Commonwealth Environmental Water Holder David Papps has said he hoped to soon put out a discussion paper, to get public opinion on how best to use the money raised from environmental water sales.
Mr Papps said he was currently considering trading allocations, from the January to March quarter, in the Goulburn, and also Gwydir systems.
“They are trading intentions, I haven’t actually made a decision,” Mr Papps said.
Mr Papps said water had been traded three times before, but he would not inform the market of the amount, until he had made a firm decision.
“There is a robust trading framework and we go to a lot of trouble, to make sure everyone knows what we are doing.”
Trading water was one of the three options open to the CEWH, the others being using it for environmental watering, or carrying it over.
“It is an incredibly important mechanism to get the best value out of environmental water,” Mr Papps said.
“I will use it much more like a rice, or cotton grower; it gives me the capacity to take water of limited environmental benefit, trade it, or use it.”
“It gives a way of moving water around, can sell water in the south and buy it in the north, where it is more needed. It is a really powerful tool to do the absolute environmental best for the water I am holding.”
Mr Papps said there was an established framework and processes on what he could do.
“It’s very important the market is comfortable with what we are doing, knows what I intend to do and understands the reasons why and the timing.”
Mr Papps said water had been traded three times before, but he would not inform the market of the amount, until a decision had been made.
“There is a robust trading framework, and we go to a lot of trouble, to make sure everyone knows what we are doing.”
The October, 2015 trade, in the Goulburn system had no impact on the market – “it didn’t influence the price or trajectory, that’s not an accident, that’s well calculated, I get independent expert advice about the state of the market and what volumes would be sensible, so I don’t disturb the price.
Revenue from trades could be used to buy more water, or be spent on environmental activities.
“It gives me much more flexibility to make the best use of environmental water – it’s a simple trade off, what’s the value of the water I am contemplating selling and what environmental benefits I might get out of it.”
The October, 2015 sale, involved 22.864GL of Commonwealth environmental water allocations, returning $6.458 million, which was used to improve the environment of the Murray Darling Basin.
Of the 22.864 gigalitres (GL), more than 95% (21.864 GL) was bought by Victorian Goulburn and Murray irrigators.
The remaining 1GL was sold to primary producers in South Australia.
“The way we operate is to try not to have any significant impact on the market, so we don’t change prices and disturb the market in any significant way – we are just another irrigator, selling water in a way that is sensible.”
He said the CEWH currently held 2479GL, with 1900GL “sneaking up to 2000GL’, available for use.
“I have got very rigid and robust constraints on me in terms of the Water Act.”
He said he was keen to get opinions, on how the money from trades could best be used to benefit the environment.
“The more the CEWH and my office are able to demonstrate to the irrigation industries we are making sensible, reasonable decisions, whilst absolutely protecting their properties, their towns, their places, their crops, the more acceptance of the program, I see happening.”
“It’s a long process, an operation of this scale has never been done anywhere in the world, this is new, this is big and this is challenging – it’s going to take a little while for us to get used to each other.”
He said he respected other people’s rights to have an opinion about what the CEWH did.
“The challenge for me is that it’s okay to have a disagreement, as long as it is based on a good understanding of what is actually happening,” he said.
“A lot of the commentary I see is based on a misunderstanding of what we are doing.”
He said the CEWH was bound by exactly the same carryover rules, as other irrigators.
The amount of environmental carryover water was very minor, “there is some silly commentary around carryover, and I am bound by exactly the same carryover rules as anyone else who has allocations.”
