Trade Water Like a Big Shot

By | 18/06/2018

Trade Water Like a Big Shot

I predict that trade out of the Goulburn system will be restricted early next year. This includes the Campaspe and Loddon systems.

These valleys can “owe” up to 200 GL to the Victorian Murray. The amount “owed” is made up of the amount traded to the Victorian Murray, less water used, spilled and back trade. Once 200 GL is reached, you can’t trade Goulburn to Murray until less than 200 GL is “owed”.

In recent years, more water has been traded to the Murray than vice versa in Victoria. A large part of the increase in demand is from new nut orchards. I think it’s likely we will reach the 200 GL limit early in the new water year (which starts on 1 July). After then, opportunities to transfer out will be few and far between.

The big shots in the water market will be transferring their water to the Murray early on in the year. The benefit of having your water on the Murray is that it can command the highest price on the temporary market. Zone 7 (Victorian Murray downstream of Barmah) is the best place to have temp water.

It’s a self-fulfilling prophecy

Self-fulfilling prophecy

If a big shot thinks Goulburn to Murray trade will close, then it’s wise for them to transfer their Goulburn water to the Murray now. However, the act of doing so brings the system closer to the trade limit. When all big shots think trade will close, then all big shots will transfer their water, which will bring us to the 200 GL limit and trade will close. The prophecy will prove to be correct.

You can play this game too

In Victoria, the instrument used to trade temporary water is the Allocation Bank Account (ABA). If you are using water on your farm, you’re using water from the ABA associated with the farm. Similarly, if you have a permanent water entitlement, the ABA associated with the entitlement will be credited temporary water. You can also set up an ABA which is associated with nothing. To set up an ABA associated with nothing costs you nothing.

If you have water in Victoria outside of zone 7, I suggest you set up a zone 7 ABA associated with nothing. It costs you nothing and you don’t have to do anything with it, but it gives you options.

At the beginning of the year, the water available to transfer will be the new allocations (current forecast) plus carryover not in the spillable account. Rather than sort through the rules, it’s easiest to plug your scenario in the carryover calculator. The “available” water is what you can transfer.

What I can do for you

I can set up a zone 7 ABA for you and transfer the water when it’s possible. Please contact me to get the ball rolling. The only details I need in your initial message are your contact details, the ABA numbers and the volume.

This is not water “parking”

Water “parking” is where you transfer your temp water onto someone else’s entitlement. There are two reasons you might do this:

  • To carryover to the next year. You have excess temp water, but you can’t carry it over on your entitlement. So you find someone who can. You put your temp water on their entitlement, carryover to the next year, then transfer it back to you.
  • Move your water out before trade closures. You have Goulburn water, but you think Goulburn to Murray trade will close, so you put your temp on someone else’s ABA in the Murray. Trade closes, then you sell your temp on the Murray from someone else’s ABA.

What I’ve described to set up is different because throughout the whole process, the water is in your name and under your control. Once it’s transferred to your zone 7 ABA, you’re free to do whatever you want with the water.

 

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