Understanding the water market
We heard from you that the process for seeking, buying and selling water was not clear. There is confusion over a multitude of areas relating to transfers. To better understand the water market the Limestone Coast Landscape Board has commissioned a study to be undertaken by Flinders University. The study will explore the current market, including but not limited to:
- Advantages and disadvantages.
- Barriers and limitations.
- Key regional drivers.
- Perceptions and social licence considerations.
The study will also undertake a desktop review of relevant literature relating to economic water markets. Relevant case studies will apply key learnings of water market development or policy to the Lower Limestone Coast Prescribed Wells Area. The study will provide a risk analysis of current and future market scenarios based on key localised drivers and limitations.
The Plan incorporates principles to allow for temporary and permanent transfers of water licences. The water market in the region is not well developed, particularly for temporary trades.
Anecdotally there are a number of factors contributing to this:
- The process for seeking, buying and selling water is not well understood. This is resulting in those who have water tending to hold onto water. They are also more likely to acquire more water in comparison to those who don’t have water and are trying to enter the market.
- There is confusion about what components of a licence can be transferred, the conditions of transfers, whether it is possible to transfer within a management area, between management areas and in the Designated Area.
- There is confusion over why a transfer is unsuccessful which contributes to water licence holders not seeking to undertake future transfers.
- There is a lack of understanding of principles for rotational crops and allowances for seasonal transfers.
- The cost of one or more hydrogeological assessments required for a transfer is seen as a prohibitive factor.
- There is a lack of demand as many licensees hold significantly more allocation than they use.
- Access to carry-over of up to 25% of unused allocation from the previous year can meet a licence holder’s demand for water negating the need for transfers.
- Unused allocation is being retained rather than transferred as a buffer against potential reductions to allocations.
- Retaining unused allocation rather than transferring retains an increasing value asset.
- Prohibitive infrastructure and operating costs limit demand and activation of unused allocations.
- Over-allocated management areas limit transfers. For example if where an industry wants to grow based on land use capabilities or other factors is already over allocated no transfers are possible.
