The water trade in Australia is growing quickly, but some fear that state restrictions will hamper river restorations.
A record 1,800 billion liters of water entitlements were traded on Australia’s water markets in 2008 – double the volume of the previous year, the Sidney Morning Herald reports.
Trade in water allocations also increased significantly – by 35 percent from 2007 to 2008. The figures come from the annual report of Australia’s National Water Commission (NWC), which was released this week.
Australia’s water rights system has two tiers, including entitlements and allocations. Entitlements are a permanent right to a share of the total water available. Allocations are a right to a specific, seasonal volume of water granted to an entitlement holder, thus they are for temporary use when traded.
The drought-stricken Murray-Darling river basin was the center of trading activity, accounting for 60 percent of the entitlement trade and 81 percent of the allocations.
Despite the record-breaking volumes, the water market could better allocate resources if states removed transfer restrictions, according to the NWC report.
The state of Victoria, located in the southeast corner of the country, caps the annual transfer of entitlements out of irrigation at four percent. The cap is used to protect rural communities from being destroyed by the transfer of large volumes of water during a drought, said Victoria Water Minister Tim Holding to ABC News.
No water entitlements were traded out of the state in the last year, according to the NWC.
Australia’s Productivity Commission supported the NWC report’s conclusions, saying that the restrictions need to be lifted for the government’s entitlement buy-back plan to work effectively, according to the Sidney Morning Herald. To restore flows in the River Murray, the government is buying rights from farmers and leaving the water in the river.
South Australia’s premier is using the NWC’s report to bolster his state’s legal case against Victoria and arguing for the High Court to overturn the restrictions, ABC News reports.
“[The Victorians] have placed a handbrake on the whole reform of the River Murray,” said Premier Mike Rann to ABC News. “There is only one basin, the River Murray does not respect state borders. Victoria’s actions are not the national solution Australians want and expect.”
A decade of drought and over-allocation of water rights has spurred development of Australia’s water market. Governments encouraged settlement post-World War II by giving away entitlements. The post-war period was unusually wet, leading to more rights than water by the 1980s, according to a study on water markets in the country by R. Quentin Grafton from the Australian National University.
Water rights were separated from land rights in a 1994 agreement by the Council of Australian Governments, making transactions easier.
Many transfers now involve cities buying rural rights to provide for growing urban populations. Victoria is spending over $700 million to build pipelines from interior basins to cities along the coast.
Source: Sidney Morning Herald, ABC News
Read Circle of Blue’s extensive coverage of Australian water issues in The Biggest Dry
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