Management approaches

Australia uses both market and planning approaches in water management.

Water markets

The Australian water markets facilitate the buying and selling of water entitlements and allocations to allow the movement of water resources between agricultural, urban and environmental uses. In 2019–20, the turnover value of Australia’s water markets was estimated at around $7 billion, up from $5 billion in the previous year and significantly higher than the $1.5–2.5 billion per year reported in the 2016 state of the environment report. This increase was driven by record entitlement and allocation prices due to low water availability and high demand during the latter half of 2019 (BOM 2021a).

Water trading occurs mainly between agricultural users at various locations and water systems across Australia. Recently, water market participants have also included environmental water managers, water utilities and investors, particularly in the Murray–Darling Basin. Most water market activity in Australia occurs as surface-water trading in the southern Basin, but some sizeable water markets exist in other regions (Figure 42).

Figure 42 Surface-water systems in Australia where trading occurred in 2019–20

Although surface-water and groundwater allocations and entitlements are traded across Australia, the volumes of water are dominated by the trades within the Murray–Darling Basin (Table 7).

Table 7 Volumes of allocation and entitlements traded for all of Australia, 2016–17 to 2019–20

Water trade prices are determined by the value placed on water by buyers and sellers in response to many factors, such as the purpose of water use, weather patterns, available allocations, storage volumes, jurisdictional legislative arrangements and commodity market conditions. Generally, higher storage levels and carryover from the previous year are major drivers for low water trade prices. In contrast, dry climate conditions push up prices for both allocation and entitlement trade.

For example, the average monthly allocation price in the southern Murray–Darling Basin was very high during the millennium drought, with average prices above $500 per megalitre (ML) in 2008–09 (Figure 43). Prices dropped significantly to as low as $10/ML with wet conditions between 2010 and 2012. As water availability progressively declined between 2013 and 2016, surface-water prices steadily increased and peaked at $270/ML in late 2015. With higher water availability during 2016–17, prices fell again to $25/ML in May 2017. Decreasing water availability and increasing demand for water saw prices continuously increase to around $690/ML in January 2020. Widespread rainfall received across the southern Basin in the second half of 2019–20 caused a sharp drop in prices after February 2020.

Figure 43 Median allocation price against storage volume (% full) volume, southern Murray–Darling Basin, 2008–09 to 2019–20

Water resource planning in Australia

Water management in Australia is the responsibility of the states and territories, and each state and territory has its own water legislation and water management plans (BOM 2021c).

The Productivity Commission issues paper (May 2020) (Productivity Commission 2020) stated that ‘there is inconsistent recovery of water planning and management costs from users across Australia’. Without adequate funds to support water allocation planning, including groundwater monitoring (e.g. increasing and maintaining an adequate system of observation bores), Australia will continue to face problems of overallocation and use, leading to environmental and economic harm.

In areas of high demand, cultural and environmental provisions need to be made as part of the allocation-setting process to allow for natural variability in water availability (see Environmental and cultural flows).

Australian Capital Territory

The Water Resources Act 2007 (ACT) provides for the management of surface-water and groundwater resources within the Australian Capital Territory (ACT) through the issuing of water access entitlements and water licences. The Territory Plan 2008 provides the policy framework for the administration of planning in the ACT. It also details the management policies for environmental values in every catchment and serves as an umbrella document for the 2013 Environmental flow guidelines. The ACT Water Strategy 2014–44: striking the balance (ACT Water Strategy) (EPD 2014) guides management of the territory’s water supply, management and catchment practices over the next 30 years. Lake Burley Griffin is an Australian Government responsibility and is administered by the National Capital Authority in accordance with the Lakes Ordinance 1976.

The ACT is divided into 14 water management areas (WMAs), with 32 subcatchment areas within the WMAs. WMAs in the ACT are consistent with the planning framework of the Territory Plan 2008. The ACT Government manages the WMAs that fall within the ACT boundary; the New South Wales Government manages the sections outside the ACT boundary. WMAs in the ACT cover both surface-water and groundwater resources. Within each WMA, maximum surface-water plus groundwater abstractions are set. The management of each WMA is dictated by the primary environmental value of the subcatchments within that WMA. Subcatchments within the ACT boundaries are assigned 1 of 4 potential primary environmental values: conservation, water supply, drainage and open space. The management policies for each type of catchment are detailed in section 11.8 of the Territory Plan 2008.

Environmental water within the region is managed by the ACT Government’s Environment, Planning and Sustainable Development Directorate. The Water Resources Act 2007 provides for the identification and management of water for ecosystems, and ecosystems are identified in the 2013 Environmental flow guidelines. Environmental water in the Canberra region is delivered in 2 ways: releases from storages, and restrictions on the volume of water that can be abstracted from a catchment (NWC 2011).

Environmental water provisions are the responsibility of the relevant ACT minister, and are administered and managed through the ACT Environment Protection Authority. The 2013 Environmental flow guidelines is the primary document that outlines environmental water provisions in the ACT. The purpose of the guidelines is to identify the components of flow from the variable flow regime that are necessary to maintain stream health. The guidelines categorise each of the 14 WMAs and 32 subcatchments as 1 of 4 possible aquatic ecosystem types and assign each an environmental management goal. The guidelines also identify 4 components of environmental flow to be maintained within these ecosystem types.

The Ngunnawal people are the Traditional Custodians of the Canberra region. Neighbouring regions include the Ngarigo, Wolgalu, Gundungurra, Yuin and Wiradjuri people. River corridors play an important role in travel routes, and provide varied flora and fauna, which are readily available food sources. Access to rivers is important in ensuring that knowledge of Country, dreaming and future land management is passed down to younger generations. One of the actions in the ACT Government’s Water Strategy 2014–44 (EPD 2014) is to ‘ensure that Indigenous and other cultural values are recognised in managing water planning and use’, addressing the strategic objective to ‘engage the community on understanding and contributing to a more sustainable city’.

New South Wales

Water management in New South Wales is governed primarily by the Water Management Act 2000, although some provisions of the Water Act 1912 remain in place. Three other legislative instruments relate to water management specifically in the Sydney region: the Sydney Water Catchment Management Act 1998 and the Sydney Water Act 1994, which govern the roles and responsibilities of WaterNSW and Sydney Water, respectively; and the Energy and Utilities Administration Act 1987, which governs water-saving initiatives.

The New South Wales Department of Planning, Industry and Environment (DPIE) is responsible for managing surface-water and groundwater resources in the state through the preparation of water-sharing plans. Water-sharing plans are current over a 10-year period, after which they are reviewed and revised or reinstated, as appropriate. DPIE also monitors the success of water-sharing plans in meeting requirements under the Water Management Act 2000. These requirements include recognising spiritual, social, customary and economic values of water to Indigenous people, and establishing flow rules to protect Indigenous cultural values that are dependent on water. The provision of water for native title rights, economic development of Indigenous communities and cultural purposes, including specific Indigenous water access licences, is also a requirement under the Act.

Planned environmental water is prescribed under the rules of a water-sharing plan. For unregulated rivers (those without dams and other structures regulating their flow), these rules may include requiring visible flows or specified flow levels before extraction of water, and/or setting daily limits on extraction. Rules for groundwater can include reserving storage components or a proportion of the natural recharge for aquifers, and/or setting distance limits between new bores and groundwater-dependent ecosystems. Adaptive environmental water allows licensed water to be committed for environmental purposes; these provisions are specified in the licences issued to water utilities or water management authorities.

The Aboriginal Water Initiative (AWI) was established in 2012 to improve Indigenous involvement and representation in water planning and management within New South Wales (Australian state and territory governments 2017b). The program was dissolved in early 2017, leaving DPIE with no formal Aboriginal unit. Moggridge et al. (2019) described the benefits, progress and achievements of the AWI until it was removed by the then DPIE leadership.

Northern Territory

The Northern Territory Water Act 1992 establishes the framework for managing and allocating water resources in the Territory. The Act provides the legal framework for the allocation of water to various declared beneficial uses, including agriculture, aquaculture, public water supply, stock and domestic use, and industry, while ensuring that adequate provisions are made to maintain cultural and environmental water requirements. The Department of Environment, Parks and Water Security (DEPWS) assists the minister with the functions set out in the Act, including proclaiming water management areas and regulating the taking of water from these areas.

DEPWS develops and implements water allocation plans in the Daly River region, which set out how the department allocates and licenses water in the region to manage the demands of agriculture, public water supply and other consumptive use. The plans recognise the area’s significant environmental and cultural values, and ensure that sufficient water is retained to protect aquatic ecosystems and meet cultural needs. The Katherine Tindall Limestone Aquifer water allocation plan (DENR 2019a) and the Oolloo Dolostone Aquifer water allocation plan (DENR 2019b) define environmental water provisions for the region.

The Daly River region is highly significant to the Indigenous people and their way of life. Many sacred sites have been recorded along the Daly River and its tributaries, and many traditional practices continue to this day. The interests of Indigenous people in water planning are represented by their participation in water-planning processes, through studies and assessments that are used to inform the development of water plans.


The Water Act 2000 provides authority for the administration of basic water rights and water entitlements (interim allocations, water licences, water allocations and unallocated water) in Queensland. The Act is supported by the Water Regulation 2016, which provides details on the procedures and fees associated with water access entitlements and trading.

Water plans are prepared under section 42 of the Water Act to advance the sustainable management of water. Construction of overland flow works and infrastructure is regulated under the Queensland Planning Act 2016. The Department of Natural Resources, Mines and Energy is in the process of implementing a new water-planning framework. The Great Artesian Basin and Other Regional Aquifers (GABORA) water plan area also underlies part of the region, although GABORA resources are not included in the region account.

Water plans are produced in accordance with the Water Act. These must establish environmental flow objectives and ecological outcomes, and consider environmental values listed in the Environmental Protection (Water) Policy 2009. Environmental flow objectives aim to retain certain temporal flow characteristics at different locations in the river system. These are met through rules that govern storage releases and allowable abstraction.

The water plans in the state support water-related cultural values. Allowing cultural use of the plan area by Traditional Owners is listed as a general outcome for surface water and groundwater in all water plans. The water plans also require decision-makers to consider the proposed impacts of various actions on cultural values, including cultural values of Traditional Owners, and, where appropriate, impose conditions to ensure that these cultural values are maintained. Relevant actions include taking water from waterholes or lakes; granting water from general, strategic and town water supply reserves; and deciding operational and supply arrangements for water infrastructure.

South Australia

Water resources, including watercourses, in South Australia are managed according to the Landscape South Australia Act 2019, which is administered by the South Australian Minister for Environment and Water. The Act aims to promote sustainable and integrated management of the state’s natural resources and to provide for their protection. The Act sets the framework for water planning and management, including provisions for declaring a water resource to be prescribed and the development of water allocation plans.

South Australia’s Water Industry Act 2012 consolidates legislation relating to water supply throughout South Australia to deliver a more efficient, competitive and innovative industry. It facilitates planning in connection with water demand and supply, and aims to regulate the water industry through the regulation of prices, customer service standards and technical standards, and also by providing performance monitoring of the water industry. The key objectives of the legislation are outlined in Part 1(3) of the Water Industry Act 2012.

The Water Industry Act enables the water resources of an area to be prescribed. Water allocation plans are then developed that set principles and objectives for the management of the prescribed water resources. Water-affecting activities that do not pertain to the taking of water from prescribed water resources are provided for through water-affecting activity permits.

The South Australian Department for Environment and Water coordinates the adoption of water allocation plans by the South Australian Minister for Environment and Water, and administers the plans following adoption.

Water use for cultural benefit is considered a basic right in the Adelaide region. These rights are described in the Water Industry Act and the Native Title Act 1983 (Cth). The Water allocation plan: Western Mount Lofty Ranges (Adelaide and Mount Lofty Ranges Natural Resources Management Board 2013) includes a specific section on Indigenous water needs. The plan states that ‘access to, and use of, water from prescribed water resources by Indigenous people for the purpose of social, cultural, or spiritual use is exempt from licensing, provided they do not stop, impede or divert the flow of water’.


Key pieces of legislation for managing water in Victoria are the Water Act 1989 and the Water Industry Act 1994. The Water Act establishes the water entitlement framework for the allocation and management of the state’s water resources. It sets out the functions, powers and governance for Victoria’s rural and regional water authorities and Melbourne Water. Under the Water Act, the Victorian Government retains the overall right to use and control flows of Victoria’s surface water and to issue entitlements. The Water Act also provides direction on groundwater management, such as licensing of bore construction and groundwater extraction. The Water Industry Act governs how government-owned retail and regional water authorities are licensed and operate.

Victoria’s water entitlement and allocation framework takes a whole-of-system approach to water management, in that it considers all water resources (surface water and groundwater) for both consumptive and environmental purposes at all phases of the water cycle. The framework includes bulk entitlements authorising abstraction of water for consumptive use, urban and rural water authority drought response plans, urban water authority demand strategies, streamflow management plans, and groundwater management plans for water use in declared water supply protection areas.

The Victorian Environmental Water Holder is an independent statutory body responsible for making decisions on the best use of Victoria’s environmental water entitlements. The environment’s share of water is called the Environmental Water Reserve, which is made up of actual entitlements for the environment, water set aside as part of conditions associated with consumptive water entitlements, and above-cap water left over after diversion limits are reached.

The Victorian Aboriginal Heritage Act 2006 recognises Indigenous people as Traditional Owners of the land. The waterways within the Melbourne region are important to cultural beliefs of Traditional Owners, including the Wurundjeri, Wathaurung and Bunurong people. The Water Act recognises the right to take water under the Victorian Traditional Owner Settlement Act 2010. Members of a Traditional Owner group with a natural resource agreement can take and use water from a waterway or bore for traditional, noncommercial purposes.

Western Australia

The Western Australian Rights in Water and Irrigation Act 1914 establishes the legislative framework for managing and allocating water resources in Western Australia. The Western Australian Department of Water and Environmental Regulation (DWER) assists the minister with functions set out in the Act, including proclaiming water allocation areas and regulating the taking of water from these areas.

DWER prepares water allocation plans to specify how water resources are to be shared between competing needs in particular areas. Each plan also recognises environmental values, and ensures that sufficient water is retained in the resources to protect water-dependent ecosystems and meet specific social needs.

The Environmental Water Provisions Policy for Western Australia (Water and Rivers Commission 2000) guides DWER in planning and decision-making in relation to allocating water to the environment. The policy describes the role of environmental water regime requirements and environmental water provisions in setting the sustainable diversion limit of a water resource.

Environmental water provisions are specified in water allocation plans. In surface-water management plans, these provisions are often expressed as required flow regimes. Responsibility for achieving these flow regimes is placed on the storage operator and is defined in the licence conditions as part of operating strategies. In groundwater allocation plans, environmental water provisions are often expressed as minimum groundwater levels at key sites to protect ecological values associated with groundwater-dependent ecosystems. Groundwater level provisions that were first identified in the mid-1980s for the Gnangara water table aquifer and in the early 1990s for the Jandakot water table aquifer are now ministerial conditions under the Western Australian Environmental Protection Act 1986.

DWER is responsible for monitoring environmental outcomes and enforcing environmental provisions. Cultural and social values of the rivers and groundwater-dependent features in the region are considered through environmental water provisions in the allocation plans.

Environmental and cultural flows

The natural flow regimes of most rivers in Australia are highly variable, and this variability is critical to the functioning of their ecosystems and the maintenance of their biodiversity. Constructing weirs or dams in the river system to divert water for human uses disrupts the natural flow cycle and can affect the health and condition of rivers and their ecosystems.

Environmental flows use water that is specifically allocated and managed to protect and restore water-dependent ecosystems. Environmental water can include uncontrolled flows from significant rain events, water that is enroute for consumptive purposes such as irrigation, and specific environmental water releases from dams.

Cultural flows are water entitlements that are legally owned and managed by Aboriginal people to improve the spiritual, cultural, environmental, social and economic conditions of Indigenous Nations (MLDRIN 2010).

Environmental water

Environmental water is made available in the Murray–Darling Basin as either held or planned environmental water. Held environmental water is water that has been recovered for the environment by the Australian Government or states and territories through the purchase of water entitlements or other mechanisms (e.g. savings from irrigation efficiency projects). Water entitlements give those holding a licence the right to use a share of water that is subject to water allocation decisions made by the states, in accordance with the licence type and the amount of water available.

Planned environmental water can also include water committed by the Basin Plan or water resource plans (see section 6 of the Water Act 2007), as well as state laws or plans. These instruments set out rules and arrangements that dictate when and how water can be taken, so that water remains in the system for environmental outcomes.

Allocation of water to all entitlement holders in the Murray–Darling Basin was low in 2018–19 and 2019–20 because of the dry conditions. This included allocations to environmental water holders. Thus, the environmental waterings targeted the highest environmental priorities to achieve the best outcomes. The aim was to deliver multiple benefits from the volume of water that was released, and a coordinated approach was adopted – involving water holders and managers, as well as stakeholder groups – to deliver multiple benefits from a volume of water.

Lower allocations in the southern Basin in 2018–19 (Table 8) were due to the dry conditions and low water availability across the Basin. The significantly higher value in 2019–20 was the result of implementation of actions planned in the first half of the financial year due to the initial dry conditions, as well as the subsequent increase in water availability in the second half of the year following the rainfall from February 2020. In contrast, the environmental releases in the northern Basin were significantly lower because of the generally low storage levels in this part of the Basin.

Table 8 Environmental water delivered in the Murray–Darling Basin

Cultural flows

Over the past decade, water managers have been identifying opportunities for shared environmental and cultural benefits through environmental watering. For example, an environmental water release in 2018–19 in the Murray–Darling Basin that provided cultural benefits to Indigenous peoples was the watering of the Ranch Billabong in the Wimmera River (VEWH 2019).

More recently, in many parts of Australia, methods for the explicit provision and accounting of water for use by Indigenous peoples have been under development. The National Cultural Flows Research Project, which is driven by and for Indigenous people, was undertaken to develop methodologies to quantify water requirements to meet Aboriginal cultural flow needs (MLDRIN et al. 2017b, MLDRIN et al. 2017a, MLDRIN et al. 2018). The program was developed by a collective of Indigenous peak bodies, the Murray–Darling Basin Authority and consultant organisations (Mooney & Cullen 2019, National Cultural Flows Research Project 2021). The concept of ‘cultural flows’ is relatively new to the language of natural resources and water managers, and is not provided for in the Water Act 2007 (Cth); only states and territories are required to have regard to cultural flows in the Murray–Darling Basin Plan.

The project drew on a range of scientific research methodologies and generations of cultural knowledge. It aimed to provide a greater understanding of Indigenous values relating to natural resources, especially water, and equip Indigenous people with information and tools to empower them to engage with water management and reform.

The findings of the project, released in 2018, proposed 8 components of research and methodology, mainly targeting the Murray–Darling Basin, but also applicable more broadly.

The Murray–Darling Basin Authority, in collaboration with the Murray Lower Darling Rivers Indigenous Nations and the Northern Basin Aboriginal Nations, have commenced work to implement the cultural flows assessment methodology. Cultural flows differ from environmental flows, but contribute to the benefits and value derived from environmental flows; work is in progress to explore this aspect of water management.