Water is a finite resource. Cities in Australia rely on water from various sources: Adelaide relies on the Murray River, while Perth uses surface and groundwater reservoirs. Sydney, Melbourne, Brisbane, and Canberra depend on surface water catchments and reservoirs.
The need for governments to ensure water distribution is managed effectively has been prompted by the growth of urban populations and the possible effects of climate change. The cost to buy water has increased due to the expense of building the required infrastructure and handling the water distribution, and it appears that this trend will continue.
The State governments are constitutionally responsible for managing water resources within the Australian federal system.
Australia’s water consumers can be divided into two groups: those who receive their water from public infrastructure and those who receive their water from privately owned infrastructure. For instance, in Queensland, approximately 50% of the infrastructure that is used to supply agricultural water is owned and constructed by farmers.
Who determines the cost to buy water?
The National Water Initiative (NWI) pricing principles regulate the cost to buy water in Australia. To help states execute water pricing consistently, the Australian Government and state and territory governments jointly developed the principles.
Following the setting of bulk water prices by the State Governments, either the local council or water authority distributes and bills water in each area.
Two costs typically make up your water bill:
- A variable water uses charge based on the actual quantity of water used.
- A fixed-fee service charge covers the supply of water to your house and connection to the drainage system.
The cost to buy water is calculated per kilolitre (1,000 litres). Some states employ “tiered pricing” for water use, which means that the more water you use, the higher the prices your water will be charged at. This strategy aims to promote more efficient water use.
Water Markets and Trade in Australia
According to the Australian Constitution, the States are in charge of managing the country’s water supplies. Water market management is mainly the responsibility of the state governments of New South Wales, Queensland, South Australia, and Victoria, and each state has its own procedures and regulations for allocating water.
This water is traded on markets along river networks, between catchments, and within catchments. Water users can purchase and sell water using this type of trading to meet their specific needs. For many irrigators, treading water has evolved into an essential economic tool.
What is Water Trade?
Water holders can choose whether they need to buy or sell water at a specific time, thanks to the water trade. There are two kinds of water trade:
- Permanent trade is when an entitlement holder sells their water entitlement permanently.
- Temporary trade is when an entitlement holder trades their allocation in a particular season based on their business model.
Anyone holding water rights/entitlements may trade it freely. The price of water reflects supply and demand factors and varies over time, across rights categories, and across locations.
Water in the Murray–Darling Basin can be bought and sold, either temporarily or permanently. The Murray–Darling Basin Authority (MDBA) facilitates fair and transparent water trade.
Features of Water Trading
- Around $2 billion is traded in water each year in the Basin.
- Water trading promotes sustainable water management and enables Murray-Darling Basin farmers to use water more effectively.
- About 60% of Australia’s water supply is used by irrigated farmland in the Basin.
- Water is allocated according to entitlements in response to variables like rainfall and storage levels, and entitlement holders are free to use the water as they see fit.
Common Terms to Comprehend
| Water entitlements | Water entitlements are rights to an ongoing share of water within a system. |
| Water allocations | Water allocation is the amount of water distributed to water entitlement holders in a given water year. Allocations against entitlements change according to rainfall and inflows into previous storages. |
| Water usage | Water usage is how much water is used from the water that is allocated. |
The relationship between water entitlements, allocations and usage will differ in wet and dry years. Your entitlement is the same, but in a wet year, more water is available, but you might use less. Your allocation in a dry year will be less, but you might use more water.