Water trade FAQs
Frequently asked questions about trade are explained below.
The Environment and Heritage Group within the Department of Planning and Environment (the department) manages environmental water licences held by the NSW Government for the benefit of our rivers and wetlands and is responsible for all trades conducted on these holdings. The Minister is not actively involved. All decisions on water trades are undertaken within the department under appropriate delegation.
The department is also the NSW Environmental Water Manager and:
- delivers planned environmental water allocations made under water sharing plans, which are not tradable, in conjunction with our licensed holdings
- cooperates with the Commonwealth Environmental Water Holder and Joint Governments under The Living Murray Program to deliver Commonwealth and jointly held environmental water in New South Wales.
No. The department does not currently buy or sell water licence entitlements, sometimes called ‘permanent water’. Our trades relate to allocation or ‘temporary water’.
To maximise the benefit 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. In these cases, the trade purpose is reported with a price as ‘Standard commercial’, ‘Forward contract’, or ‘Carryover parking’ on the WaterNSW allocation trade form.
Most of the department’s water trades are operational. They are transfers between environmental water licences or to private water users who deliver water to targeted rivers, creeks and wetlands on our behalf through partnership arrangements. These are recorded as trades on the NSW public water register as zero dollars per megalitre and the trade purpose is reported as ‘Environmental use’ or ‘Returned unused environmental water’.
The department holds water licences in 5 regulated river systems – the Gwydir, Macquarie, Lachlan, Murrumbidgee and NSW Murray valleys.
Most of the holdings on these licences are for general security, conveyance or supplementary water.
Though the department can purchase water in other river catchments, we haven’t done so to date, but may in the future.
Graph shows the valleys where the department holds and trades water
The department trades water allocation but does not generally sell or buy water licences. The department manages water to maintain and improve the health of NSW rivers along with the unique native plants and animals that rely on them.
Licenced water allocation managed by the department may be sold to:
- contribute to the payment of water use fees associated with water licences (the same costs apply to all water licence holders)
- support small infrastructure projects which enhance the delivery of water to important river or wetland sites
- purchase water for another valley
- enable carryover of water into future years.
Example – improved infrastructure
- In 2017 we traded water which enabled the department to invest in the replacement of the Mascotte Escape — part of Murray Irrigation’s network in the central Murray catchment, southern New South Wales.
- This improvement increased the amount of water able to flow through Mascotte Escape which means that larger volumes of environmental water can be delivered into the Jimaringle-Cockran Creek network for the environment.
- The Jimaringle and Cockran creeks are isolated from major waterways. This improved infrastructure means, the department can restore more natural flow patterns into these creeks.
Example – forward water purchase
- In June 2014 we ‘forward purchased’ 6500 megalitres of water in the NSW Murray. This gave us certainty that we could deliver water at the start of the new water year in July 2014. A water year runs from 1 July to 30 June.
No. Water is traded with the objective of improving river and wetland health.
The department is a water user – not an investor.
Water trading is considered if there is an opportunity to help increase river and wetland health without risking good environmental results between years or across valleys.
Water needs change all the time. Water trade helps the department manage sudden changes in water availability within and across valleys.
Water licences are a public asset and trades must be considered good value for money before they can proceed.
Water trades need to provide the best benefit for environmental assets like rivers and wetlands. The sale of water must cause the least impact on good environmental outcomes. When the department sells water, the benefit must be more than the risk of having less water to achieve the best environmental outcomes for rivers and wetlands.
Yes, the Department of Planning and Environment pays the same licence fees levied by WaterNSW on all licence holders.
Water for the environment that accrues under Water Sharing Plan rules is called planned environmental water. Planned environmental water does not attract the same fees because the water is not from a licence, it is provided by the plan.
No, most of the Department of Planning and Environment’s operating costs are covered by the NSW Government.
Both commercial and non-commercial trade decisions are made centrally by our Environmental Water Governance unit.
Our regional operations staff are involved in planning and managing the delivery of water to achieve specific outcomes for native fish, waterbirds, plants or system processes, but do not participate in trade decisions.
The Department of Planning and Environment (the department) participates in the market in the same way as other water users. This includes the use of established water brokers and online water trading platforms and ensures that buyers and sellers are not identified by each other before a trade is agreed. This ensures neither party is disadvantaged in negotiations to reach a fair price.
Trading is done centrally by the Environmental Water Governance unit and is commercial in confidence until transfers have been approved by WaterNSW and posted on the public water register. The Department also reports on its trade activity in an annual Outcomes Report.
The Department of Planning and the Environment (the department) follows rules established by the Basin Plan which control how it shares information and how it makes decisions about trades. The department deals with market sensitive information and makes water trade announcements.
Our Sensitive Water Market Information Protocol establishes the following:
- arrangements to prevent market sensitive information being communicated to the person(s) making the trade decision to prevent them being involved in trade with this type of knowledge
- limit how information is communicated within the department and between agencies to ensure market sensitive information is only shared where it is appropriate
- the way in which the department makes water trade announcements.
More information about water trading and choosing a water broker can be found at the Australian Competition and Consumer Commission (ACCC)
No, our trades are designed to maximise environmental benefit by achieving a competitive price on the open market. Selling water for less than it’s worth does not maximise the benefit to the environment from trade.
The market sets the price based on supply and demand at the time.
The department aims to participate in the market with minimal influence on the current market price. For example, we consider whether the volumes traded are likely to have an undue influence on the price compared with market trade volumes.