In some NSW catchments, the owner of a water licence may choose to ‘carry over’ a percentage of their unused allocation for use at a later time.
The rules for how much water can be carried over, held and for how long vary between licence classifications and river systems.
Deciding whether to carry over water and how much is a complex decision which is not taken lightly. Some water may be carried over if forecast conditions are dry and rainfall is likely to be low. In very wet years, there may be widespread natural flooding and an environmental water manager may choose to carry over a proportion of available water for use in drier times.
Like water, carryover space can be bought and sold.
Licence holders can sell ‘space’ (or capacity) on their water licence to manage carryover water on behalf of another licence holder. The seller of this space 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.
For managers of environmental water accounts, this market mechanism provides an opportunity to invest in environmental works such as infrastructure improvements and contribute to payment of water licence charges. It can also help minimise the volume of water for the environment traded to generate required revenue.