Water trading strategy 2020-21

The Victorian Environmental Water Holder has released its annual allocation trading strategy to transparently outline where we may buy or sell water for the environment across Victoria in 2020-21.

The VEWH's water allocation trading strategy 2020-21 provides a high-level overview of the types of water trading activities that VEWH may undertake across Victoria in 2020-21.

Water trading allows the VEWH to move water to the systems where it is most needed, and to smooth out some of the variability in water availability across systems and across years.

“The VEWH regularly assess its environmental demand and supply position throughout the year, considering factors such as environmental condition and demand, current and forecast climate conditions and water availability, carryover capacity and market conditions,” said Co-CEO Beth Ashworth.

“Any decisions to buy or sell water will be publicly announced, including on our website.”

The VEWH ensures adequate information is provided to the marketplace, alleviates positive or negative discrimination against potential buyers and sellers or intermediaries and minimises any real or perceived impacts on the market from trading activity.

To support the VEWH’s continuous improvement in trade activity, last year an Independent Review was conducted by Marsden Jacobs. The review and article on the VEWH’s website can be found here.

This strategy covers both commercial water allocation trade (selling and purchasing water allocation), and administrative water transfers ('internal' transfers of VEWH allocation or transfers between water holders).

Availability of water for the environment is expected to be low to moderate across the state in 2020-21. Average to wet conditions and associated inflows to storages will be required to increase water availability to moderate to high levels.

The purchase or transfer of water allocation has been flagged as a possibility for northern Victoria, and the Wimmera-Glenelg, Latrobe, Werribee and Maribyrnong systems. This would only be to address a shortfall in meeting critical environmental needs and is more likely under dry or drought conditions.

The VEWH may consider selling part of its allocation in northern Victorian systems if foreseeable environmental demands can be met. If this occurs, it would most likely be from summer 2020-21 onwards and be more likely following an average to wet winter-spring.

In 2020-21, the VEWH intends to implement a range of administrative transfers to facilitate the delivery of environmental water across Victoria or for carryover purposes, including water held by other environmental water holders. Similarly, administrative transfers will be undertaken to transfer allocation available for use in the Snowy River.

Download a copy of this trade strategy: Water allocation trading strategy 2020-21