What we will do
- Develop a grid oversight function;
- Explore options for future additions to the water grid;
- Improve the effectiveness of water markets;
- Increase water market transparency and information sharing;
- Develop the water market in south central Victoria;
- Improve trading rules in northern Victoria;
- Develop trading rules in other water systems.
Victoria’s water grid works much like our road network, connecting sources such as dams, reservoirs, and the desalination plant via infrastructure including pipes and pumps, and natural elements like rivers. Water markets allow users to move water in connected systems to where it is most needed.
Local, regional, and state-wide networks operate independently as well as together to allow water to be moved from where it is captured and stored to where it is required.
Victoria’s water markets allow farmers, the Victorian Environmental Water Holder, and water corporations to buy and sell water entitlements and seasonal allocations, so they can manage their own risk according to their willingness to pay. The water markets allow us to share water security benefits in ways that are equitable, responsive, and transparent.
Victorians must get the most value from all sources of water and existing infrastructure. This becomes all the more important as we deal with the challenges of climate change and population growth, with less water available. New investment in the water grid may also be necessary.
We have an opportunity to improve the way we use the infrastructure, and to continue to build effective and efficient ways for buying and selling water.
The enhanced connectivity of the grid allows areas outside Melbourne to benefit from the increased water security provided by the desalination plant. We have an opportunity to share the benefits of this water security and to build drought resilience. All benefits, costs and risks need to be recognised and assessed.
Moving water around the grid or transacting water trades must not result in adverse impacts on the environment or third parties. This is a challenge for greater use of the grid and water markets.
South Central Water Trial
A major new water initiative trial will launch in Victoria in 2017, with a five-year trial to develop a new water market in south central Victoria which includes rapidly growing regional centres, such as Geelong. The trial market builds on the increased connectivity of the grid over the last decade and access to water from the Victoria Desalination Project. It will provide significant opportunities to trade water and delay or avoid costly additions to the water grid augmentations. It could also help to further free up water trading within the southern irrigation districts and water for environmental outcomes. The trial will need to balance the trade opportunities with the need for water security during long periods of drought.
The south central market trial will be staged and collaborative to build understanding and confidence. The government will work closely with stakeholders to define institutional arrangements and governance. The trial will initially focus on more clearly understanding trade opportunities and barriers. It will be important to build understanding of the grid through improved system information and modelling.