Trading Water Access Entitlements in Queensland

Water is a limited and precious resource in Australia. Because of the increasing demand for water from all sectors of the economy and the variability in supply, efficient management of water resources is of vital importance. The national water reform agenda has provided a strong impetus to all states and territories to progressively move towards more efficient and sustainable water management. The Queensland Water Act 2000 is the legislative framework for providing water for the environment and for planning for the security of supply to water users. The comprehensive water planning process prescribed in the Act results in new tradeable water allocations that are separate from land. These water allocations are well specified and can be traded on a permanent or temporary basis. Trading of water allows it to move to its highest value use, thereby encouraging the most efficient distribution of this limited resource. In addition to transferring ownership of water allocations, it is also possible to change the attributes of the allocation, such as the location from which water may be taken. Changes to water allocations are subject to approval from the resource manager. Pre-testing allows for certain changes to be approved very quickly, making the trading process more streamlined and cost effective. Temporary trades, or seasonal water assignments, currently account for the majority of water trades in Queensland. However, permanent trading activity is expanding steadily as old water entitlements are converted to tradeable water allocations and as the market matures. The permanent trading market provides significant opportunities to the mining sector. It allows mining companies to buy water allocations at market prices without compromising environmental outcomes or causing third party impacts.