Frequently asked questions about River Murray water trading

What information is reflected on my unbundled River Murray water licence?

An unbundled water licensing system is where water access entitlements are provided as ‘unit shares’ in the available water resource or consumptive pool – currently only in the River Murray Prescribed Watercourse and the Southern Basins and Musgrave Prescribed Wells Area.

Your unbundled water licence specifies:

• name of holder and contact details
• water resource
• date of issue and expiry (if relevant)
• dates of any variation
• whole of licence temporary transfers, including reversion date
• water access entitlements including
• number of unit shares
• the consumptive pool (in this case the River Murray Prescribed Watercourse) to which the shares relate
• class of entitlement
• temporary transfers of water access entitlements including number of unit shares, their class and date of return of any temporarily transferred entitlements
• conditions – some classes of entitlements may have specific conditions.

Can I convert from one class of entitlement to another?

You can convert from Class 3a to Class 3b or vice versa if you are moving water in or out of the Qualco-Sunlands Groundwater Control Trust Area. You cannot convert between other classes, because the relative reliability of the water allocations under each class has not been fixed in the water allocation plan and depends on the Minister’s decisions in relation to allocation of water during drought.

To enable conversion between water access entitlement classes an exchange rate would need to be developed. A policy on exchange rates may be developed and, once established, conversion between classes may be possible. Until then, the unit shares will remain in the class they were issued and water allocations will be issued reflecting the water available for those classes under prevailing conditions.

Unless there is a condition on the water allocation, the water can be used for any purpose as long as you have a site use approval that covers that use. For example, Class 3 entitlement allocations can be used for irrigation, domestic, industrial or recreational uses, provided the site use approval covers these purposes.

Who can apply for a site use approval?

Any legal entity can apply for a site use approval, although the land owner will be required to counter sign if the applicant is not the land owner.

The approval will be assessed according to criteria set out in the River Murray Water Allocation Plan. Conditions on a site use approval will be those set out in the water allocation plan that are relevant to the location or type of water use applied for.

Can I transfer a site use approval?

A site use approval is not transferable because it is attached to the land parcel or parcels to which it applies. However it is possible to change the name on the site use approval, e.g. when land is sold, leased or there is a change in lease.

It is important for the purchaser or lessee to have a clear agreement on what will happen to site use approval with the sale or lease of land.

We will only change the name of a site use approval holder when it receives an application to vary the site use approval and change the holder’s name from the current holder. This is similar to an application to vary the name against the registration of a car when a car is sold.

Can I change a site use approval?

You can apply to vary a site use approval, e.g. to add parcels of land on which water can be used or to change the conditions of use.

In such cases new technical or site assessments may be required and a fee will apply. The application will be assessed against the relevant policies in the water allocation plan, e.g. for salinity and water use efficiency.

Changes to a site use approval can also be made by the Minister in limited circumstances such as where the water allocation plan has been changed or where the Minister considers the variation is necessary to more effectively regulate the taking of water from the resource in accordance with the relevant water allocation plan and the NRM Act, or in accordance with the objects of the River Murray Act 2003 or the Objectives for a Healthy River Murray under that Act.

Administrative amendments can also be made, such as correcting an error or changing contact details on the site use approval.

There is already a site use approval for a parcel of land. Can I apply for another one on the same parcel?

It may be possible for there to be more than one site use approval on a land parcel. However, each separate site use approval holder would need to have his/her own meter reference number for compliance purposes.

What happens if the land endorsed on the site use approval is sold, leased or there is a change of lease?

The current holder of the site use approval can apply to vary the name, similar to an application to vary the name against the registration of a car when a car is sold.

How does the salinity zoning policy affect site use approvals?

The Water Allocation Plan for the River Murray Prescribed Watercourse includes provisions to help manage salinity impacts from irrigation development. The provisions are implemented through site use approvals that specify the maximum volume of water that can be applied for irrigation on defined land parcels within salinity impact zones.

What if I use River Murray water outside of the River Murray region?

If you own a River Murray Prescribed Water Course licence, you may use the water outside of the Natural Resources South Australian Murray-Darling Basin region. This will require the same authorisations as if you were using the water within the region.

If you do not own a River Murray Prescribed Water Course licence but use a third party delivery provider (such as SA Water or Barossa Infrastructure Limited) who access SA Water’s water allocation, you do not need water resource works approval or a site use approval. However, if you currently require an imported water permit you will continue to require the imported water permit.

Who can apply for a works approval?

In order to construct any works you will need legal access to the land.

The water resource works approval will generally state a time limit of 12 months for the construction of the approved works and a requirement to notify the department when construction is completed.

The approval can cover the ongoing operation and maintenance of works. Therefore, water resource works approvals for these aspects can be ongoing.

Can I transfer a water resource works approval?

A water resource works approval is not transferable because it applies to a specific site and is attached to the land.

It is possible to change the name on the water resource works approval, e.g. when land is sold, leased or there is a change in lease.

The current holder of the water resource works approval needs to apply to vary the name, similar to an application to vary the name against the registration of a car when a car is sold.

Can I change a water resource works approval?

You can apply to vary a water resource works approval, e.g. to add locations from which water will be taken, or new extraction infrastructure.

In such cases, new technical or site assessments may be required and a fee will apply. Your application will be assessed against the relevant policies in the water allocation plan, e.g. about the location of pumps on backwaters.

You can also apply to vary the name of the water resource works approval holder when land has been sold or the lease has changed. The current holder of the water resource works approval needs to apply to vary the name, similar to an application to vary the name against the registration of a car when a car is sold.

Changes to the works approval can also be made by the Minister in limited circumstances such as a change to the water allocation plan or where the Minister considers the variation necessary to more effectively regulate the taking of water from the resource in accordance with the relevant water allocation plan and the Natural Resources Management Act 2004, or in accordance with the objects of the River Murray Act 2003 or the Objectives for a Healthy River Murray under that Act.

Administrative amendments can also be made, such as correcting an error or changing the contact details on the water resource works approval.

What happens if the land on which the works are situated is sold, leased or if there is a change of occupancy?

The current holder of the water resource works approval needs to apply to vary the name, similar to an application to vary the name against the registration of a car when a car is sold.

• See the frequently asked questions fact sheet about unbundled water licence rights
• Unbundling was possible under the Landscape South Australia Act 2019

Where can I find water market information?

While it is not possible to know the future price of water rights, it is possible to develop a more informed understanding of the likely direction of price trends based on ongoing monitoring of information relevant to you and your water market.

An understanding of water market behaviour and regular assessment of the key drivers of water markets and prices can help shape decisions around:

• The types of water right that will suit your business needs i.e. water allocation only, water entitlement only (high reliability or low reliability; with or without carryover); outright entitlement purchase or short-term entitlement lease; or a mix of each.
• The timing of your water purchases – at annual and seasonal time scales.
• The location of the water product (SA versus interstate) in relation to known and potential water restrictions.
• Using the forward water market to lock in a volume of water allocation at a set price for future delivery on an agreed date.
• Rebalancing your water portfolio as water resource conditions or your business needs change.
• Avoiding common trade restrictions by monitoring known trade limits between states/trading zones, considering contingency options in advance and acting sooner rather than later.
• Minimising your exposure to the water market by maximising your water-use efficiencies.

Check out our useful links to websites and information on water markets and trade.

Watch our video Overview of ‘waterflow’ - technology to help you navigate the water market.

Can I purchase water allocation for next year in the current water use year?

Yes. Some water brokers (not the department) facilitate ‘forward’ water allocation markets whereby a buyer may enter a contract with a seller to buy water allocation for a set price, with delivery at an agreed date in the future. Buying allocation from a seller on a forward basis can be beneficial in that it can mitigate against future pricing uncertainties. The delivery of the bought volume on the agreed delivery date is guaranteed by a contract provided by the broker and entered into between the seller and buyer.

Note that the forward water allocation market is a relatively new market offering by water brokers. As such, the availability of purchasing options may be much lower than the availability of allocation on the ‘spot’ market for the current water use year. The forward market will typically gain momentum:

1. Near the end of the irrigation season, when the total end-of-season usage can be better estimated; and
2. After state government agencies have provided their first water resource outlooks for the following water year, including in relation to forecast inflows and allocations and carryover, against which the likely water availability and water usage needs for the following year can be better assessed.

Forward water transfers are arrangements between a water broker and their customer. The department has no involvement in these arrangements and will only determine transfer applications when they are lodged with the appropriate fee.

Can I purchase River Murray water without owning any land along the river?

Yes. River Murray water rights (water access entitlements and water allocation) are able to be purchased independently of any land considerations, and independently of each other. This means that they are able to be purchased prior to, or after purchasing land and gaining other necessary approvals for the take and use of water.

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

What is the difference between a ‘Wet’ and a ‘Dry’ Entitlement Transfer?

Some water brokers offer sellers the opportunity to transfer entitlements ‘wet’ or ‘dry’.

When an entitlement is transferred ‘wet’, it means that all of the current year’s water allocation that has been made to the entitlement, from 1 July to the date of signing the water transfer contract, is included in the transfer price and made available to the buyer.

When an entitlement is transferred ‘dry’, the current year’s water allocation remains with the seller.

Whether an entitlement includes the current allocation or not can affect the entitlement’s asking price. In either case, new water allocation that is made to the entitlement after the date of signing the transfer contract is made available to the buyer.

The department has no involvement in these entitlement transfers and will only determine entitlement transfer applications when they are lodged with the appropriate fee.

What is ‘Tagged’ Entitlement trade?

If you own or want to buy a New South Wales or Victorian water entitlement and use the water allocation made to that interstate entitlement in South Australia, you can do this under a system known as ‘tagging’.

An entitlement that is ’tagged’ retains all of its original interstate characteristics, but the tagging arrangement makes clear that the intended use of the water allocation under that entitlement is in another state or another trading zone.

The form to establish a tag on an entitlement is available here (River Murray, Form T1). To order water allocation under a tagged entitlement to SA, you will need to contact our Water Licensing team in Berri on (08) 8595 2053.

Importantly, if you do own an interstate water entitlement, you do not need to establish a tag to receive water allocated under that entitlement in SA. You can just transfer the water allocation as required using a standard water allocation transfer form (Form A.1).

While you will pay an application fee to establish a tag on an interstate entitlement, the benefit of establishing a tag is that once the tag is in place, no further fees are required to maintain the tag or to order water allocation related to the tagged entitlement.

If you own entitlements in more than one trading zone, tagged trading is designed to help you manage and use your portfolio of allocations at a reduced cost.

If there is a restriction on water allocation transfers between two trading zones, the Basin Plan Water Trading Rules may require that the same restriction applies to orders for water allocation under a tagging arrangement. Whether the same restriction applies depends on the date that the tag was established.

For tags established:

• before 22 October 2010, restrictions on orders for water under a tag will not apply ever
• between 22 October 2010 and 24 November 2012, restrictions on orders for water under a tag will apply after 1 July 2019
• after 24 November 2014, restrictions on orders for water under a tag will apply.

Do I need a water licence or a water account before I can purchase River Murray water rights?

No. In South Australia a water licence will be established for you by the Department for Environment and Water (the department) upon your first approved water entitlement transfer. Similarly, a water account will be established upon your first approved water allocation transfer.

Are there any limits on the number of trades that I can make, or volume of water that I may trade each year?

No. 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.

Why should I report the correct price for my water trades?

Proper price reporting is a fundamental element of any well-functioning market.

Sellers are now required to report the price achieved for their water sales in the Murray‑Darling Basin under the Basin Plan Water Trading Rules (section 12.48); and the reported price must not include any land or other considerations.

Reporting erroneous trade prices distorts the market and may force you to pay a higher price than necessary when you next need to purchase water, or you may achieve a lower price than you ought to when you next need to sell water.

Notwithstanding the requirement of the seller to report the price of all water entitlement and water allocation trade in the Murray‑Darling Basin, there are legitimate reasons why you may enter zero dollars ($0) for the price of water on your water transfer form such as:

• You are transferring water to a family member at no cost
• You are transferring water among water accounts, perhaps linked to separate farms, which you use to maximise your business flexibility
• You are an environmental water manager using water trade to deliver water for the environment

Note that if you purchase a parcel of land with associated water rights, the land price and the water price should be provided as separate considerations.

New entry fields have been entered on all SA River Murray water transfer forms to facilitate accurate price reporting.

Will there always be water available for purchase on the River Murray?

The River Murray water market, together with the state water planning, management and entitlement frameworks underpinning it, is now effectively a ‘cap and trade’ system, which facilitates water trade. The system operates much like that of a financial market whereby natural forces of supply and demand are key determinants of price, volume and the directional movement of water within and among specified trading zones. Ultimately, market mechanisms should see water move to its highest value use in years of both low and high water availability.

In light of the above, there should always be water available for purchase. However, there has been a documented shift towards a reducing supply of water for consumptive purposes such as irrigation (due to recovery of consumptive water for environmental purposes) and increasing demand on the remaining consumptive water that has led to increased water prices (due to increased frequency of years of relatively low water availability, and an increase in water intensive permanent commodities like nuts). So, in the future, it is possible that there may be an inability to meet the total immediate demand for water allocation e.g. in consecutive dry years and/or periods of unprecedented drought.

Finally, note that even in years of relatively good water availability, it may be more difficult to purchase:

1. Specific types of water, such as high security water shares ¾ as these entitlements are in shorter supply and are more tightly held i.e. SA Murray Class 1 or 5, and NSW Murray and NSW Murrumbidgee High Security; or
2. Relatively small volumes of water (i.e. 10 ML) compared to larger volumes of water (i.e. 100 ML). This is because sellers may be unwilling to transfer small volumes, as transferring multiple small parcels of water incurs multiple fees.