Overview of water trading
Water trading is essentially about buying and selling water separate to the sale of land.
It is a key element of the National Water Initiative agreed by the Australian, state, and territory governments to drive water reform at the national level, by promoting a sustainable and efficient irrigation industry while ensuring that our rivers stay healthy.
Why trade water?
Queensland’s highly variable rainfall, combined with increasing demand and competition for its water resources means that we need to be able to adapt quickly by reallocating water in response to changes in:
- markets for farm products and other industries
- environmental conditions
- the size of cities and towns
- availability of water caused by climate change and other factors.
Trading is a way of achieving this, while enabling users to reallocate water voluntarily. It also sends market signals that encourage users to:
- value the resource appropriately
- use water more efficiently
- direct water to its most productive use.
Establishing water markets in a fair and open way provides certainty for the water industry and for the environment, helping to create a stable and more attractive business environment.
Benefits of water trading
Water trading enables users to make considered decisions about water use, and to tailor water allocations to their needs, with the market setting or determining price. Over time, this promotes efficiency and the development of more profitable businesses.
- helps people clearly see the value of their water as a secure asset, and obtain finance against its value
- encourages water-use efficiency by allowing allocation holders to sell, lease or seasonally assign spare water
- enables retiring landholders or those wanting to stop production to sell their water without selling their land
- enables users to increase water supplies and improve the reliability of current allocations, and to switch to crops that generate higher returns
- enables new industries to acquire water without jeopardizing the environment, or affecting other water users.
Last reviewed 15 April 2010
Last updated 21 May 2009