The plans outline priorities for using water for the environment in the coming year, depending on climatic factors and water availability.
To maximise benefits for our rivers and meet some of the costs involved in managing this resource, the department may choose to buy or sell water or carryover space.
Market trades typically involve less than 5% of the water available for the environment. This small proportion is carefully planned to ensure our ability to achieve environmental outcomes is not compromised.
Commercial trades
The department trades within prevailing market conditions through brokers and online platforms, similar to other water market participants. Activities are designed to:
- achieve the best value for the environment
- minimise impact on market prices
- ensure administrative efficiency.
We have no plans to trade entitlement commercially in the foreseeable future. However, we may buy or sell allocation where we hold licences (Gwydir, Macquarie, Lachlan, Murrumbidgee, Murray and Barwon Darling surface water catchments, and Murrumbidgee groundwater).
The department may purchase carryover space in the Murray for environmental use early in the new water year or buy/sell carryover space in the Murrumbidgee to maximise environmental outcomes.
Carryover water is licensed water that remains unused in storage at the end of the water year. In some cases, this water can be held over and used (or traded) in the following year. Trading carryover water helps to provide certainty for buyers in future years as they can start a new season with guaranteed water in their accounts.
Licence holders can also sell 'space' (or capacity) on their water licence to manage carryover water on behalf of another licence holder. The seller provides a service to the buyer by holding their water at the end of the water year and transferring it back to them at the start of the next water year.
Commercial allocation purchases or sales would not exceed 3 GL per valley in any year unless a proportionate need for water or funds arises to support better environmental outcomes or manage a potential loss. This could occur at any time of year, however environmental water demand is highest during winter, spring, and March to June when conditions are dry for carryover purposes. Funds for small projects could be required at any time.
Administrative trades
The department performs administrative (non-commercial) trades to move water between our own licences or between environmental water holder licences. Administrative trades with private landholders occur where agreements exist to deliver environmental water on our behalf.
Administrative trades can involve transferring allocation from below to above a trade restriction, such as the Barmah Choke. This creates a market opportunity to trade in the opposite direction. This type of trade is called a ‘back trade’.
Trades in either direction through the Murrumbidgee Inter-valley Trade can occur in response to watering needs. Back trades are more likely late in the water year to ensure allocation can be carried over to the next year.
The department also carries out administrative entitlement trades, such as adding or removing work approvals to facilitate water delivery or consolidating multiple licences, to improve water management efficiency. Changes of holder name can occur following departmental or ministerial name changes.
Water market trade reporting
The volume of water traded by the NSW Environmental Water Holder varies between years, depending on environmental water demand and market value. Completed trades are posted on the public water register. The department also reports on its trade activity in an annual Outcomes Report.