Since its establishment, MJA has advised the water sector as a core business activity, working at all levels and for both public and private sector clients. MJA has advised on the creation of water markets and entitlements, pricing and regulation (for both regulators and water businesses), and State and Territory frameworks and planning strategies.
Pricing and regulation
MJA brings its deep understanding and experience of institutional arrangements and regulatory frameworks – in their broadest sense – to its work with water businesses, Government departments and agencies, local government and the private sector. This includes meeting the requirements of economic regulators; regulatory impact assessment; development of policy proposals and regulatory reforms; and planning to meet regulatory requirements.
Water prices and charges need to be designed to ensure:
- viability of the business,
- appropriate consideration of social equity;
- consistency with the needs and responsibilities of directors to ensure that the business can meet its ongoing obligations;
- consistency with the needs and responsibilities of price regulators to ensure that prices charged do not allow monopoly exploitation;
- incentives and price signals consistent with enhanced environmental and resource management and efficient outcomes including through water trading; and
- consistency with the National Water Initiative (where required), including charges for water storage and delivery services, and cost recovery for water planning and management.
MJA has extensive expertise in economic regulation and pricing in the water sector, built up over 15 years. MJA provides a wide range of pricing-related services including economic impact assessment of policy or business decisions, development of cost recovery and tariff proposals, and submissions to economic regulators.
Markets and Trading
The reality of water scarcity in Australia, compounded by drought and climate change, demands efficient and effective solutions to allocating water between different and competing uses. Water markets, combined with tradeable water entitlements, provide the capacity to:
- allocate – and reallocate – water efficiently and equitably;
- facilitate the movement of water to highest value end uses;
- enhance flexibility and profitability in water-dependent enterprises (e.g. irrigated agriculture).
MJA has been actively involved in water markets and water trade for over fifteen years and has considerable expertise and experience in this area. We provide analysis and advice on a range of issues that are important to the development of robust and efficient water markets, including:
- economic and policy analysis of market requirements and of obstacles to trade and market development;
- market design and supporting policy and legislation;
- water entitlement definition and related issues (such as risk assignment; delivery entitlements; exit fees; ‘tradeability’ of environmental water); and
- water accounting and registration.
Although water markets and trade can deliver substantial economic and commercial benefits, public perceptions of their benefits and costs vary widely. The movement of water between communities, or from commercial utilisation to the environment are examples of controversial issues that can benefit from the objective and robust analysis that MJA provides.
For more information relating to the water sector, please contact:
Dr Jeremy Cheesman or Dr John Marsden in our Melbourne office: +61 3 9882 1600.