The dairy industry in Victoria is now more exposed to the water market and heavily reliant on the allocation market. Victoria is aware that the dairy sector will be the first group to be exposed to the risk of rising allocation prices.
The horticulture sector in Victoria has purchased large amounts of Victorian High Reliability Water Shares, now laying claim to more than 40 per cent. If allocations drop below 40 per cent there will not be enough water to supply industries across Victoria, New South Wales and South Australia.
High Reliability Water Shares have been disproportionately targeted by the Commonwealth in the past. This has increased Victoria's risk in dry years, as the entitlement market helps to lessen the impact of drought in Victoria.
Reduced water availability may impact future tariffs and system infrastructure requirements.
Irrigators who participated in Commonwealth buybacks previously are now much more reliant on allocation purchases: from zero to 12 per cent on the allocation market prior to participation, to 26 to 52 per cent after participation.
For more information on the social and economic impacts of the Basin Plan, download the summary report or fact sheet: