Obtain additional water allocations instead of entitlements
Water allocations are credited to access licences based on available water determinations, providing licence holders with a proportionate share of the available water. Determinations can be expressed as a percentage or in ML per unit of share component.
Water allocations can be traded on the water market under specific provisions of the Water Management Act 2000, subject to restrictions outlined in the Minister's Access Licence Dealing Principles Order 2004 or relevant water sharing plans.
Local water utilities may opt to purchase water allocations from the market instead of seeking additional licence entitlements, especially for temporary or short-term needs like replenishing recreational facilities during dry periods.
Advantages of purchasing water allocations
Purchasing water allocations as required, instead of obtaining additional licence entitlement, provides the following benefits:
- Risk reduction: Reduces the risk of impacting other users by avoiding breaches of water sharing plan limits and ensuring water availability for lower priority licences remains within the limit.
- Equity retention: Retains equity with other water users who can only increase their water extractions by purchasing an additional licence share component or water allocations through the water market.
- Allocation preservation: Does not reduce water allocations currently required for water-dependent industries, such as irrigated agriculture; licence holders will only sell water allocations that are not needed for their individual business needs.
- Market strengthening: Strengthens the water markets in NSW by broadening the participation of water users, contributing to beneficial outcomes for the state's economy and productivity improvements.
- Cost advantage: Offers cost advantages as the cost of water allocations is much lower than the purchase of licence entitlements.
- Flexibility enhancement: Increases flexibility for water utilities, allowing them to choose when to buy water allocations for a specific year.
Selling local water utility allocations
Water access licence holders, including local water utilities, can apply to trade water allocations with WaterNSW. Applications are subject to rules in the Water Management Act 2000, the Access Licence Dealing Principles Order 2004, and relevant water sharing plans.
However, local water utilities cannot trade water allocations if it jeopardises their ability to meet the water needs of their supply area. Section 77A of the Water Management Act 2000 stipulates that specific purpose access licences may be cancelled if their intended purpose no longer exists.
Selling traded water allocations under specific purpose access licences may lead to reduced access licence entitlements. Unused water allocations from general security licences can be traded to other users.
Changing licence categories
The conversion of some licences from one category to another is possible under section 71O of the Water Management Act 2000. However, section 71O prohibits changing the category from or to a local water utility access licence. The conversion of the access licence category is also constrained by the rules in the Minister’s Access Licence Dealing Principles Order 2004.
The conversion of any category of specific purpose access licence to another category is also not permitted. This is because section 77A of the Water Management Act 2000 requires the Minister to cancel a specific purpose access licence if the purpose for which it was granted no longer exists. An application to convert a specific purpose access licence category would prove that the purpose for which the licence was granted no longer exists.