Water licence trading – new value and opportunities for landholders

While water allocations have been tradable independently of land since the Water Act was introduced in 2000, water licences remained connected to land and landholders’ rights were limited when it came to dealing with water taken under these licences.

Recent changes to a number of water plans and management protocols now mean that landholders in the Barron, Condamine and Balonne, Cooper Creek, Great Artesian Basin, Gulf and Wet Tropics water plan areas can now:

• sell a “relocatable water licence” to another landholder in the same water area; or
• relocate a “relocatable water licence” to other land owned by it in the same water area.

These changes will grow a new market for tradable water in the same way as the conversion of some water licences to water allocations did over the past 19 years.

The Department of Natural Resources, Mines and Energy (DNRME) oversees the relocation process and it will apply the relocation rules under either the water plan or water management protocol to decide whether a sale or relocation should be permitted. Usually these rules will require an underground water impact assessment to look at how the relocated water use will affect the underground water source.

Unlike the sale of a water allocation which can be managed to ensure the seller is paid, the sale or relocation of a water licence is finalised as soon as an application is approved by the DNRME. This means that if a water licence is to be paid for, the buyer needs to provide security for the payment to the seller.

Thynne + Macartney have worked with a number of buyers and sellers of relocatable water licences to ensure that their rights are protected through this government managed process.