The Government manages the allocation of water resources across the state in accordance with the Water Act 1989.

Victoria's water entitlement and planning framework defines how water is shared, held, used and traded to support agricultural, urban and environmental water needs and ensures planning processes are in place so that future water needs can be met. A key element of the entitlement framework is that it provides certainty and flexibility for water managers and water users.

Water entitlement framework

Victoria's water entitlement framework establishes the tools to ensure water can be managed to meet competing demands now and into the future. The framework establishes:

  • water entitlements
  • annual processes to allocate water to entitlements
  • ability to trade.

Under the framework, entitlement holders are responsible for managing their own water security and risks including during drought.

Water entitlements

Water entitlements consider surface water and groundwater resources for both consumptive and environmental purposes at all phases of the water cycle.

The framework establishes entitlements in the context of limits so that water taken under one entitlement does not reduce the reliability of supply to other entitlement holders or adversely impact environmental values.

It also provides the entitlements with integrity, by outlining clear consultative processes to make any changes to water entitlements.

The Minister for Water issues entitlements under the Water Act 1989. These include:

  • bulk entitlements
  • environmental entitlements
  • water shares
  • water licences.

In addition to the water entitlements listed above, the Water Act 1989 allows individuals to take water for domestic and stock purposes from a range of surface water and groundwater sources without a licence. These domestic and stock rights are defined under section 8(1) and section 8(4)(c) of the Water Act 1989 and are not formally issued. They include farm dams for domestic and stock purposes.

Annual processes to allocate water to entitlements

The framework provides the ability to restrict annual water use in response to seasonal variability.  Water availability and use can be restricted through seasonal allocations; rosters, restrictions or bans on licence holders in unregulated of groundwater systems; or urban water restrictions.

Water markets and trading

The framework provides mechanisms for water trading to enable available water resources to be put to their most efficient use. This provides entitlement holders with an effective way of managing climate variability and re-allocating water during prolonged drought and times of scarcity.

Water markets have existed in Victoria since 1991, with trading rules evolving as the markets have developed. Ongoing reforms have led to an active market in northern Victoria involving Victoria, South Australia and New South Wales. Victorian water market enables people to buy and sell entitlements and allocations. More information on Victorian water markets and trading is available here.

For information on water market prices and volumes of water traded visit the Victorian Water Register.

Millennium Drought Report

Managing extreme water shortages in Victoria – Lessons from the Millennium Drought

Page last updated: 28/11/19