Commonwealth Consolidated Acts Commonwealth Consolidated ActsNote: See section 4.
In this Schedule:
"exchange rate" means the rate of conversion to be applied to water to be traded from one trading zone and/or jurisdiction to another.
"trading zones" means zones established to simplify administration of a trade by setting out the known supply source or management arrangements and the physical realities of relevant supply systems within the zone so that trade can occur within and between zones without first having to investigate and establish the details and rules of the system in each zone.
"water access entitlement tagging" means an accounting approach that allows a water access entitlement that is traded from one jurisdiction or trading zone to another jurisdiction or trading zone to retain its original characteristics when traded to the new jurisdiction or trading zone (rather than being converted into a form issued in the new jurisdiction or trading zone).
This Schedule sets out:
(a) the Basin water market and trading objectives; and
(b) the Basin water market and trading principles.
Note 1: These objectives and principles are relevant to the formulation of:
(a) the provisions of the Basin Plan (see item 12 of the table in subsection 22(1)); and
(b) the provisions of water management plans for particular water resource plan areas (see subsection 22(3)); and
(c) the provisions of the water market rules (see paragraph 97(1)(b)).
Note 2: These objectives and principles are based on those set out in clauses 58 to 63 and Schedule G of the National Water Initiative when Part 2 of this Act commences.
3 Basin water market and trading objectives
The objectives of the water market and trading arrangements for the Murray - Darling Basin are:
(a) to facilitate the operation of efficient water markets and the opportunities for trading, within and between Basin States, where water resources are physically shared or hydrologic connections and water supply considerations will permit water trading; and
(b) to minimise transaction cost on water trades, including through good information flows in the market and compatible entitlement, registry, regulatory and other arrangements across jurisdictions; and
(c) to enable the appropriate mix of water products to develop based on water access entitlements which can be traded either in whole or in part, and either temporarily or permanently, or through lease arrangements or other trading options that may evolve over time; and
(d) to recognise and protect the needs of the environment; and
(e) to provide appropriate protection of third - party interests.
4 Basin water market and trading principles
(1) This clause sets out the Basin water market and trading principles.
(2) Water access entitlements may be traded either permanently, through lease arrangements, or through other trading options that may evolve over time, if water resources are physically shared or hydrologic connections and water supply considerations would permit water trading.
(3) All trades should be recorded on a water register. Registers will be compatible, publicly accessible and reliable, recording information on a whole of catchment basis, consistent with the National Water Initiative.
(4) Restrictions on extraction, diversion or use of water resulting from trade can only be used to manage:
(a) environmental impacts, including impacts on ecosystems that depend on underground water; or
(b) hydrological, water quality and hydro - geological impacts; or
(c) delivery constraints; or
(d) impacts on geographical features (such as river and aquifer integrity); or
(e) features of major indigenous, cultural heritage or spiritual significance.
(5) A trade may be refused on the basis that it is inconsistent with the relevant water resource plan.
(6) Trades must not result in the long - term annual diversion limit being exceeded. That is, trades must not:
(a) cause an increase in commitments to take water from water resources or parts of water resources; or
(b) increase seasonal reversals in flow regimes;
above sustainable levels identified in relevant water resource plans such that environmental water or water dependent ecosystems are adversely affected.
(7) Trades within overallocated water resources (including ground water resources) may be permitted in some cases subject to conditions to manage long - term impacts on the environment and other users.
(8) Where necessary, water authorities will facilitate trade by specifying trading zones and providing related information such as the exchange rates to be applied to trades in water allocations to:
(a) adjust for the effects of the transfer on hydrology or supply security (transmission losses) or reliability; and
(b) reflect transfers between different classes of water resources, unregulated streams, regulated streams, supplemented streams, ground water systems and licensed runoff harvesting dams.
(9) Water trading zones, including ground water trading zones, should be defined in terms of:
(a) the ability to change the point of extraction of the water from one place to another; and
(b) the protection of the environment.
The volume of delivery losses in supplemented systems that provide opportunistic environmental flows will be estimated and taken into account when determining the maximum volume of water that may be traded out of a trading zone.
(10) Exchange rates must not be used to achieve other outcomes such as to alter the balance between economic use and environmental protection or to reduce overall water use.
(11) Trade in water allocations may occur within common aquifers or surface water flow systems consistent with water resource plans.
(12) Trade from a licensed runoff harvesting dam (that is, not a small farm dam) to a river may occur subject to:
(a) a reduction in dam capacity consistent with the transferred water access entitlement; or
(b) retention of sufficient capacity to accommodate evaporative and infiltration losses; or
(c) conditions specified in water resource plans to protect the environment.
(13) Compatible institutional and regulatory arrangements will be pursued to improve intrastate and interstate trade, and to manage differences in entitlement reliability, supply losses, supply source constraints, trading between systems and cap requirements.
(14) The transfer of water allocations and entitlements will be facilitated (where appropriate) by water access entitlement tagging, water access entitlement exchange rates or other trading mechanisms that may evolve over time.
(15) Institutional, legislative and administrative arrangements will be introduced to improve the efficiency and scope of water trade and to remove barriers that may affect potential trade.
(16) Barriers to permanent trade out of water irrigation areas up to an annual threshold limit of 4% of the total water entitlement of that area will be immediately removed, subject to a review by 2009 by the National Water Commission under paragraph 7(2)(h) of the National Water Commission Act 2004, with a move to full and open trade by 2014 at the latest.
(17) Subject to this clause, no new barriers to trade will be imposed, including in the form of arrangements for addressing stranded assets.