Australian irrigators have turned to water markets to lessen their exposure to loss during dry spells when supplies are limited. This article examines irrigation activity in Victoria, Australia’s water markets, and how water rights work, covering ten years. In particular, it investigated the prevalence of price clustering, a phenomenon in other mature markets characterised by water bids and offers that tend to settle around the exact figures.
Uncertainty and strategic conduct contributed to categorising bid/offer prices in Victoria’s water allocation markets. The risks and rewards of clustering are weighed by water traders, who make decisions based on their comfort with uncertainty.
Increased market uncertainty was the most common explanation for buyer clustering behaviour in the water market. In contrast, strategic behavioural factors that evaluate the costs and benefits of clustering most commonly explained seller clustering behaviour.
1. Valid Water Permits and Rights to Use Water
The Minister for Environment and Water provides water licences, which grant the bearer an irrevocable right to draw water from a regulated water resource. Currently, charges may be given as bundles or as separate components.
A person’s right to receive a certain quantity of water arises if they have obtained a water licence or entitlement share for that quantity.
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Water use under SA water allocations may be carried over from one water usage year to the next in certain regions.
2. Notice under S105 of the Landscape SA Act 2019
A notice of authorisation under section 105 of the Act may be issued by the Minister of Environment and Water to permit the taking and utilisation of water from a regulated water resource for a specified purpose. Some need special authorisations for particular activities, such as collecting roof runoff or running controlled aquifer recharge schemes, while others are valid for the whole state.
These privileges are time-limited or perpetual, depending on the terms of the authorisation notice.
3. Rights to Land and Water
All water permits in South Australia now exist independently from property ownership. Therefore, although a water licence transfer may be included in a property sale agreement, it must go through its transfer procedure and get its permission before it can be finalised.
Other permits to use water are sometimes associated with properties in areas where water rights have indeed been unbundled. These approvals will pass to the new registered owner when the land is sold (s).
Any water usage restrictions associated with a bundled water licence may be transferred together with the land title in case of a property sale.
It is important to note that a person may require the proper permissions (in the form of a state water works licence, anandite use clearance or restrictions on a bundled water licence) to impose water at a specific place in a certain way. Activities that affect water resources are referred to as water-impacting activities and may need permits.