If you’re considering selling water to the Australian Government, then you should hopefully be aware that Expressions of Interest (EOIs) are now open for water right owners who wish to sell water rights in the southern connected basin in 2025.
In the second part of this series on navigating the new MDB water purchase strategy and framework, Erika van ‘t Veld summarises key aspects of ‘the Framework’ – the Government’s approach to recovery of 450 GL of additional environmental water that is intended to ensure there is enough water to sustain the health of the Murray-Darling Basin’s natural ecosystems and to achieve widespread enhanced environmental outcomes. Erika also provides a status update on the new Water Markets Intermediaries Code.
This article aims to help readers understand the approach being used by the Australian Government to achieve Basin Plan outcomes.
Part 1 (spotlight on the Strategy) can be found here: https://www.marsdenjacob.com.au/article-and-resource/navigating-the-new-mdb-water-purchase-strategy-and-framework/
Background
In July 2024, Marsden Jacob’s Simo Tervonen and Erika van ‘t Veld presented a Talks Live webinar on ‘Navigating Australian water markets’. As part of this webinar, Erika and Simo discussed the Government’s next steps in their direct water purchasing program to return 450 GL of water from the Murray Darling Basin (MDB) to the environment by 2027.
On the same day, the Department of Climate Change, Energy, the Environment and Water (DCCEEW) released the full Restoring our Rivers: Framework for delivering the 450 GL of additional environmental water and on 15 July, it published the Restoring our Rivers Trading Strategy.
What is the Restoring our Rivers Framework?
The Framework outlines the Australian Government’s adaptable approach to recovery of 450 GL, which is governed by three guiding principles:
- Enhanced environmental outcomes: Restoring and protecting the ecological health of the Basin.
- Minimising socio-economic impacts: Reducing negative impacts on local communities.
- Achieving value for money: Ensuring cost-effective water purchases. Marsden Jacob has published an assessment of market price information across a range of entitlements in MDB catchments, including those relevant to the tender, available publicly here.
The ‘toolkit’ for achieving water recovery
The Framework also highlights the Commonwealth’s July 2024 Implementation Plan, which sets out the full suite of water recovery tools that will further water recovery for the environment in a steady and staged approach:
- Resilient Rivers Program This program focuses on infrastructure projects, rule changes, and partnerships to enhance water recovery. Projects range from irrigation network modernisation to land and water partnerships that support both water conservation and biodiversity. More information on the Resilient Rivers Water Infrastructure Program can be found here.
- Voluntary Water Purchase The Government offers to purchase water entitlements from willing sellers, ensuring fair compensation while meeting environmental goals. This option serves as a last-resort mechanism, providing flexibility in meeting the 450 GL target. We discussed and the Restoring Our Rivers Trading Strategy in Part 1 of this LinkedIn post series, which can be found here. Information on the Voluntary Water Purchase Program can be found here.
- Sustainable Communities Program This program is designed to assist communities in transitioning to a future with less water. It includes over $300 million in funding to support local economic diversification, workforce development, and infrastructure improvements. More information on the Sustainable Communities Program can be found here.
Water Markets Intermediaries – Code and Statutory Trust Accounting regulations
As you may be aware, especially if you’re a water market intermediary, the Australian Government has committed to introducing a new Water Markets Intermediaries Code (the Code) that will regulate the conduct of water markets intermediaries in dealings with their clients.
The Code will apply to water market intermediaries such as:
- brokers
- exchanges
- irrigation infrastructure operators (IIOs) that provide intermediary services including operating an exchange, and
- any other intermediary service providers.
While the Code is currently under development, the commitment is that the Code and statutory trust accounting framework will come into effect no later than 1 July 2025.
This means that water market intermediaries will be considering what they need to do to meet these new requirements, and so it is possible that there may be some service changes experienced by their customers in the future.
Concluding remarks
The Restoring our Rivers Framework provides a structured, adaptable, phased and, importantly, integrated approach to water recovery. This approach helps stakeholders to understand how the Australian Government intends to achieve multiple long-term benefits, including better environmental outcomes, improved water security, and stronger community resilience through localised initiatives.
It is encouraging to see that the Framework also focuses on transparency and collaboration with key Basin stakeholders. By including both non-purchase and water purchase recovery methods, and allowing time for consultation, feedback and impact evaluation, the Government is paving the way for more resilient river systems while balancing socio-economic considerations.
The team at Marsden Jacob Associates looks forward to tracking the progress of the Basin Plan’s implementation and the Water Market Intermediaries Code.
Published October 17, 2024
Disclaimer
The information presented here is based on publicly available information including from the Delivering the Basin Plan in full, Restoring Our Rivers: Framework for delivering the 450 GL of additional environmental water document published on 4 July 2024, and the Restoring Our Rivers trading strategy published on 15 July 2024 and is intended for informational purposes only. It is not intended as financial advice for water holders or guidance on how to sell your water, and we do not accept responsibility for any loss caused by reliance on it.
