How water allocation decisions are made within the Murray Darling Basin
The Murray Darling river system River Murray Water has been established by the Murray-Darling Basin Ministerial Council as an internal business division of the Murray-Darling Basin Commission for the specific purpose of operating and managing the River Murray system.
River Murray Water commenced operations on 1 January 1998. Its establishment as an internal business unit provides a clear distinction between the service delivery functions of the Commission and its resource management and policy setting functions.
The major water storages of the Murray Darling system are Hume Reservoir (3000GL), Dartmouth Reservoir (4000GL) and the Menindee Lakes (1700GL).
Inflows into these storages and from the Kiewa River are shared equally between the New South Wales and Victoria and used to supply South Australia’s water. If the volume stored in Menindee Lakes falls below 450 GL it reverts to New South Wales control until the storage in the lakes exceeds 640 GL.
New South Wales tributary inflows downstream of Albury (the Murrumbidgee River and Billabong Creek) are 100% New South Wales water, and Victorian tributary inflows downstream of Albury (the Ovens, Goulburn, Broken, Campaspe, and Loddon rivers) are 100% Victorian water. The major storages for rivers that are controlled by the states are Eildon (Goulburn River) in Victoria, and Burrinjuck (Murrumbidgee River) and Blowering (Tumut River) for New South Wales.
Lake Victoria (677GL) is an important balancing storage to meet South Australian requirements.
The Yarrawonga and Torrumbarry weirs are the major diversion points for the gravity feed Murray irrigation districts and can act as balancing storages for managing river operations.
Allocation history
Water extractions were capped at 1993/4 levels and the water sharing arrangements between states agreed nationally were agreed under “the Cap”.
Prior to the recent dry conditions and reduced system inflows, full high security allocations were almost always made for most regions although the amount of low security or low reliability allocation varied. Modeling when the cap was introduced showed that in a limited number of years high security or high reliability allocations would be less than 100%.
The prolonged dry period since 2001 has seen a record low inflow of 1040 GL in 2006/07, by comparison the 1982/83 drought inflow was 1940 GL. The last two years have been the driest two years on record with total inflows of 3340 GL (previous minimum two years inflows 6020GL).
Water sharing arrangements will continue to evolve due to the efforts by water managers to achieve the maximum allocations for irrigators from the limited water available.
Allocation decisions process
The water available to the states is determined by River Murray Water based on storage levels and inflow
s. Each state then allocates that volume of water based on a hierarchy of needs. Although slightly different between states the order is basically critical human needs, then stock and domestic requirements, then system losses to supply existing carryover water held in storage. After this allocations of high reliability/high security water are made and finally low reliability/general security.
As allocations increase there are incremental increases in system and delivery losses. There are also other specific issues such as concerns that not all carryover water is able to be delivered due to the system losses in supplying carryover water in the Victorian gravity districts.
More information on current and likely seasonal allocations is available from your local water authority.
Maximising allocations
River Murray Water in conjunction with the states water managers have altered the operating rules to reduce losses and make more water available for allocations. Examples are lowering weir pools and reducing minimum flows to hold water in upstream storages to reduce evaporation, the relaxation of water trading rules through the Barmah Choke extended to allow temporary water trade to downstream users, and pumping of “dead” storages.
Governments and water authorities are investing in improved delivery systems to reduce losses and make more water available. The recipients of the saved water vary according to who is investing in the system improvements. An example is the Northern Victoria Infrastructure Renewal Project which is a major part of the Victorian government’s upgrades to create water savings.
The environment has a water allocation however many environmental flows have been withheld in the dry conditions. There is a focus on creating critical drought environmental refuges. Historically much of the environmental flows have been due to flood events, it is over a decade since most of the Murray floodplain was flooded.
Seasonal allocations and outlooks
Allocations are reviewed regularly and announced twice monthly by the relevant state water authorities along with seasonal outlooks. The sites are:
- Victoria http://www.g-mwater.com.au/water-resources/ allocations/current.asp
- New South Wales http://www.naturalresources.nsw.gov.au/ water/legislation_awd.shtml
- South Australia http://www.dwlbc.sa.gov.au/murray/drought/ index.html
Current allocation information will be available at this regional presentation.
Water trade
Temporary trade occurs when all or part of the water allocation made to an entitlement is sold for the current irrigation season. The water may be carried over into the following season by the purchaser.
Prices for temporary water trade varied widely last season (2007/8). For example, the price per megalitre for water traded on the Watermove exchange into the allocation Zone 7 Vic Murray Barmah to SA border ranged from $1,050/ML in November 2007 to $220/ML in February 2008.
Permanent trade in entitlement occurs when the seller relinquishes all rights to the water entitlement in perpetuity. Permanent trade may require the payment of an exit fee to the water supply authority.
If ‘permanent’ water is purchased, it remains under the jurisdiction of the state it was sourced from. There
are two implication for this – if the water is sourced from interstate, the irrigator may receive two bills – one for the water volume from the state of origin and one for delivery and metering from the water authority where it is applied. The second implication is that the water is ‘tagged’. This means that it retains the allocation percent of the state/area of source.
The price of permanent water has not fluctuated as much as that of temporary trade water. The trading rules within and between states are complex and beyond the scope of this presentation. Your local water supply authority or water broker will be able to provide information specific to your region. Information on water trading is available on the MDBC web site:
- http://www.mdbc.gov.au/nrm/water_issues/water_trade
Web based water exchanges currently only match buyers and sellers at set intervals, although some are moving to real time trading and facilitating web based price negotiation. Water brokers can provide almost instant service and the certainty of a transaction completed rather than waiting for an exchange to go off. Water brokers views and experience can assist you make your water purchase decisions and complete all the necessary forms.
Water trade decisions
Water trade decisions are an individual business risk management action dependent on the operator’s attitude to risk. It is essential to be familiar with the water market and try to understand the things that affect others in the market. ABS data shows in 2004/5 dairy and other pasture irrigators used over 70% of the irrigation water in Victoria. Winegrapes are a relatively low water user in comparison. The conditions and performance of dairy and other pasture irrigators will have a significant affect on the temporary water market, as will the performance of other permanent horticultural plantings.
Water allocations in other regions that can be traded into your region are also important, for example, large volumes of Murrumbidgee water were temporarily traded into the Murray system in the 2007/8 season.
Although the water market seems complex, on current seasonal allocations and outlooks, water trading will be an essential part of winegrape business management.
Author
Mark Krstic
Grape and Wine Research and Development Corporation
