RGA Water Tool Kit by ricegrowers

Water tool kit

March 2022

Assistance with this tool kit The Ricegrowers’ Association of Australia Inc. (RGA) would like to acknowledge Jennifer McLeod for working with the RGA to compile the first version of this water tool kit in 2016. Without her efforts this important document would not have been produced. We also thank Murray Dairy for allowing the RGA to utilise the Murray Dairy – Dairy Australia Water Trading Took Kit, July 2015 when preparing the original document. This update to the tool kit was undertaken by Andrew Bomm of Progressive Agriculture.

The RGA also acknowledges the financial contribution of supporters of resource, as listed on the inside cover.

Published by the Ricegrowers’ Association of Australia (RGA) March 2022 ISBN: 978-0-646-86357-3 ©2021 Ricegrowers’ Association of Australia Inc. All rights reserved Electronically published by RGA in March 2022 Printed copies available by contacting the RGA Ricegrowers’ Association of Australia PO Box 706 Leeton NSW 2705 Australia www.rga.org.au email: rga@rga.org.au T. (02) 6953 0433 (International +61 2 6953 0433) F. (02) 6953 3823 (International +61 2 6953 3823) ABN: 65 191 537 636

Disclaimer While reasonable care has been taken to ensure the information in this “Tool Kit” is “true and correct,” the RGA gives no assurance as to the accuracy. The RGA and its contractor expressly disclaim to the fullest extent permitted by Australian Law all liability for any losses, costs or damages that may be incurred as a result of the use of or reliance upon the information contained herein, including without limitation, liability stemming from reliance on any part which may contain inadvertent errors, whether typographical or otherwise, or omissions of any kind.

This project is supported by Riverina Local Land Services through funding from the Australian Government.

This tool kit has been prepared to provide irrigators with information to improve their knowledge of and access to water information. It is intended to assist growers with their planning decisions including decisions about water ownership and purchasing strategies. The tool kit focusses on water availability in the southern Murray-Darling Basin (Basin) and delivery in the New South Wales (NSW) Murray and Murrumbidgee Valleys.

Water tool kit

Acknowledgement

The RGA wishes to acknowledge people of the many Indigenous nations across the southern Murray Darling Basin. We recognise the cultural importance of the river and pay respect to the sustainable way Indigenous people managed the landscape for 60,000 years.

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Contents

Water system summary

Water sharing - NSW

Water sharing - Victoria and South Australia

NSW allocations

Delivery in NSW

Trade

Key trends

Management options

Planning schedule

Information sources

Glossary

06 6

Water system summary Storage capacity Storages of varying sizes contribute to water availability for growers.

Menidee Lakes

677

1,731

NSW

Lake victoria

Burrinjuck Hume

3,055

3,334

VIC

Blowering Dartmouth

Eildon

1,026

1,631

3,856

Active storage volume of main storages in the southern Murray Darling Basin Storage and catchment

Full supply volume (GL)

Dartmouth (Mitta Mitta River - shared)

3,856

Eildon (Goulburn River - Victoria)

3,334

Hume (Murray River - shared)

3,055

Menindee Lakes (Darling River – shared )

1,731

Blowering Reservoir (Tumut River - NSW)

1,631

Burrinjuck (Murrumbidgee River – NSW))

1,026

Lake Victoria (Murray River - shared) Compliance

The connected southern Basin includes the River Murray (NSW, Victoria and SA) and Lower Darling downstream of the Menindee Lakes, the Murrumbidgee catchment, Goulburn/Broken, Campaspe and Loddon in Victoria. The water in storage on the Goulburn and Murrumbidgee belong to their respective states. Water in storages on the River Murray and in Menindee Lakes are part of the shared water resource (shared between the NSW, Victoria and SA Murray)1.

677 3,856

NSW takes control of the Menindee Lakes when storage falls below 480GL and the water is no long part of the shared resource, it reverts to being part of the shared resource when storage next reaches 640GL.

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Water sharing between states The Murray Darling Basin Agreement (the Agreement) specifies the sharing arrangements for the waters of the River Murray system between NSW, Victoria and SA.

50%

Waters of the River Murray are shared equally between NSW and Victoria with each State equally supplying SA with its entitlement flow.

NSW and Victoria retain water from their tributaries downstream of Hume Dam with the exception of the Kiewa, which is shared.

Each state can store a volume equal to 50 percent of the storage volume.

The volume available to each state is then shared with the state’s irrigators according to state regulations.

How are shares in the River Murray determined? •

NSW and Victoria each share 50 percent of the inflows into Dartmouth and Hume dams and the Kiewa River (which flows into the Murray just downstream of Albury)

•

NSW and Victoria each share 50 percent of the inflows in the Menindee Lakes when the Menindee Lakes are part of the ‘shared resource.’

•

Each state retains inflows from their tributaries, for example NSW retains inflows from the Murrumbidgee River and Victoria retains inflows from the Ovens, Goulburn, Campaspe and Loddon.

•

Victoria and NSW equally supply SA with its entitlement flow. SA’s annual water entitlement is a fixed quantity of water 1,850GL passing into South Australia.2

NSW and Victoria can store water up to half the capacity of the four Murray storages they share: Hume, Dartmouth, Menindee and Victoria. If a state’s half of the storage is full the other state’s volume is increased by the volume ‘spilt‘ by the ‘full’ state, unless a physical dam spill is occurring. This is called in ‘internal spill’.

NSW

VIC

Flows across the border above entitlement volumes are surplus flows to SA and not debited from their entitlement flow. Historically, SA has often received flows above their entitlement flow of 1,850GL. Further information about SA flows is available at https://www.environment.sa.gov.au/topics/rivermurray/river-management-information/flow-reports

State shares under the Agreement 2000 to 2020

Monthly up to date state shares in each storage are posted on the MDBA website. They can be accessed www.mdba.gov.au/ water-management/ allocations-statesmdba/water-sharing

Source: Interim Inspector-General of Murray–Darling Basin Water Resources, based on data provided by the MDBA

Distribution of water resource for 2021-22 (15th September – Minimum inflow scenario)

NSW, 24% Victoria, 26% SA Diversion Entitlement, 12% Conveyance, 11% Storage Loss, 9% Min Reserve, 9% Dilution and loss, 7% Conveyance Reserve, 2%

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MDBA role in allocations process

•

The Murray-Darling Basin Agreement has set the rules for how water is shared since 1914

•

States provide ongoing input into the water availability and sharing calculations through BOC and RMOC

•

Objectives and outcomes for River Operations in the River Murray System are set by BOC

MDBA calculates Basin state shares by:

The water liaison working group reviews assumptions

Predicted how much water will be available for the year

Working out what is in the state’s share today + historical storage

+ year-to-date use

+ inflows

MDBA advises states of water availability at different risk levels

+ future inflows

– use

– future conveyance

– conveyance – evaporation

States conduct allocation calculation based on state priorities and risk appetite (allocation assessment)

– future evaporation – reserves

States publish allocations

Managed by MDBA

Managed by states

Commitees involved in process: Water Liaison Working Group – Technical representatives from NSW, Vic, SA and Commonwealth Basin Officials Committee (BOC) – Senior officials from the 6 Basin governments River Murray Operations Committee (RMOC) – Officials from governments of NSW, Vic, SA and Commonwealth Independent River Operations Review Group (IRORG) – Independent experts nominated by states

IRORG reviews MDBA river operations, and water sharing annually

Water allocated by consumptive licence types

Source: Aither 2021. Based on Victorian, New South Wales and South Australian water registers, 2021.

Water sharing when water supply is limited The Agreement contains rules for determining South Australia’s share when there is not sufficient water to supply SA’s entitlement, with NSW and Victoria continuing to supply equally the volume SA is entitled to. The Agreement requires NSW and Victoria hold a minimum reserve (sometimes referred to as the mandatory reserve) except during periods of special accounting. The minimum reserve is 835GL, with each state required to provide 417GL. During periods of special accounting the minimum

reserve may be reduced, with each state still required to hold half of the remaining reserve. NSW and Victoria can store water up to half the capacity of the four Murray storages they share: Hume, Dartmouth, Menindee and Victoria. If a state’s half of the storage is full the other state’s volume is increased by the volume ‘spilt‘ by the ‘full’ state, unless a physical dam spill is occurring. This is called in ‘internal spill’.

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Water Availability

Recent water availability has been highly variable.

Long term average annual yield has been declining for lower reliability water entitlements.

Total River Murray system inflows 1895 to 2020

Source: Interim Inspector-General of Murray–Darling Basin Water Resources, based on data provided by the MDBA

Total inflows from and NSW tributaries 1895 to 2020 8,000

6,000 5,000 4,000 3,000 2,000 1,000

0 20

5 20

0 20

5 19

0 19

5 19

Driest 10% of years

0 19

5 19

0 19

NSW Tributary Inflows

0 19

5 19

0 19

5 19

/1 19

5 19

/0 04

0 18

Inflows (Gigalititres per year)

7,000

Estimate from January 2020

Source: Interim Inspector-General of Murray–Darling Basin Water Resources, based on data provided by the MDBA

Change in River Murray system inflows Long term average annual yield explained The long term average annual yield (LTAAY) for the different water entitlements in each valley quantify the expected long term annual yield of different entitlements, thereby allowing comparisons between them.

NSW share of inflows

NSW share of inflows Victorian share of inflows

Victorian share of inflows

The Murray Darling Basin Cap (The Cap) on diversions introduced to limit surface water extractions in the Basin. The Cap applies valley by valley and in the case of the Murray there is a NSW, Victorian and SA Cap. In Murrumbidgee Valley and NSW Murray the Cap on diversions is based on 1993/94 levels of development. The LTAAY of the main entitlement types in the southern Basin used for Basin Plan water recovery is included in state WSPs. The actual yield on entitlement for the past 20 years is covered later in the report at pages 24 and 33.

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The Snowy scheme Snowy Hydro is required to release minimum volumes into Murray and Murrumbidgee storages by 30 April each year. This water is included in allocation announcements.

Water captured by Snowy Hydro at the system’s headwaters and stored is then released through their tunnels and power stations to the Murray and Murrumbidgee catchments. The Snowy Water Licence sets a minimum release by the licensee (Snowy Hydro) over its Snowy water year from 1 May to 30 April, called the Required Annual Release (RAR).

1,062GL

1,026GL

Murray RAR

Murrumbidgee RAR

Snowy Hydro is obligated to release its RAR by 30 > April below target water Snowy may release volumes up to 200GL in excess of the RAR, subject to downstream flooding issues > above target water In periods of low inflows, the volume of water released annually to the Murray and Murrumbidgee catchments is reduced. Information about Dry Inflow Sequence Volume (DISV) is available www.snowyhydro.com.au/wp-content/ uploads/2011/11/Water_Reference_Report_0708.pdf

Image courtesy of Snowy Hydro

Water use by industry

Water use by cotton and horticulture have increased as a percentage of total use

Water use by the rice and dairy industries has decreased since the Basin Plan

Total inflows from and NSW tributaries 1895 to 2020 120% 100% 80% 60% 40% 20%

Coleambally Irrigation Cooperative Ltd (CICL)

20 /2 20

15 /1 20

10 /1

6 20

05 /0 20

1 20 /2 20

20 15 /

10 /1

Murray Irrigation Ltd (MIL)

05 /0 20

20 /2 20

15 /1 20

10 /1 20

05 /0

Murrumbidgee Irrigation Ltd (MI)

Rice

Nuts-plantation

Winter crops

Pasture

Stock and domestic

Citrus & Vines

Summer Cereal & Oil Seed

Cotton

Other

Source: RGA. “Other” includes Horticulture for MIL & CICL. Also includes includes Cotton & Corn in MIL. The major contributor to increase in “Other” for MIL is summer crops other than rice particularly cotton & corn. These crops are not recorded in MIL’s water ordering system.

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Water recovery under the Basin Plan

The government has invested in shifting some agricultural water use to the environment, resulting in lower supply for irrigation.

The Basin Plan water recovery process is nearly complete, though there is uncertainty about the source of remaining recovery efforts.

Basin Plan starting point - Baseline surface water diversions (excluding interception) for Southern NSW, Northern Victoria and SA in GL Since the early-mid 2000s governments have been investing in water recovery to provide more water for the environment. This investment has reduced the volume of water available for irrigated agriculture. The most significant change is the Murray Darling Basin Plan (Basin Plan). Water recovery for the Basin Plan commenced prior the finalisation of the Basin Plan in 2012. When fully implemented the Basin Plan will reduce consumptive diversions in the Basin by 2750GL, with a new Sustainable Diversion Limit (SDL) for each catchment3. The Basin Plan effectively sets a new, lower Cap on diversions. Information about up-to-date Basin Plan recovery is available www.mdba.gov.au/progress-water-recovery

SA, 683 Victoria, 3,493 Southern NSW, 3,708

Total – 7,844GL

The Basin Plan also includes setting SDLs for groundwater, this Tool Kit’s discussion of the Basin Plan is limited to surface water reductions.

The Basin Plan allows for the 2,750GL reduction by a combination of the following measures, in approximate GL

1,231GL

2,750GL

Direct entitlement purchase

876GL

2,750GL

Water efficiency use infrastructure in exchange for entitlement

605GL ‘Supply works’ to generate GL equivalent outcome

2,750GL

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The reduction is around 28 per cent for southern NSW compared to the baseline. This reduction is replicated in Victoria and South Australia.

Water sharing - NSW Water entitlements provide access to a share of the available resource. Water allocations represent how much water is available at any given time.

Different entitlement types are given different priority and have different reliability from year to year. Allocations in NSW are covered in another chapter.

The rules determining the seasonal allocation of water are included in water sharing plans for the Murray and Murrumbidgee.

Carryover rules dictate how irrigators can manage water risk across seasons.

Water ownership rights Access to water in the NSW Murray and Murrumbidgee is regulated by water sharing plans (WSPs) for each valley, under the Water Management Act 2000 (NSW). Water sharing plans underpin the value of entitlement assets by providing a defined legal right to extract water. Water sharing plans set out the rules for: • •

Sharing water between users and the environment in each water source Trading of water allocated within the source

Further information about WSPs is included further below.

Water access rights are held via a Water Access Licence. More information about WALs is included www.waternsw.com. au/customer-service/water-licensing/about-licences/wateraccess-licences The water season runs from 1 July to 30 June. Allocations against entitlement are made until 15 April each year, on the 1st and 15th of each month. The actual allocation volume available to use and trade in any year is variable, determined by rules in the relevant Water Sharing Plan and influenced by volume of water available from inflows and seasonal conditions.

Entitlement specified share of the a available water within a water source

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Allocation actual volume of water available in any given season as a proportion of entitlement owned

Wet year

Dry year

Your allocation In a wet year more water is available

Your allocation In a dry year less water is available

Categories of water access licences Example John owns 1000ML of General Security entitlement

The priority for allocating water to the different regulated river licences is as follows, highest to lowest:

100% allocation

1000ML available for use

•

local water utility

60% allocation

600ML available

•

domestic and stock

•

high security

•

conveyance water

•

general security

•

supplementary

1000ML General Security Entitlement 60% Allocation

600mML

100% Allocation

1000ML

Information about the volumes available to each licence class are covered in the chapter on NSW allocations below. A breakdown of the share component of each licence type is included www.industry.nsw.gov.au/water/allocationsavailability/water-accounting/share-component-dashboard Ground water rights exist under a separate water sharing plan. More information on groundwater rights in the Murrumbidgee is available www.legislation.nsw.gov.au/view/html/inforce/current/ sl-2019-0303 Regulated river, groundwater and supplementary water licences are permanent rights. Specific purpose licences such as stock and domestic must be cancelled when the purpose for which the licence was issued ceases.

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Reliability of surface water in NSW Water availability across the southern connected Basin has been volatile in both the Murray and Murrumbidgee valleys.

Average annual yield on NSW southern Basin entitlement types As the lowest priority entitlement, General Security is the most volatile licence type, with potential annual allocation from zero to 100 per cent.

Storage and catchment NSW Murray High Security

97%

NSW Murray General Security

56%

Murrumbidgee High Security

95%

Murrumbidgee General Security

56%

General Security End of Season Announced Allocation

21 year and 10 year average announced allocations

Murrumbidgee GS

63 96 97

Murrumbidgee HS 53

NSW Murray GS

63 90

NSW Murray HS 0

40 10 year average

80 21 year average

95 100

120

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Carryover In the Murray and Murrumbidgee Valley the water year runs from 1 July to 30 June (note annual trade closes from May onwards depending on circumstances). Carryover occurs where water remaining in a water allocation account at the end of the season can be carried over from one irrigation season to the next. Carryover rules are described in the WSPs. There are limits on the volume that can be carried over, as a proportion of entitlement.

Murray

50%

Murrumbidgee

of general security entitlement volume

Carryover is automatic - there is no need to apply and no loss factor applies in NSW. Carryover in NSW provides a risk management tool for irrigators. Using carryover, general security entitlement holders can manage between water year variability, particularly the risk of low early season allocations.

30%

of general security entitlement volume

Carryover in summary •

Carryover provides general security entitlement holders with a ‘tool’ to manage between year variability in water availability.

•

Carryover will increase the volume available to you at the start of the water year, but in a better water availability year individuals with high levels of carryover will have less water allocated to them.

•

Carryover is not lost when a dam spills.

•

Once an individual’s allocation account limit is reached no more allocation water is allocated to this account, i.e. additional allocation is forfeited. The forfeited water is allocated to general security licence holders with less carryover up to the maximum of 110 percent in the Murray and 100 percent in the Murrumbidgee Valley.

•

In the NSW Murray, carrying over a minimum of ten percent maximises the volume you potentially get allocated.

•

Decisions about whether to carryover or not should take into account the end of season storage levels and the seasonal conditions.

•

Water traded out of an account is part of the account limit and water traded in is in addition to the account limit.

•

Supplementary or off allocation water use may be part of the maximum account limit in the NSW Murray and Murrumbidgee in some circumstances.

•

NSW carryover rules are different to Victoria.

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Carryover – NSW Murray Irrigation Here are examples of how carryover works for two different customers in Murray Irrigation.

50% carryover Maximum account 110% Example zero carryover Trade in Off-allocation use

Trade in and off allocation increase volume available

100% gs 1,000ML

Zero carryover

60% allocation 600ML

Trade in 200ML 20%

800ML available or 80%

100% allocation plus trade 1,200ML

Offallocation 150ML or 15%

50% carryover Maximum account 110% Trade out

Maximum account 110%

Account full - no more improvement allocated

100% 1,00 g.s. water entitlements

50% carryover 500ML

60% allocation 100% available 1,100ML

Trade out 200ML 20%

90% remains 900ML

1,350ML available

Water Sharing Plans The rules for access to all surface and groundwater in the Murray and Murrumbidgee valley is described in the water sharing plans (WSPs).

The following WSPs apply to the surface water WALs in the NSW Murray and Murrumbidgee. •

Water Sharing Plan for the NSW Murray and Lower Darling Regulated River Water Sources 2016: https:// legislation.nsw.gov.au/view/html/inforce/current/sl-20160366

•

Water Sharing Plan for the Murrumbidgee Regulated River Water Sources 2016: https://legislation.nsw.gov.au/view/ html/inforce/current/sl-2016-0367

•

Water Sharing Plan for the Lower Murrumbidgee Groundwater Sources 2019: https://legislation.nsw.gov. au/view/html/inforce/current/sl-2019-0303

Assist with

The Department of Primary Industries are obliged to follow the Rules in the WSP unless the Plan has been suspended. The priority for allocating water to licences in the WSP needs to be consistent with the Water Management Act. The key features of the two WSPs most relevant to irrigators in southern NSW are described in the tables below. Under the Basin Plan, state governments are responsible for submitting existing WSPs to the MDBA for accreditation as Basin Plan compliant Water Resource Plans. At the time of publication, the Murray and Murrumbidgee WSPs had not yet been accredited as compliant Water Resource Plans under the Basin Plan.

de ve lo p

t en m Basin states starts development

Basin states consult with local communities, water users, peak bodies and Aboriginal Nations

Basin state WRP submission to the MDBA

Murray-Darling Basin Authority (MDBA) gives feedback to assist states throughout development

MDBA assesses WRP and provides advice to minister

Assess

Minister decides whether to accredit WRP

Accredit

Once accredited the WRP is operational

Basin state finalises WRP Northern Basin Aboriginal Nations/Murray Lower Darling Rivers Indigenous Nations assess Traditional Owner consultation and provide advice

Source: MDBA

The Department of Agricultre advises the minister on the MDBA’s recommendation

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Water Sharing Plan for the Murray Lower Darling Regulated River Water Sources 2016 Access Licence

Key Features

General Security

Maximum announced allocation 110% Maximum carryover 50% Carryover plus announced allocation cannot exceed 110% net of any allocation trade Barmah/Millewa Forest Allocation can be borrowed when general security less than 30%, repayment commences once 30% is reached. Tradeable

High Security

Maximum announced allocation 100% Carryover – not available Maximum announced allocation where general security <95% - 97% Tradeable Increases above 97% to 100%, with high security being 1% more than general security up to the maximum of 100%

Supplementary water

Maximum announced allocation 100% Availability subject to unregulated or surplus flows. In addition to general security account limit if a supplementary licence held. Tradeable (restrictions apply). General security licence holders can access supplementary water when the announced allocation for general security is <65% - however any supplementary use is included in the allocation account maximum. At some times of a water year, Murray Irrigation may make off allocation water available. When this occurs water delivered is not debited from the customer’s water allocation.

Unit shares

General security High security Local water utility Domestic and stock Conveyance Supplementary water

Trade limits

Barmah/Choke restriction. Allocation trade from upstream of the Barmah Choke to downstream, at times can be restricted. Further information including account balances can be found at: https://www.mdba. gov.au/managing-water/water-markets-trade/interstate-water-trade/barmah-choke-trade-balance

Annual trade deadlines

Inter-state trade closes 30 April Inter valley and intra valley trade closes 31 May

1,672,226 191,698 33,497 17,102 330,000 252,579

Water Sharing Plan for the Murrumbidgee Regulated Water Sources 2016 Access Licence

Key Features

General Security

Maximum announced allocation 100% Maximum carryover 30% Carryover plus announced allocation cannot exceed 100% net of any allocation trade Tradeable

High Security

Maximum announced allocation 100% Carryover – not available Maximum announced allocation where general security <95% - 95% Tradeable Increases above 95% to 100%, with high security being 1% more than general security up to the maximum of 100%

Supplementary water

Maximum announced allocation 100% Subject to unregulated or surplus flows. In addition to general security account limit, if a supplementary licence held. Tradeable (restrictions apply) General security licence holders can access supplementary water when the announced allocation for general security is <70% - however any supplementary use is included in the allocation account maximum of 100% including carryover and supplementary use unless a supplementary water licence is held.

Unit shares

General security 1,891,995 High security Local water utility Domestic and stock Conveyance Supplementary water Lowbidgee

364,278 23,816 10,626 373,000 198,780 747,000

Trade limits

A 100 GL undelivered (allocation) Inter Valley Trade limit applies. Further information is available at: https://www.waternsw.com.au/customer-service/ordering-trading-and-pricing/trading/murrumbidgee

Annual trade deadlines

Inter-state trade closes 30 April Inter valley and intra valley trade closes 31 May

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Supplementary water use within Murrumbidgee Irrigation

Water used within Irrigation Corporations

Murrumbidgee Irrigation has different types of surplus water including:

Irrigators’ statutory water rights with the NSW Government exist as contractual rights with their Irrigation Corporation.

•

General security surplus water

•

Supplementary water allocation

The NSW Irrigation Corporation holds the statutory WALs, also referred to as ’bulk entitlement’.4

•

Internal (history of use) water

•

Internal (non-history of use)

•

Internal (storage) water

For example, Murrumbidgee Irrigation holds a bulk General Security water access licence (WAL), which is a share of the resource held for members.

Subject to the Rules annual allocation and permanent trade of surplus water and supplementary water is possible. Irrigators should confirm with Murrumbidgee Irrigation the rules for their specific geographic circumstances, including where surplus or supplementary water use is in addition to the 100 percent account limit. Murrumbidgee Irrigation rules for sharing of surplus water are available www.mirrigation.com.au/ customers/contracts-and-rules

Supplementary water use within Coleambally Irrigation Co-operative Limited (CICL) Some irrigators have rights to access water from CICL’s supplementary water licence (these rights were issued based on history of use). Irrigators with supplementary rights can use supplementary water up to the volume held in addition to their 100 percent allocation account limit. Only general security entitlement holders in CICL without supplementary rights can access supplementary water, however any use is part of the limit of 100%.

Each IC has WALs for regulated river high security, general security, conveyance, supplementary and local water utility.

Water sharing – Victoria and SA Victorian water shares and allocation In northern Victoria there are two entitlement types held by irrigators, High Reliability Water Share (HRWS) and Low Reliability Water Share (LRWS)

Victoria has less entitlement volume for irrigators but it has higher reliability than NSW General Security entitlement

DISTRICT SERVICES

Nyah Irrigation District

IRRIGATION AREAS

Woorinen Irrigation District

Tresco Irrigation District

WATER DISTRICTS

Shepparton Tungamah Central Goulburn East Loddon Rochester-Campaspe West Loddon Loddon Valley Normanville FLOOD PROTECTION DISTRICT Murray Valley Loch Garry Torrumbarry

Victoria GMW Region

Rive

Kerang rna Channe l

Pyramid Hill KOW

Broken

SWAMP National Channel

ve r Ri

as pe

mp Ca

ta M

ive

Lake Buffalo

itta

Dartmouth Dam River

Goulburn Riv

Lake William Hovell

Mit

Source: Goulburn-Murray Water

Lake Nillahcootie

Riv

Stuart Murray Canal

Goulburn Weir

Lake Eppalock

Lake Eildon

Sugarloaf Pipeline

Hepburns Lagoon Newlyn Reservoir

Waranga Basin

Hume Dam

wa Kie

Tullaroop Reservoir

a Ch

rray

Wangaratta

Broken

e nn

Cattanach Canal

Cairn Curran Reservoir

r Mu

er King Riv

Goldfields Superpipe

Shepparton

Rive

River

Lodd on

Rochester Kyabram Tatura

Yarrawonga Weir

Laanecoorie Reservoir

Yarrawonga Main Channel

Cre

gaWestern

ran

Cobram

River Murray

Torrumbarry Weir

Maco

Eas Maint Goulb Cha urn nne l

Mildura Weir

N Great Dividing Range

SCALE OF KILOMETRES 0

100

150

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Like in NSW, a Victorian water share is an ongoing entitlement to a share of the water available in a system and can be held separately to land.

The water share is linked to an allocation account (ABA) which keeps track of allocations available to the water share. It includes water use and trade.

Features of a water share include:

Victoria’s allocation policy is more conservative than NSW, with larger volumes set aside as reserves for future years than NSW. An explanation of Victoria’s allocation policy can be found at www.nvrm.net.au/seasonal-determinations/how-allocationswork

•

water system eg Goulburn or Murray

•

reliability eg high or low reliability

•

volume eg 100 megalitres (ML)

Water availability in any given year is allocated against water shares. The seasonal allocation is the percentage water share volume available under current resource conditions, as determined by the resource manager.

Murray

89%

Victorian low reliability water receives no allocation except flood years. These entitlements are used to carry water across years without risk of spill. In Victoria allocation announcements are made at 10am on the 1st and 15th of each month, visit www.nvrm.net.au/seasonaldeterminations/current

Goulburn

HRWS average reliability

88%

From 2007/08 to 2020/21

1,281GL

321GL

Murray HRWS

Murray LRWS

983 GL

427GL

Goulburn HRWS

Goulburn LRWS

(960 GL below choke)

As at season 2020/21

(191 GL below choke)

HRWS average reliability

Carryover in Victoria

100%

Goulburn and Murray low reliability entitlement can carry 100% without risk of spill

Victorian carryover is used a tool to smooth fluctuations in supply and water costs

Water can be carried on high reliability shares, but subject to spill

Victorian carryover – how does it work? Water can be carried over on both HRWS and LRWS up to 100% of the volume of water shares attached to an allocation account. There is a five percent reduction on water carried over from one season to the next to allow for evaporation. If both HRWS and LRWS are attached to an allocation account, any water carried over will be carried over against LRWS. Once the 100 percent limit has been reached the remaining water carried over will automatically be carried over against HRWS. Once the combined volume of water carried over and announced allocation reaches 100 percent of the water shares, any further allocation against water share will be transferred to a spillable account. Water in the spillable account cannot be accessed until the Northern Victorian Water Resource Manager announces a

low risk of spill. A low risk of spill is defined as a less than 10 percent chance the storages will spill for the remainder of the season. Once a low spill risk has been announced, water in the spillable account will be transferred back to the allocation account and is available for use, sale or carryover into the next season. The Northern Victorian Resource Manager makes monthly ‘risk of spill’ announcements on 10th day of each month until access to spillable accounts is declared. If the storage spills then water will be deducted from the spillable accounts in proportion to the spilt volume (i.e. if 200GL is in the spillable account and 100GL is spilt, then spillable accounts will be reduced by the equivalent percentage i.e. 50 percent). You can find out more about the carryover rules that apply in each system www.waterregister.vic.gov.au/water-entitlements/ carryover

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South Australian irrigation water

607GL

100%

Class 3 irrigation entitlements

Average annual yield

Carryover is available for access under specified conditions

River Murray Water Available to South Australia Storage Right River Murray System Conveyance

Deferred water from a previous year

900 FL u/s SA

SA State Water Share Up to 1154 GL Consumptive Entitlement

696 GL in SA

696 GL Dilution and Loss River Murray water available to SA

Further information about SA’s system is available via the SA Water Allocation Plan: river-murray-wap-final-gen.pdf

Deferred water for CHWN and Private Carryover SA Entitlement - Provided 50:50 by NSW/VIC - 1/3 share of River Murray resource up to 1154 GL - No access to NSW/VIC tributary flows

NSW allocations How water is allocated

Allocation availability depends on inflows into storages

The available water resource is allocated under Water Sharing Plan rules

Allocations include volume in storage plus expected inflows and Snowy releases

How much water is available in the storages Minimum forecast inflows into the storages that are expected during the year Required annual release (RAR) from Snowy Hydro Volume required to ‘run the river’ and planned environmental water Forecast volume of carryover

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Priority for water allocations – Murrumbidgee

Priority

23GL Town Water

19GL Stock and Domestic

373GL Conveyance

363GL High Security

1,890GL General Security

199GL Supplementary

ML Volume

NSW Murray allocation process

Bulk Resource

MDB Agreement and Operational

NSW Resource

Stock & Domestic Towns (~62 GL) High Security (97% - 184 GL), Carryover and MAA (6 GL) Conveyance (50% - 165 GL) General Security and Conveyance Barmah Millewa Allowance Reserves for next year high priorities

Forecast inflows are conservative and irrigators can expect in 99 percent of seasons inflows will be greater than forecast and allocations will increase as the season progresses. This conservative forecast hinders early allocation. Snowy Hydro releases are influenced by whether Snowy is experiencing a Dry Inflow Sequence, if this is the case as the season progresses, assuming inflows improve the RAR from Snowy will also increase. If there is no DISV than the unadjusted RAR volume is included upfront.

A breakdown of the share component of each licence type is included www.industry.nsw.gov.au/ water/allocations-availability/water-accounting/sharecomponent-dashboard

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Allocation announcements

DPIE Water allocate water at the beginning and middle of each month

Allocation statements include details about the volume allocated to the different licence types

NSW DPIE Water make allocation announcements on the 1st and 15th of each month5 until 100 percent general security is announced, or until the final announcement late in the water year (typically 15 April). Examples are included on the following page. There is also excellent data available on water volumes allocated and used in NSW.

Links DPIE Water allocation announcements www.industry.nsw.gov.au/water/allocations-availability/allocations/statements

NSW Water insights portal - volumes allocated www.waterinsights.waternsw.com.au/

NSW Trade dashboard – volumes used www.industry.nsw.gov.au/water/allocations-availability/water-accounting/usage-dashboard

Or on the next business day if the 1st or 15th fall on a weekend or Public Holiday.

Murray example announcement NSW Murray resource assessment data sheet Resource Distribution* (16 August) for 2021-22

Volume (GL)

Total Available Resource(1)

1,900

less

52%

Carryover(2),(8)

720

Rules based Environmental Water(3)

144

Towns, Stock, Domestic(4)

62 (100%)

Announced High Security subcategory(4)

<1 (100%)

Announced High Security(4)

184 (97%)

Conveyance(5)

203 (62%)

Wakool Allowance(6)

Reserves(7)

Announed General Security(8)

502 (30%)

Water Allocation Statement Year 2 (2022-23) high priority needs

(9)

Water availability and allocation update

NSW Murray resource distribution 2021-22 – 16 August 2021 NSW Murray resource distribution 2021-22 – 16 August 2021 e-water (146* GL)

e-water (177* GL) e-water (146* GL)

e-water (177* GL)

Total = 1,900 GL

consumptive use (356* GL)

2021/22 High Priority needs 0 GL

Total General Security 502 GL

Total GS Carryover 720 GL

Reserves 15 GL Wakool Allowance 70 GL Towns, S&D 62 GL

High Security 184 GL (97%)** Conveyance 203 GL

consumptive use (543* GL)

Rules-based Env Water 144 GL

* indicative breakdown of held environmental water holdings (OEH, TLM, CEWH), refer to note ** includes <1GL (100%) for HS subcategory

Data sheet notes (1)

Total available resource - NSW’s state share of active storage volume (Hume, Dartmouth, Menindee and Lake Victoria) as assessed and accounted for under the Murray-Darling Basin Agreement at the time of the assessment plus any usable flows in transit plus assumed (99%ile) inflows for the rest of the year plus S nowyHydro’s assured Required Annual Release (RAR) (including anyflex (pre-release) from the prior year), as well as estimated usage to date. Snowy Hydro’s M1 releases to date for this water year (202 1-22) is estimated to be about 410 GL. NSW is in Special Accounting with South Australia (SA) as of 1 August 2021. The details of Special Accounting can be

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Murrumbidgee example announcement NSW Murray resource assessment data sheet Resource Distribution* (16 August) for 2021-22

Volume (GL)

Total Available Resource(1)

3,042

less Carryover(8)

415

Rules based Environmental Water(2)

254

Towns, Stock, Domestic (100%)

Reserves(3)

Conveyance(4)

355

Announced High Security (95%)

348

(transmission, evaporation, operational) Water Losses Allocation Statement

444

(5)

Murrumbridgee IVT account (carryover on 1 July)(6)

Announed General Security (52%)(8)

985

Water availability and allocation update Year 2 (2022-23) high priority needs(7)

Murrumbidgee resource distribution 2021-22 – 16 August 2021 Murrumbidgee resource distribution 2021-22 – 16 August 2021 e-water* 99 GL

Total Resource 3042 GL

478 1892

e-water* 249

Supply Distribution(9) Consumptive Use 316 GL

Total Carryover 415 GL

Total GS 985 GL

Usage to-date 7 GL

Rules based Env Water 254 GL

Consumptive Use 736 GL Conveyance 355 GL 2022/23 High Priority Needs 0 GL IVT balance 92 GL *Indicative breakdown of held environmental water holdings (OEH, TLM, CEWH), refer to note 8.

Minimum inflows 621 GL

Losses 444 GL

Reserves 75 GL

Total = 3042 GL

1414

Blowering Dam 1507 GL

High Security 348 GL Burrinjuck Dam 907 GL

Towns, S&D 74 GL

Data sheet notes

Total available resource – total active storage volume (Blow ering & Burrinjuck Dams) at the day of assessment plus any usable flow s in transit plus minimum inflow s for rest of the year plus Snow y Hydro’s assured Required Annual Release (RAR) (including any flex (pre-release) fromthe prior year), as w ell as estimated usage to date. Snow y Hydro’s net Jounama Release for this year (2021-22) is estimated to be about 375 GL (includes montane release). Rules-based environmental w ater – w ater required to be set aside under w ater sharing plans to provide for riverine environments. Includes end-of-systemflow requirements (currently 179 GL) and environmental w ater allow ances (EWA1 = 53 GL, EWA2 = 22

The peak inflow months in the Murray and Murrumbidgee catchments are generally in August – November. This is the period through which allocations can build quickly.

River Murray Weekly Report River Murray Weekly Report Murray System Daily Inflows (excl. Snowy, Darling, inter-valley trade and

Week ending Wednesday 12 Jan 2022

environmental inflows) 5 day rolling average

Week ending Wednesday 12 Jan 2022

Murray System Daily Inflows (excl. Snowy, Darling, inter-valley trade and environmental inflows)

State Allocations (as at 05 Jan 2022) NSW - Murray Valley High security 100% General security (as 110% State Allocations at 05 Jan 2022) Source: MDBA

Victorian - Murray Valley High reliability Low reliability

100% 12%

NSW - Murray Valley NSW Murrumbidgee Valley High–security 100%

Victorian - Murray Valley Victorian - Goulburn Valley High reliability 100%

NSW – Murrumbidgee Valley

Victorian - Goulburn Valley

General security High security General security

110% 100% 100%

Low reliability High reliability Low reliability

12% 100% 0%

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Allocation forecasts DPI Water provides indicative allocation information – the probability of allocation outcomes under a range of inflow scenarios.

These forecasts provide a guide but should not be relied on. Allocation outcomes often vary from forecasts across various inflow scenarios.

Example Murrumbidgee GS outlook

DPI Water indicative allocation information – how to interpret it

Forecast general GS outlook (any carryover water can be added to these indicative allocations)

•

The information isn’t a weather forecast. It is a probability statement based on multiple years of inflow data and models to predict general security allocations under different inflow conditions in the catchment.

•

Allocations are conservative and based on inflows which will be exceeded in all years except extreme conditions.

•

DPI Water provides indicative allocations for a range of different inflow conditions.

1 Nov 2021

1 Feb 2022

99 chances in 100 (extreme) (99%)

52%

9 chances in 10 (very dry) (90%)

52%

3 chances in 4 (dry) (75%)

54%

1 chance in 2 (mean) (50%)

61%

65%

1 chance in 2 (mean) (25%)

64%

100%

Repeat of historical inflow conditions

– 1 in 2 or median is when in 50 percent of years’ inflows would be exceeded and 50 percent of years when inflows would be less. – 3 in 4 or dry is when inflows in 75 percent of years would be exceeded. – 9 in 10 or very dry is when inflows in 90 percent of years would be exceeded. – 99 in 100 (extreme dry) is when inflows in 99 percent of years would be exceeded. This inflow scenario is what the announced allocation is based on. •

This information can be used to assist planning, but should only be used as a guide.

•

During the peak inflow months of August – November, the difference in volume between ’dry inflows’ and even ‘median inflows’ is a large volume of water. Information provided in September and October is therefore most useful for providing an indication of seasonal allocations.

Delivery in NSW Delivery Entitlements within irrigation corporations

Delivery entitlements (DE) provide a delivery right for irrigators in ML units

DE rights and charging structures vary between irrigation schemes

DEs enable irrigation companies to recover their cost of delivery

In some circumstances irrigation schemes make efficiency allocations or provide member benefits as a percentage of DE volume

If flow restrictions apply access to daily flows is generally based on delivery entitlements except in MIL

Allocations are not available on DEs and water can’t be carried over on them

Delivery entitlements cannot be transferred out of a scheme and must be attached to a parcel of land

The Fees and Prices Schedules of the three main schemes can be accessed from their websites

Delivery entitlements can be terminated, with the termination fee regulated by the Water Charge (termination fee) Rules 2009 (Cth). Notionally the termination fee is 10 times the delivery entitlement charge plus GST.

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River pumpers River pumpers accessing surface water in the NSW Murray or Murrumbidgee are direct customers of Water NSW. WaterNSW requires customers to order their water direct from the Water NSW ordering process (iWAS) www.waternsw.com. au/customer-service/ordering-trading-and-pricing/ordering/ iwas Lead time between placing a water order and delivery vary between locations and irrigators should contact their WaterNSW Customer Service Manager to confirm arrangements. Charges paid by river pumpers include: •

Fixed water entitlement charge, which includes WaterNSW and DPIWater

•

Usage fee which includes a WaterNSW and DPI Component

•

Annual metering fee

•

Annual licence fee

Government water charges can be found www.waternsw.com. au/customer-service/ordering-trading-and-pricing/pricing River pumpers are responsible for their own pumping costs.

Trade

Water can be traded to other users within and between southern connected valleys

Limitations to water trade apply and these can change quickly

For rice growers, the most important of these are limits on Murrumbidgee inter-valley trade and the Barmah Choke

Irrigators should check water they are purchasing can be transferred into their trading zone

Water Allocation Trade zones Greater Goulburn Lower Goulburn Part Campaspe Lower Campaspe Part Loddon Vic Murray above Barmah Choke Lower Broken Creek Vic Murray from Barmah Choke to SA Border New Murray Barmah above Choke New Murray Barmah below Choke South Australia Murray Murrumbidgee Lower Darling Lachlan Lower Lachlan Groundwater SA Mallee Groundwater Murray Darling Basin River

Image courtesy of Duxton Water Trade is permitted from one trading zone to another if MDBA and state department rules allow. These depend on whether transferred water can flow readily to the destination flow and to protect third parties and the river environment, some trade limits apply. Back-trade is possible when water has been transferred downstream from one system to another. As water cannot flow

‘uphill’ trade from a downstream source to an upstream source can only occur if some downstream trade has already occurred. The most relevant back-trade opportunity is from the Murray to the Murrumbidgee. Trade in this direction is only possible when allocation water has been transferred out of the Murrumbidgee Valley to NSW, Victorian or SA Murray users.

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Allocation trade limits There are four key restrictions that apply in the southern Basin. These are: •

Barmah Choke (MDBA)

•

Murrumbidgee IVT (NSW)

•

Goulburn-Murray IVT trade limit (Victorian)

•

NSW to Victoria Water Trade Limit (Victorian)

NSW Murrumbidgee IVT

SA VIC

CHOKE

Goulburn IVT

VIC Source: Aither Consulting

Barmah Choke The Barmah Choke is a naturally occurring narrow stretch of the River Murray that begins downstream of Cobram, Victoria and ends upstream of Echuca, Victoria and running through the Barmah– Millewa Forest on the Victorian/NSW border It restricts the river flow to approximately 7,000 ML per day. There is no net trade of water from above to below the choke. Trade is only permitted where an equivalent volume has been traded from below the choke (back trade). In most years trade is frequently closed, due to the higher priced demand below the choke. Choke trade is generally open during wet seasons or when water has been shifted upstream for carryover. The Barmah/Choke trade restriction is managed by the MDBA. Information about the current balance is available www.mdba.gov.au/ managing-water/water-markets-trade/interstate-water-trade/barmahchoke-trade-balance The Barmah/Choke trade balance is re-set on 1 July each year.

Murrumbidgee IVT limit When the net allocation trade out of the Murrumbidgee Valley reaches 100GL then inter-valley trade closes. A positive IVT account balance means there is currently net trade out of the Murrumbidgee Valley. The maximum balance of + 100 GL applies to the Murrumbidgee IVT account because this is the volume of water that can be physically transferred out of the valley via Balranald in one year without incurring excessive transmission losses and/or third party impacts. A zero balance results in trade into the Murrumbidgee Valley being closed, as it is not possible deliver water upstream. The IVT balance status is updated at 9.00am each business day. Arrangements for operation of the IVT account and current IVT balance is available at: Murrumbidgee IVT account status - WaterNSW The IVT volume at the end of the water year transfers to the start of the new water year.

Image courtesy of Craig Steele

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Opening and closing triggers

Open

Trade out of the Murrumbidgee Valley

Trade into the Murrumbidgee Valley

Closed

100GL

85GL

0GL

15GL

The IVT balance status is updated at 9.00am each business day. Arrangements for operation of the IVT account and current IVT balance is available at: Murrumbidgee IVT account status WaterNSW

The IVT volume at the end of the water year transfers to the start of the new water year.

Water trade limits - Goulburn

NSW to Victoria

The Goulburn system has an IVT trade limit of 190GL. It is influenced by: •

Water owed to the Murray at the beginning of the season

•

Volume traded out within the season

Trade limits also apply to allocation trade into Victoria. Allocation trade from New South Wales to Victoria is limited to the lesser of a net annual volume of 200GL, or a volume that keeps the risk of spill in Victoria’s share of the Murray system below 50 per cent.

•

MDBA calling water from the Goulburn to the Murray

The volume available to trade within this limit can change quickly.

•

Legacy trade arrangements

The status of the NSW to Victoria trade limit is available www.waterregister.vic.gov.au/ TradingRules2019/

The rules for Goulburn IVT changed in 2021 and are complex. These rules and the status of the trade limit can be checked at the Victorian Water Register www.waterregister.vic.gov.au/watertrading/trading-rules

Closure of allocation trades Government and Irrigation Corporations all have closing dates for allocation trades. Actual dates can vary between years and irrigators should take notice of information updates or relevant websites to ensure key dates are not missed. Water Sharing Plan for the Murray Lower Darling Regulated River Water Sources 2016

Type of trade

Closing date

Interstate trade

End of April

Intervalley and Intravalley trade NSW

End of May

Intervalley and Intravelly trade Victoria

Mid- June

Coleambally Irrigation

External and internal trade end of May

Murray Irrigation

External trade end of May but before trade to or from their licence closes

Internal trade early June

Inter-state trade closes 30 April Inter valley and intra valley trade closes 31 May

Murrumbidgee Irrigation

External trade end of May Internal trade mid-June

West Corurgan

Mid - June

Groundwater sources

Mid - June

Water brokers and platforms

Transaction processes and fees

Water brokers facilitate access to water markets and information about market conditions and prices. Brokers can assist or undertake irrigators with the administration of allocation trades.

In NSW all allocation trades from a WAL are processed by WaterNSW. Important information about Water Trading including forms and key dates is available from the WaterNSW website www.waternsw.com.au/customer-service/orderingtrading-and-pricing/trading

Some brokers are also members of the Australia Water Brokers Association (AWBA). AWBA’s primary role is to set and maintain standards of professional practice, education, ethics and professional conduct for its members and the broader water broking industry. AWBA has a Code of Conduct for its members, available at www.awba.org.au/

Trades within an Irrigation Corporation are internal trades and do not require WaterNSW approval. Fees vary across irrigation corporations and when trading between different zones.

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Key trends

Supply volatility has increased

Lower General Security allocations

Supply remains the main driver of price

Increasing ‘fixed’ horticulture demand below the choke

Carryover is being used to create ‘high security’ water

More complex water products are being used

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Increased supply volatility over the past 20 years 9,000 8,000 6,893

7,000

6,293

6,000 5,297

5,000

4,586

Wet Average Dry Extreme Dry

4,000 3,000 2,000 1,000

0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2022f

Source: ABARES

Median Inflows by source(Gigalitire per year)

10,000 For example, the change in Murray River inflows from 2000 to 2020 is compared with the previous 95 years.

9,000 8,000 7,000 6,000 5,000 4,000 3,000

Inflows shared equally

2,000 1,000

1895 to 2000 Snowy Hydro

Upstream Albury

Last 20 years Lower Darling Inflows

Victorian tributaries

NSW tributaries

Source: Interim Inspector-General of Murray-Darling Basin Water Resources, based on data provided by the MDBA.

Average entitlement yield on NSW General Security water has declined General Security End of Season Announced Allocation

Supply is the key driver of the allocation (temporary) water price Storage levels and Victorian allocation market prices since 2008. There is a clear inverse relationship between water availability and price, though changing demand patterns are exacerbating price extremes.

Source: BOM Note: Water prices in 2020-dollar terms.

Increasing levels of ‘fixed’ water demand in the system, especially from Murray horticulture plantings below the choke

Source: Aither Consulting.

The yellow and red lines depict expected below choke allocated availability in average (yellow) and drought (red) years. This means that water has to be carried over or imported from other valleys (Murrumbidgee and Goulburn) to meet future demand. The requirement for more water users to secure fixed volumes of water across variable supply circumstances, and a higher capacity to pay than broadacre or dairy, is driving changed water market behaviour and increased temporary prices.

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Carryover is being used to smooth supply volatility by creating high security parcels, increasing demand for parking on GS entitlement Carryover allowances Victorian

LRWS

100%

NSW Murray

General Security*

50%

NSW Murrumbidgee

General Security

30%

The consequence of this trend has been to see carryover used at higher levels than would be previously expected, particularly following dry seasons where supply within the year has been short. This increases the price within that water year, and increases the risk of physical dam spills and ‘lost’ allocation following rain events.

*110% allocation allowed so 10% of carryover is non-spillable

More complex water products are being used The most common emerging water products are:

Entitlement leasing

Forward water

Carryover parking

An explanation of how these work is included in the following chapter.

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Management options Water risk management options

Ownership of water entitlements and using the annual allocation (standard practice)

Allocation market trade

Leasing water entitlement with to access the annual allocation.

Entering into a forward contract for delivery of allocation water in a future water year

Carryover on water entitlement owned by another party (parking)

Diversifying your water portfolio by owning water entitlements in different systems to minimise risk of low allocations or to access different carryover options

Water share farming

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Advantages and disadvantages of water options Option

Advantages

Disadvantages

Ownership of water entitlement Water Entitlement Features • Location (i.e. catchment and trading zone) • Reliability • Carryover features

• •

Access to water through annual allocations. Reduced exposure to the allocation water market. Capital gain of asset. Access to carryover depending on the entitlement. Can be leased. Can be used as security for borrowings, with encumbrances registered. Can be held separate to land. Public registers for statutory rights.

• •

Spreads exposure to annual allocations between systems. Options can include holding a zero WAL and or one entitlement and using the WAL or water entitlement to access annual allocation from different markets. More flexibility in management of carryover, providing opportunities to utilise end of season water markets.

•

Access to water through annual allocations for the term of the lease. Allocation risks rests with the lessee. Reduced exposure to the allocation water market Opportunity to access water without capital expense. Sale and then lease back unlocks capital of water entitlements and maintains access to allocation water Lease payments are operating expenses. Subject to lease will provide access to carryover.

• • •

Provides certainty to access to water at a known cost for the period of the contract. Not exposed to allocation risk. Reduced exposure to the allocation water market. Generally, less costs to gain access to water compared to ownership but more expensive than leasing. Not exposed to depreciation of asset.

• •

• • • • • •

Portfolio options i.e. owning water entitlement in different systems Water Entitlement Features • Location (i.e. catchment and trading zone) • Reliability • Carryover features

•

Leasing entitlement Lease price linked to capital value of asset Length of lease of duration variable

•

• • • •

• •

Term Forward Contracts (Forward Sale contracts, Forward Delivery contracts) • Locks in a volume at a price for one season • Generally, only applies for one season in advance • Will normally require a deposit on signing a contract with balance of payment due at delivery date(s)

• • • •

•

• •

• • • • •

• •

• • • •

Exposed to allocation risk. Opportunity cost of capital – e.g. What other use could the capital value of water entitlement be used? Annual water entitlement cost or water entitlement storage cost in Victoria. Exposed to reduced market value.

Active management required, particularly if trade restrictions may limit access to annual allocation. Exposed to allocation risk. Opportunity cost of capital. Annual water entitlement cost or water entitlement storage cost in Victoria. Increased cost of annual transfers. Establishment costs.

Exposed to allocation risk. No capital gain of asset. Annual water entitlement storage costs generally included in lease costs. Exposed to cost changes at the end of the lease. Medium level of active management.

No capital gain of asset Generally, no water entitlement charges (subject to agreement). Cost is set, exposed to market price falls No access to carryover. Medium level of active management. Delivery dates will vary for when water must be purchased

Advantages and disadvantages of water options Option

Advantages

Disadvantages

Trading on the allocation water market

• • •

•

No capital cost. No water entitlement charge. No exposure to asset depreciation.

• • • • •

Water share farming Access to allocation secured by share in crop returns Allocation supplied on signing of contract (Not very common)

• • • •

No capital costs. No water entitlement charge. Provides access to allocation without payment, freeing up cash flow. Shares production risk

• • • •

• Carryover products Carryover of ML on another party’s water entitlements

Opportunity to increase carryover volume • taking advantages of end of season alloca- • tion prices and/or increasing certainty for • the next year’s irrigation program • •

•

Carryover – multiple years • Carryover of ML on another party’s water entitlements • • •

Opportunity to increase carryover volume • taking advantages of end of season allocation prices and/or increasing certainty for • the next year’s irrigation program. Multiple years available for Victorian Low Reliability Lessees should seek lessor to establish lease on the Victorian Water Register Lease of Vic LR provides carryover space and offers opportunity for allocations at no extra cost

Exposure to allocation market within and between years. Exposed to allocation risk – higher prices as a result of low water availability. Requires access to cash. No capital appreciation. High level of active management. Water may not be available at crucial irrigation times or may be too expensive. Usually only for a single year. Generally higher cost than allocation sale on terms. Will require some negotiation to establish risk of production Shares production risk

Usually only for a single year Transaction costs paid twice. Private transactions carry higher risk of failure. Some parties offer contracts to provide security Carryover through brokers usually relies on authority forms to be lodged by the broker in a timely fashion Medium level of management.

Inter-valley transfers require transaction costs to be paid twice outside Victoria Medium level of management.

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Planning schedule Month

Price influencers

Activity or decision

April

Water remaining in allocation accounts Outlook for next water year Interstate trade closes Autumn irrigation programs ending Autumn climate

Check accounts for carryover volumes – avoid volume being higher than carryover limits Consider purchase or sale subject to volume outlook and prices Explore carryover options Closely watch Victorian trade limit if transferring allocation to Victoria (LRWS) Finalise any transfer to Victoria Prepare next year water budgets

May

Water remaining in allocation accounts Outlook for next water year Inter and intra-valley trade closes in NSW Autumn irrigation programs end Autumn rainfall

Confirm last days for transfer processing with WaterNSW and supplier Finalise carryover volumes, taking in account end of season storage levels and outlook for next year Finalise carryover product options (if required)

June

Allocation trading closed for all or part of the month

Review previous season strategy and review water budget and strategy for the next water year Murray and Murrumbidgee customers finalise carryover volumes Start exploring market options

July

Opening allocations announced Outlook for the water year provided Catchment rainfall and storage inflows

Monitor opening allocations in all valleys in the Southern Murray Darling Basin Monitor allocation market activity including price and volume

August

Irrigation deliveries commence in gravity irrigation schemes Catchment rainfall and storage inflows

Refine water budget Monitor allocation improvements all systems and market activity, including identifying catchment conditions and contrasting with outlook information Further develop market options if required

September

Dry seasonal conditions will increase water use on winter crops and pastures Wetter spring condition will reduce irrigation water use Access to supplementary water or off allocation will reduce allocation use

Modify water budget Monitor allocation improvement and market activity Monitor supplementary water announcements Monitor spill risk

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Month

Price influencers

Activity or decision

October

Rice and cotton areas largely determined Dry seasonal conditions will increase Demand for winter crops and pastures

Finalise water budget for summer cropping programs Monitor allocation improvement, market activity and risk of spill Monitor supplementary water announcements

November

Inflows into storages generally peak by November Access to supplementary water, if available often ends

Assess volume available and likely seasonal allocation Quantify any additional volume required for summer irrigation program Refine allocation purchasing strategy if required

December

Summer irrigation programs finalised and irrigation water use on summer crops increasing

Monitor water market activity and ensure sufficient access to water over the Christmas/ New Year period Declaration of low risk of spill often made for Victorian spillable accounts

January

Water use increases, demand by rice growers increases in preparation for panicle initiation and microspore

Where possible plan purchases outside of peak irrigation demand

February

Seasonal conditions influence water use High demand period for permanent plantings Autumn irrigation and pre-watering commences in late February

Review autumn irrigation requirements

March

Autumn irrigation and pre-watering continues Seasonal conditions influence demand

Review end of season irrigation requirements

Information sources Save these into your favourites on your web browser •

MDBA live river data

•

MDBA weekly report

•

NSW Water Insights Portal

•

NSW Trade Dashboard

•

NSW iWAS

•

Northern Victoria Resource Manager

•

Aither markets report

•

H2OX

•

Water Exchange

•

Waterflow app

•

Victorian water market watch app

Glossary Term

Definition

Allocation

A volume of water allocated to a Water Access Right (Water Entitlement, unit share) in the water year.

Allocation trade

The transfer of water in an allocation account from one licence to another in a water year. Transfers via WaterNSW of allocation are referred to as assignments.

Available water determinations

Announcements regularly by DPIE Water of the annual allocation to different classes of water access licences.

Basin Plan

A Plan, legislated under the Water Act 2007 (Cth). The Basin Plan sets new (lower) diversion limits for each catchment in the Basin, its aims to balance access to water for Basin communities and provision of adequate water for the environment. State governments are signatories to an Intergovernmental Agreement for implementation of the Basin Plan.

Critical human water needs (CHWN)

CHWN refers to the minimum amount of water needed to meet basic human needs. It also includes non-human needs, where a failure to meet these needs would cause too much damage to social, economic or national security, for example water for firefighting.

Carryover

The capacity to carryover water against water entitlements from one water year to the next. The carryover rules vary between States and between catchments in NSW.

Carryover product

Commercial products, offered by some brokers available where water is carried over on another person’s water entitlements.

Delivery Entitlement or Delivery Right

A right to the delivery of water within an Irrigation Infrastructure Operators network. Most networks recover a portion of their costs from delivery entitlement charges.

General Security

A type of water entitlement in NSW, water is allocated to general security after high security.

Gigalitre (GL)

One gigalitres equals 1,000 megalitres

High Reliability Water Share (HRWS)

A type of water right available in Victoria, water is allocated to HRWS before it is allocated to LRWS.

High Security

A type of water entitlement in NSW, water is allocated to high security before general security allocations.

Inter-valley Trade Limit (IVT)

The maximum volume of undelivered inter-valley trade. Once this volume is reached trade out of the source valley ceases. IVT volume transfer into the new water year.

Irrigation Right

A right issued by an Irrigation Infrastructure Operator to receive water which is not a water access right or water delivery right. Irrigation rights are ‘contractual’ rights between an irrigator and their supplier.

Leasing

Leasing of water entitlement for a single year or longer, where the leasee receives the annual allocation.

Long Term Average Annual Yield (LTAAY)

A factor used by governments to compare the long term yield of different water entitlements in the Murray Darling Basin.

Low Reliability Water Share (LRWS)

A type of water right available in Victoria.

Ricegrowers’ Association of Australia Inc.

Term

Definition

Megalitre (ML)

One megalitre equals one million litres

Murray Darling Basin Agreement

An agreement between the Commonwealth, NSW, South Australian, Victorian and Australian Capital Territory in relation to the River Murray. The Agreement is a Schedule to the Water Act 2007 (Cth)

Murray Darling Basin Ministerial Council

A Council made up of State and Commonwealth Ministers representing the water, agriculture and or the environment portfolios. Changes to the Murray Darling Basin Agreement are made by consensus by the Ministerial Council. The Ministerial Council is chaired by the Commonwealth Water Minister.

Required Annual Release (RAR)

The volume Snowy Hydro is required to release into the Snowy- Murray and Snowy Tumut developments in the Snowy water year. Notionally the RAR for the Snowy- Murray development is 1,062GL per year and 1,026GL for the Snowy – Tumut development.

Reliability

A measure of how often 100 percent will be received for a type of entitlement based on modelling assumptions and history records.

Share component (NSW)

This is volume on an access licence, WAL have a volume expressed as unity shares. Unit shares are similar to the entitlement volume previously. Available water determinations are made to unit shares.

South Australia Entitlement

The volume South Australia is entitlement to under the Agreement, notionally 1,850GL per year.

Supplementary water

Announced when there are unregulated or surplus flows in a regulated river in NSW. Supplementary water can be extracted without debit from allocation accounts, where a supplementary licence is held. Arrangements within irrigation corporations vary for supplementary and or off allocation access.

Temporary entitlement leasing

Leasing of entitlement for a single year

Trading Zone

A defined area within which trade between users can always occur, or can always occur subject to a few set conditions. Trade between trading zones are also possible but will be subject to conditions defined in the trading rules

Sustainable Diversion Limit (SDL)

The volume which represents the volume, which can be sustainably extracted from a catchment, as determined by the Basin Plan. .

Sustainable Diversion Limit Adjustment Mechanism

A mechanism which allows the reduction in diversions, required under the Basin Plan to be reduced (i.e. a higher SDL set). The Basin Plan allows for up to 650GL of ‘off set’ projects through this mechanism.

Water Access Licence (WAL)

A licence which provides its owners with access to a share of the available water in the water source.

Water Exchange

An on-line platform, generally for the sale of annual allocation where parcels are listed for sale at a price. Successful transactions are listed, providing independent market information.

Water tool kit

Ricegrowers’ Association of Australia PO Box 706 Leeton NSW 2705 Australia (02) 6953 0433 (International +61 2 6953 0433)

rga.org.au