Water trading is the process of buying and selling of water access entitlements, also often called water rights. The terms of the trade can be either permanent, where the water access entitlement is sold outright, or temporary, when seasonal water allocations are traded. This allows farmers some flexibility - you can irrigate more of your existing land without having to buy another paddock, or if you want to get out of irrigation farming, you can sell the water and stay on the land. Harvey Water Irrigators own water in the form of shares in the cooperative plus a corresponding certificate of water entitlement.
Water trading can promote more efficient water allocation because a market based price acts as an incentive for users to allocate resources from low value activities to high value activities, allowing scarce water resources to be transferred to their most productive uses.
Our records show that over 10 years of trading, about 10% of annual water sales relate directly to temporary trades and about 1% of sales relate to permanent sales. Trades and prices generally increase in dry years. Three distinct markets have developed in each of the 3 irrigation districts for different reasons.
Harvey Water plays no direct role in water trading or price setting but has facilitated auctions each season to assist the trading process. 70% of trades which occur are between irrigators without any input from Harvey Water. This is how it should be as there is an open market for water, the same as other commodities, such as hay, for example.