Download Water Trading: An overview of Queensland water markets

Water Trading
An Overview of
Queensland Water Markets
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Water trading
Water reforms in Queensland have made it possible for water users to buy
water to expand their operations and sell water they do not need. The water
trading market has been introduced to address the increasing competition for
water without compromising the sustainable allocation and use of the state’s
water resources.
Water trading raises awareness of the value of water, helps to promote efficiency
and innovation in water use, and encourages the development of productive
enterprises. It is also an effective means of reallocating water on a voluntary basis.
What is water trading?
Put simply, water trading is the voluntary buying and selling of a water entitlement—or
the water that is available under a water entitlement—with the price determined by
market conditions. A water entitlement is a general term for a water licence, interim
water allocation or water allocation.
In Queensland, three types of water trading are available:
• permanent trades of water allocations and interim water allocations
• leases of water allocations
• seasonal assignment of water available under a water entitlement.
Water licences are entitlements to take water, and are attached to the land. Interim
water allocations are also attached to the land, and exist only in supplemented water
systems—that is, for water delivered from infrastructure such as dams—before the
water planning process is finalised.
Water allocations are new entitlements established following the completion of the
water planning process. Anyone can hold a water allocation. Unlike interim water
allocations and water licences, water allocations are assets separate from the land,
and have their own title. They can be held and traded as personal property by nonlandholders. In most cases, only landholders can hold interim water allocations and
water licences.
An overview of Queensland water markets
Water Allocations Register
The Water Allocations Register is an accurate and secure system that centrally records
the holder details and attributes of water allocations, similar to the way that details of
land ownership or dealings are recorded in the Land Registry. The public can access
the register and, on payment of a fee, can obtain copies of water allocation titles and
any dealings lodged or registered. To have legal effect, all permanent water allocation
trades must be registered on the Water Allocations Register. Other interests—such as
financial securities or caveats, and settlement notices—may also be recorded against
a water allocation on the register. The state’s Registrar of Titles and Water Allocations
manages the Water Allocations Register.
Permanent trading
Permanent water trading may include the transfer or lease of an allocation to another
party, or may relate to other transactions such as subdividing, or changing location.
Permanent water trading allows a water allocation to be voluntarily bought and sold
at market prices or shifted to a new location. Formal approval may be required for
some dealings, and a permanent trade always requires registration on the Water
Allocations Register.
Leases
Whole water allocations can be leased in a similar way as land is leased—that is, all of
the benefits and responsibilities of holding the water allocation are transferred to the
lessee for the duration of the lease. A lease always requires registration on the Water
Allocations Register.
Seasonal water assignments
A seasonal water assignment, previously known as a temporary transfer, is the
assignment to another person of part or all of the water available under a water
entitlement for a water year. A seasonal water assignment cannot be registered on
the Water Allocations Register.
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Water trading
A dynamic and flexible water market
In general terms, water trading is a new business planning tool that allows water users
to make the most of water as a secure, bankable asset. A tradeable water allocation
can be tailored to a water user’s needs. This creates greater flexibility by:
• helping people to see clearly the value of their water allocation, thus enabling them
to take advantage of emerging business opportunities and obtain finance against
the allocation’s value
• encouraging investment in water-use efficiency measures by allowing an allocation
holder to sell, lease or seasonally assign spare water
• allowing retiring landholders, or those wanting to stop production, to sell their
water without selling their land
• providing opportunities for a user to increase water supplies, bolster reliability, or
switch to crops that generate higher returns
• enabling new industries to acquire water without jeopardising the environment or
affecting the supply security of existing users.
In summary, water trading improves environmental and economic conditions by
allowing water to be allocated to a use where it will be more highly valued.
Where will water be traded?
Water trading will not immediately be available everywhere. It will be available
where water entitlements are secure and well-specified—that is, in areas where
water allocations are established. Water trading may also be introduced where water
allocations have not yet been established, but where demand exists and where
environmental risks associated with water trading can be managed.
Trading rules
A number of rules exist to facilitate water trading wherever possible, while protecting
the environment and supply security of other water users. For example, any trade that
involves changing the location from which the water is taken will require approval
from the Department of Environment and Resource Management (the department),
after checking that the application abides by the trading rules.
An overview of Queensland water markets
Market information
The value of water allocations is determined by the market, and the prices paid
for water allocations are publicly available. A summary of water trade prices and
volumes is available on the department’s website. Detailed sales information can be
obtained—for a fee—at departmental business centres throughout Queensland.
Water brokerage services
Water brokers and exchanges play an important role in the market. Real estate and
stock and station agents may offer water brokerage services. Online brokerage
services and exchanges are also being established in Queensland. Water supply
scheme operators may also provide online brokerage services and exchanges for
some water trading markets. Further brokering services and exchanges are likely to
develop over time.
Fair trading laws contain certain rights and obligations for brokers and exchange
operators as well as water users when doing business. These obligations are in
addition to any contractual or other rights and obligations between water users,
brokers and exchange operators.
Land and water management plans
The buyer or lessee of a water allocation, and the buyer of an interim water allocation,
requires an approved land and water management plan before irrigating land using
the water taken under the allocation. An exception to this requirement exists when a
water allocation is purchased with land as a ‘going concern’, provided the seller does
not already need to operate under a land and water management plan.
An approved land and water management plan is also required for water taken under
the seasonal assignment of water to an irrigation property for two consecutive water
years, or two out of three consecutive water years.
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Disclaimer
This information brochure has been prepared to draw attention to the Water Act 2000 in force
as at 1 January 2009. While every effort has been made to ensure accuracy at the time of
publication, the information presented here does not purport to be definitive or to constitute
legal advice. This brochure is not designed to be a substitute for the Act and/or seeking
legal advice. The Department of Environment and Resource Management does not accept
responsibility for any loss or damage caused by actions based on information in this brochure.
Further information
This brochure is one in a series of publications explaining water trading and
associated issues. Other brochures in the series include:
• Permanent water trading
• Seasonal water assignments and leases
• Water allocations and land valuations
• Financial interests and tenancy arrangements.
Contact the department to obtain further information, guidelines on land and water
management plans, or application forms for any water allocation dealings.
Telephone: 13 74 68 (13QGOV)
Website: www.derm.qld.gov.au
Note: Departmental staff do not provide legal advice. To protect your interests, or
if you are unsure of your legal entitlements or financial interests, please contact a
solicitor or taxation advisor.
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