The plans outline the priorities for the use of water for the environment in the coming year, depending on climatic factors and water availability.
Environmental flows and trade in 2021–22
Water deliveries are important for the environment when times are good because they provide greater opportunities for events that aren't possible during dry times.
With continued rainfall in 2021–22, most large storages in the state have filled and spilt or dam pre-releases have been made.
The increased rivers flows are providing flushing and inundation of systems and trigger natural processes for native plants and animals.
The Water for the Environment team is currently monitoring opportunities to support these natural fish, bird and plant responses to high flows.
Annual water use for the environment in the NSW MDB to May 2022 (GL)
The department also uses the water market to move water to where it is needed most and assist with paying water licence use fees and small infrastructure projects to improve environmental outcomes.
Trades typically commit less than 5% of the water available to the environment and are a small proportion of the total trades made by other market participants.
With good water availability this year, and higher volumes of water delivered to key rivers and wetlands, there are higher water use and pumping costs. The small proportion of water traded is carefully planned to ensure our ability to achieve environmental outcomes is not compromised.
Water trade announcements
This section relates to decisions made solely by the NSW Environmental Water Holder (the department) to trade state-owned allocation. It does not include decisions made by other environmental water holders or joint governments to trade to or from environmental water licences held in New South Wales. Other parties could be:
- the Commonwealth Environmental Water Holder
- private environmental water holders, such as the Murray Darling Wetlands Working Group
- joint governments for water under The Living Murray Program which we trade under instruction from the MDBA
The department trades within the prevailing market conditions. It does not typically announce commercial trade activities before they are completed, as a public announcement can impact the market. This allows us to flexibly respond to market conditions as they change over the year to minimise potential price impacts.
If the department considers its future water market activities may have an unavoidable market impact, we may choose to make a public water trade announcement before a market trade activity. If this happens, the announcement will be posted in this section. We regularly update our water market trade reporting section below with completed trade information.
The department performs administrative trades to move account water to where it is needed. This can involve transfers of allocation from below to above a trade restriction, such as the Barmah Choke, and this creates a market opportunity to trade in the other direction. A trade of this nature is called a ‘back trade’.
As the water year comes to a close and use of water for the environment pauses, like other water users, environmental water holders balance water across their accounts to prepare for the new water year. After the below choke accounts were filled to their carryover limits, the choices considered by the department were to forfeit environmental water or to transfer water to upstream accounts for later use. The latter was the preferred option and after consultation with the Commonwealth, approximately 40 GL of Commonwealth held water has been transferred from below choke to above choke in late June 2022, so that this water remains available in the coming water year.
Water market trade reporting
The volume of water traded by the NSW Environmental Water Holder varies between years – it depends on environmental water demand and the value of water on the market. Our water use costs are highest when market prices are moderate to low.
The graph 'Total volume sold and purchased (all valleys)' shows our past trading volumes for both the sale and purchase of water. The graph does not include 'supplementary' water – surplus flow that cannot be captured into storage.
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.
The Department of Planning and Environment has previously purchased small carryover volumes in the NSW Murray and sold carryover space in the Murrumbidgee.
Total volumes purchased and sold (all valleys to 30 June 2022)
A total net volume of 11,085 ML surface water has been sold across all valleys in 2021-22 YTD. 6,575 ML was purchased upstream of the choke, funded by sales downstream of the choke. An additional 4,000 ML of Murrumbidgee 'event based' supplementary was sold in 2021–22. The revenue raised is approximately 60% of the department's expected water use costs for the year.