In some NSW catchments, the owner of a water licence may choose to ‘carry over’ a percentage of their unused allocation for use at a later time.
The rules for how much water can be carried over, held and for how long vary between licence classifications and river systems.
Deciding whether to carry over water and how much is a complex decision which is not taken lightly. Some water may be carried over if forecast conditions are dry and rainfall is likely to be low. In very wet years, there may be widespread natural flooding and an environmental water manager may choose to carry over a proportion of available water for use in drier times.
Like water, carryover space can be bought and sold.
Licence holders can sell 'space' (or capacity) on their water licence to manage carryover water on behalf of another licence holder. The seller of this space provides a service to the buyer by holding their water at the end of the water year and transferring it back to them at the start of the next water year.
For managers of environmental water accounts, this market mechanism provides an opportunity to invest in environmental works such as infrastructure improvements and contribute to payment of water licence charges without the loss of water. It can also help minimise the volume of water for the environment traded to generate required revenue.
Are there benefits to the environment from buying or selling carryover space?
Yes. Revenue generated through the sale of carryover space is invested in environmental water projects or used for the payment of water delivery charges. We can also use carryover space to ensure water is available in future years to meet the needs of rivers, wetlands and wildlife.
Is it within the rules?
Water can only be carried over when the rules allow it.
How is the sale of carryover space done?
The process for sale of carryover space is that same as that for allocation trading.
For more information see Water trade FAQs.
Do we sell carryover space every year?
No. When deciding whether to sell carryover space, we weigh up the need to carry over water for environmental needs before a sale is considered.
What percentage of total Murrumbidgee carryover did we sell?
The amount of carryover space we sell typically represents a very small portion of the total water carried over by all licence holders. For example, in 2019–20 a total of 18% of water was carried over in the Murrumbidgee and our component was less than 3% of that.
Does the amount carried over influence water prices?
Carryover in general helps to manage the risks of water availability and reduces the price volatility between water years. The major drivers of water allocation prices are changes to water availability and irrigation demand – see the Department of Environment, Land, Water and Planning 2019 Water Market Trends report (PDF 1.2MB).