Independent advisors have given the VEWH a clean bill of health

Independent economic advisors, Marsden Jacob Associates found that the VEWH's water trading activities had no impact on allocation water market prices.

Marsden Jacob also found the VEWH transparently signalled its trading intentions to market participants, effectively avoiding market distortion and adverse impacts on other parties.

"The VEWHs approach of using existing market mechanisms to sell environmental allocation water is the preferred approach for most market participants," Marsden Jacob director Rod Carr said.

"The underlying sentiment is that using existing mechanism places the VEWH on the same playing field as other allocation sellers."

To support the VEWH's continuous improvement, Marsden Jacob suggested minor changes in how the VEWH reported its allocation trades once completed, the details included in its public announcements, and to provide more flexibility in its decision making.

The VEWH has sold or bought small volumes of water allocation in systems across Victoria in every year since it commenced in 2011-12, with all water sales occurring in northern Victoria.

Most purchases occurred in western and southern Victoria.

In the last water season of 2018-19, the VEWH sold 10,000megalitres in northern Victoria, with the proceeds going to works that would optimise environmental watering outcomes.

"Water trading is a small but critical part of our business," said co-chief executive Dr Sarina Loo.

"It helps us to smooth out some of the ups and downs in water availability across years, ensuring we can deliver water to the highest-priority rivers and wetlands when they need it most."

"We have always been extremely mindful of the need to ensure our water trading does not significantly impact on other market participants and it's fantastic to get these independent findings that demonstrate we've done exactly that."

The VEWH's entitlements receive the same allocations as other entitlement holders, with lower allocations in dry years and higher allocations in wet years.

"In some years, we've had enough water to meet our highest priority environmental needs in a year, and enough to carry over for critical environmental needs the following year," she said.

"In those circumstances, we have been able to free some water up, for sale.

"This has generated revenue that we've been able to invest in projects that optimise future environmental watering outcomes, such as the current design and intended construction of a fishway at Koondrook Weir, which will boost fish numbers and support better recreational fishing in the Murray."

Ms Loo said this had the added benefit of making additional water available for farmers at times that they've needed it.

The VEWH regularly assessed its water demand and supply position throughout the year to identify any water trading opportunities.

Current planning indicated all available water for the environment was needed to support high priority environmental watering actions, under dry conditions this year, and to support carryover for environmental priorities into next year.

For more information about the independent review of the VEWH's water trading or its current year trading intentions, visit http://www.vewh.vic.gov.au/watering-program/trading