There are 2 types of water trade:
Permanent trade is the trade of water entitlements (known as 'entitlement trade'). For example, if an entitlement holder sold their water entitlement permanently.
Temporary trade is the annual trade of water allocations (known as 'allocation trade'). For example, an entitlement holder can trade their allocation in any season, based on their own business model.
Anyone holding water rights or entitlements may trade these freely – except where restricted by physical constraints (such as geography or lack of connections to the system) or water supply system considerations.
The price of water reflects supply and demand factors. It differs across regions and type of rights, and with time.
The Murray–Darling Basin Authority (MDBA) facilitates fair, consistent and transparent water trade across the Murray–Darling system. We provide information on water trading and works.
Water entitlements, allocations and usage
Water entitlements
Water entitlements are rights to an ongoing share of water within a system.
The financial value of a water entitlement is determined by the water market (which operates like any other free market) and is subject to change.
Water allocations
Water allocations are the amount of water distributed to users (water entitlement holders) in a given water year.
Allocations against entitlements change according to rainfall, inflows into storages and how much water is already stored. Allocations can increase throughout the year in response to changes in the system.
This method provides people with knowledge about when they will receive water and how much, while allowing Basin state governments to manage water availability through varying climatic conditions.
Water usage
Water usage is how much water is actually used from the water that is allocated. When water is allocated to an entitlement holder, they use it as needed – sometimes they only use a proportion of their allocated water – for example sometimes they will use 30%, sometimes 95% and sometimes they'll carryover to the next water year (depending on the state's rules).
This is an individual business decision, where entitlement holders consider climate and rainfall, their cropping cycle, and their own business plans.
Roles and responsibilities
Irrigation infrastructure operator (IIO) rules
Irrigation infrastructure operators (such as Murray Irrigation) create and maintain trading rules within their irrigation network. These rules ensure the operation, maintenance and accounting of trades that occur within their networks. An irrigation infrastructure operator owns or operates water service infrastructure for delivering water for the primary purpose of irrigation.
The Basin Plan water trading rules require IIOs to provide their trading rules to us, to ensure they are consistent with the Basin Plan.
Murray–Darling Basin Authority
The MDBA facilitates fair, consistent and transparent water trade across the Murray–Darling system.
Inspector-General of Water Compliance
The Inspector-General of Water Compliance (IGWC) is a regulatory role. It aims to improve trust and transparency in implementing the Commonwealth’s Basin water reform agenda, deliver greater consistency and harmonisation of water regulation across the Basin and strengthen Basin Plan compliance and enforcement. One of the main responsibilities of the IGWC is enforcing compliance with the Basin Plan water trading rules.
The Australian Competition and Consumer Commission (ACCC)
The ACCC has monitoring, enforcement, advisory and price-setting roles (in some cases) for water market rules and water charge rules. Under the Water Act 2007, the Australian Government Minister responsible for water makes or changes these rules.
The water market rules and water charge rules:
- Reduce barriers to trade by regulating Irrigation Infrastructure Operators' transformation arrangements, maximum termination fees and some trade-related charges.
- Improve pricing transparency by requiring the publication and provision of information about charges to water users.
- Regulate how infrastructure operators' charges are set, in certain circumstances.
- Restrict the ability of infrastructure operators to discriminate against particular customers.
The ACCC also considers complaints about anticompetitive conduct in the water industry and water markets and enforces the Competition and Consumer Act 2010 (Cth).
More information on these rules is available on the ACCC website.
The ACCC has conducted an inquiry into markets for tradeable water rights in the Murray–Darling Basin. The ACCC was asked to recommend options to enhance markets for tradeable water rights, including options to enhance their operations, transparency, regulation, competitiveness and efficiency. The ACCC's final report was released on 26 March 2021.
The Minister for Resources and Water has engaged an independent Principal Adviser to work with the Australian Government, Basin states, industry, communities, and other stakeholders to develop a phased, practical, and cost-effective plan for water market reform having regard to the ACCC’s findings and recommendations.
More information on the Water market reform roadmap is available from the Department of Climate Change, Energy, the Environment and Water.
Basin state and territory governments
Basin state and territory governments are responsible for:
- determining water allocations
- developing policies and procedures for trade
- monitoring water use
- developing water resource plans that set the rules for sharing water between users and the environment
- day-to-day trade operations such as trade applications and approvals.
Basin state governments set trading rules within their respective states. These rules need to be consistent with the Basin Plan and generally outline:
- where trade is allowed between different locations
- how trade transactions need to be conducted within the state.
This arrangement with state and territory governments provides a consistent water trading environment across the Basin, while still recognising states and irrigation infrastructure operator's (IIO) ability to restrict trade where necessary.
More information from state governments
Last updated: 17 March 2025