are also permitted directly from the SA Murray into the trading zones of the NSW and Victorian Murray (Zones 6, 7, 10 and 11) and by ‘back trade’ from SA into the trading zones of the connected NSW and Victorian tributaries.

An opportunity for back‑trade into a tributary arises when water has previously been transferred out of the tributary to the Murray but the out-transferred water has not yet been delivered by the Murray‑Darling Basin Authority, i.e. while the net volume of allocation ‘owed’ to the Murray system from the tributary is greater than zero. This is necessary because water cannot flow backwards.

• Graphical illustration of the general water allocation trade opportunities out of South Australia

River Murray transfer information

Interstate trades in the Southern Connected System of the River Murray need to be approved by the department as well as the interstate approval authority. The department coordinates this process on behalf of applicants, however you will also need to complete forms and pay applicable transfer fees to the interstate approval authority.

The approval of water allocation transfers on the River Murray is also subject to a ‘guaranteed processing date’, which is the third Friday in June. After this, we cannot guarantee that an allocation transfer application will be processed and approved before the end of the water use year (30 June).

For more information about the application process or to check the status of your application you can contact our Water Licensing Branch:

Email (all areas): DEWWaterLicensing@sa.gov.au

Buying River Murray water without owning land along the river

River Murray water rights (water access entitlements and water allocation) can be purchased independently of any land considerations, and independently of each other. This means that they may be purchased before or after purchasing land and gaining other necessary approvals for taking and using water.

Investors seeking to own water rights may also purchase River Murray water rights without owning any land.

You do not need a water licence or account before purchasing River Murray water rights. In South Australia, we will establish a water licence for you, free of charge, upon your first approved water entitlement transfer. Similarly, a water account will be established upon your first approved water allocation transfer. Note that a transfer fee is payable on the water entitlement or water allocation transfer itself.

In New South Wales (NSW) and Victoria, there may be account establishment fees to consider in addition to the usual transfer fees. For example, in NSW there are fees and the water account is called a ‘Zero Share Water Access Licence’ account.

There are no limits on either the number or volume of transfers that may be made each year. There are fees, however, associated with the transfer of water entitlements and water allocation so multiple transfers will attract multiple fees.

Restrictions on River Murray water allocation trade into SA

All restrictions on water allocation trade must now be consistent with and allowable under the Basin Plan Water Trading Rules, which took effect on 1 July 2014 (refer Chapter 12 of the Basin Plan). The Trading Rules require that the trade of surface water be free of any restrictions unless states can justify them for specific reasons like not being able to deliver water, or to avoid effects on third parties and/or the environment.

In practice, in agreeing to the Basin Plan, states have committed to increasing the efficiency of water markets by removing unwarranted restrictions, and increasing transparency and the availability of information about restrictions. In this light, it is anticipated that it will be relatively uncommon for states to impose new restrictions. However, trading patterns and volumes are changing and state governments, together with the Murray‑Darling Basin Authority will continue to monitor water trade within and between states and trading zones, to ensure impacts to third parties and the environment are appropriately managed.

South Australia supports an open, efficient and transparent water market and does not tend to invoke any restrictions on the transfer of River Murray water allocation within South Australia, or between South Australia and New South Wales and Victoria.

There are known limits on the volume(s) of allocation that can be transferred into and/or out of some trading zones in new South Wales and Victoria though, and there are other common interstate restrictions that are in force from time to time (and occasionally for extended periods) that affect transfer options into and/or out of SA.

• The most common transfer restrictions that can apply from time to time are described in this fact sheet on Restrictions on River Murray water allocation trade into SA.