The Victorian Water Trading Annual Report for 2017-18 is now available here. The annual trade report is part of the Victorian government’s commitment to an open and transparent water market.

Record volumes of allocation trade in northern Victoria in 2017-18 show that people are increasingly using the water market to deal with changes in commodity prices, climate and seasonal conditions.

Active irrigators in the Goulburn Murray Irrigation District and in Sunraysia were net buyers of allocation in the market.

Drying conditions in northern Victoria and emerging drought in NSW resulted in increasing market prices for water allocation during the year and had a strong influence on where water was traded to.

There was net trade of allocation out of Victoria to NSW with lower general security water allocations in New South Wales and increased demand from irrigated annual crops such as cotton. This is the first time since 2012-13 that Victoria was a net exporter of allocation.

As a result, buyers in the Victorian Murray looked to secure their water from elsewhere in the market, including purchasing more from the Goulburn.

The largest net movement of water allocation was into NSW (146 GL) and into the Victorian Murray below the Barmah Choke (139 GL). The largest exporters of allocation were the Greater Goulburn trading zone (197 GL) and the Victorian Murray above the Barmah Choke (35 GL). Water used from tagged accounts contributed around two thirds of the net movement of allocation from the Goulburn to the Victorian Murray.

Making sure market settings are appropriate

The Victorian Government's policy is to support irrigated agriculture development while protecting existing water users' rights and the environment.

Victoria already has strong water sharing arrangements in place which protect existing rights to water and support water users to manage their water needs in a fair and efficient way. This includes the cap on water entitlements downstream of the Barmah Choke and trading rules that limit how much water can be held for delivery to the lower Murray region.

The water market allows people to make their own decisions about their water needs to in a farming landscape farming landscape that is constantly changing to respond to global markets, commodity prices, drought and climate.

The Victorian Government is committed to making sure our communities have the right tools and information to manage their water needs and is working with regional agencies to further strengthen our water sharing arrangements. This includes:

• Providing water users with clear, accurate information to help them make informed decisions in the water market and to enable them to do their due diligence when making investment decisions.
• Ensuring trade rules adequately manage the impacts of water movement on other entitlement holders and environmental values.
• A key piece of work in this area is reviewing the existing Goulburn to Murray trade rule, to better understand how much water can be delivered down the Goulburn, particularly during summer and autumn, without impacting the environmental condition of the lower Goulburn and the entitlements of others.
• With the increasing use of tagged accounts, existing trade rules may need to be reconsidered. Victoria is currently considering options to restrict use under tagged accounts in line with the relevant trading rules to provide consistent and equitable application of restrictions to different forms of trade when the impact of water moving between valleys is the same.
• Strengthening and modernising our approach to managing compliance and enforcement.

The Victorian Government is also working closely with Lower Murray Water, Goulburn-Murray Water, the Murray-Darling Basin Authority and other states to make sure river operators are equipped to manage constraints on delivery such as the Barmah Choke, changes in water use patterns and deal with any unexpected changes in conditions.