The National Water Commission has released a new report, Strengthening Australia’s Water Markets, which calls on governments to improve and coordinate the operation of water markets in Australia with the aim of increasing efficiency and providing for future developments.


“The ability to trade water, largely in the Murray-Darling Basin, has delivered real benefits to irrigators, regional communities and the environment.” National Water Commissioner Laurie Arthur said.


“Australia's water trade is a centrepiece of national water reform and has become a multi-billion dollar market since the first reported trades in the 1980s.”


Strengthening Australia's Water Markets was commissioned to analyse issues that may impede the efficient operation or further development of markets. The recommendations and supporting actions outlined in the report are intended to open up greater access to trading, improve market performance and allow for future growth.


“Better information about prices would encourage market participation and deliver more efficient transactions,” Mr Arthur added.


The report suggests that market confidence would be boosted by improving the business practices of water market intermediaries and the way that conflicts of interest are handled.


“More needs to be done to identify where and how groundwater trade can work, and ensure these areas are prioritised for reform.”


The report found that ‘Notwithstanding the notable successes of water markets in Australia, there is significant scope for further strengthening and refining them to increase efficiency, address impediments and provide for future developments. The water market has grown into a multi billion dollar institution, and it is timely to review some aspects of the supporting framework.’


Recommendations include:

  • State and territory water management agencies should identify groundwater areas that would benefit from groundwater trading and prioritise reforms to support trade in those areas. Agencies should simplify trading processes in groundwater areas where trade is already possible.
  • The quality, extent and transparency of information on trade processing need to be improved, and information on trade processing performance standards expanded.
  • Formal public disclosure of conflicts of interest should be made by all organisations with combined water market and other water management roles, together with disclosure of the arrangements for managing these conflicts. Compliance with steps to manage conflicts should be monitored. Structural separation should be considered where compliance is not adequate.
  • The Australian Government should require greater disclosure and transparency in the operations of the CEWH.
  • Price disclosure and data collection need to be mandatory, and the data should be monitored and verified. Trade processes and data collection mechanisms need to be amended to distinguish between different types of trades and transfers.
  • The public disclosure and transparency of allocation determinations should be improved, and information supporting determinations should be provided to the market.
  • The water market intermediary industry should improve its business practices, and further efforts should be made to improve traders’ and intermediaries’ knowledge of their rights and obligations under existing law. Monitoring should continue, and the costs and benefits of a registration scheme should be considered.
  • Jurisdictions should carry out the necessary water planning processes and resource assessment to enable trade.


The full report can be accessed here


The Commission has also released a companion report, Australian Water Markets: trends and drivers, 2007-08 to 2009-10 which analyses market trends as well as the drivers influencing market outcomes, based on three years of data contained in the annual Australian water markets reports. This report can be accessed here