CEWH’s first environmental water trade

CEWH’s first environmental water trade

20.01.2014 - Posted by Mark Stacey
The Commonwealth Environmental Water Holder (CEWH) today announced a plan to sell 10 gigalitres of water back to irrigators in the Murray Darling Basin. Hearing this on breaky news this morning my first reaction was not positive – thoughts of wasted effort, lost momentum, and a quick grab for cash immediately filled my mind. Fortunately, now the details have been released I can see how this is an important step forward for environmental water management.

The first thing to note is that this sale only includes a small proportion of the CEWH’s annual allocations, not their permanent water entitlements (for those not familiar with these terms, an analogy is to equate an entitlement to an annual salary, and an allocation to deposits in the bank). At the start of 2014 the CEWH’s water allocation totalled 864 GL, acquired through their entitlement of 1,704 GL. The 10 GL sale (0.02 Sydharbs in layman’s terms) therefore represents just over 1% of their available water and is valued at about $1.4 million at the going rate. According to the CEWH this water is not required to meet this season’s watering plan and will provide greater environmental benefit in future years.

The sale is also an important milestone for the water market - it is the first time the CEWH has traded environmental water since its inception in 2008. Australia’s waterways have adapted to some of the most extreme variability in the world, presenting major challenges to managing these systems within a water market that was designed to provide consistent and reliable irrigation supplies. With this in mind trading has an important role to play in accommodating variability - temporarily selling water when it’s not needed to purchase when it is. Seen in this light the CEWH’s sale today represents an important step forward and efficient use of our limited water resources.

Gwydir Wetlands following environmental watering, New South Wales (image sourced from Commonwealth Environmental Water Holder)