Portfolio Management Update
March - June 2014
The Commonwealth Environmental Water Office successfully conducted its first trade of regulated water allocations in the Gwydir catchment of New South Wales in January 2014. This trade was conducted in a manner that was consistent with the requirements of the Commonwealth Environmental Water Trading Framework.
A review of the processes used indicates that the tender mechanism and internal business systems were appropriate and fit for purpose, as demonstrated by a timely and fair assessment of bids and a good return for the water sold by the Commonwealth Environmental Water Holder.
These trading outcomes were specific to the Gwydir sale, and do not preclude other market mechanisms being used in other circumstances. Outcomes from this first trade and the trading framework can be found at Trade of Commonwealth environmental water.
The Commonwealth Environmental Water Holder has considered opportunities to trade water in other catchments in the Murray-Darling Basin during the remainder of the 2013-14 water year.
Decisions on whether water allocations are to be sold are based on whether environmental needs have been met, as required under the Water Act 2007, and after considering the optimum level of carryover required (where available) to meet future environmental needs. Information about how the water portfolio is managed is available at www.environment.gov.au/topics/water/commonwealth-environmental-water-office/about-office
Allocation disposal – Northern Basin
It is anticipated that the sale of Commonwealth environmental water allocations over the remainder of 2013-14 may occur in the northern Murray-Darling Basin. In particular, we are actively investigating the opportunity to sell water allocations in the Peel River in the Namoi and in the Gwydir and Lachlan catchments in New South Wales.
At this stage, the sale of this year’s seasonal allocations in the Peel is the priority because the water is not required for the remainder of the year. There is no carryover available with these entitlements.
Meanwhile, the sale of water allocations in the Gwydir and/or Lachlan, if any, may occur later in the water year (with the water likely to be used in the next irrigation season) subject to further analysis of environmental needs in 2014-15 and beyond; a clearer understanding of likely seasonal conditions and allocations in 2014-15; and prevailing market conditions.
The Commonwealth Environmental Water Office will provide further information to the water market prior to undertaking any trading action.
Allocation disposal – Southern Basin
The Commonwealth Environmental Water Office does not currently plan to sell water allocations in the southern Murray-Darling Basin over the remainder of 2013-14. It is expected that available water allocations will be required to meet current environmental needs and carried over to meet foreseeable future environmental needs.
The Commonwealth Environmental Water Office does not currently plan to purchase water allocations over the remainder of 2013-14 but may investigate opportunities as they arrive. Opportunities to purchase water allocations will be examined as part of the 2014-15 annual water use options planning process, which occurs between February and June 2014.
The Commonwealth Environmental Water Office does not currently plan to trade permanent water entitlements over the remainder of 2013-14.