A Step-by-Step Guide to Trading Water in NSW

A Step-by-Step Guide to Trading Water in NSW

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The water market in New South Wales is one of the most active in Australia, governed by a specific set of rules and processes under the state's legislative framework. For farmers, irrigators, and investors looking to buy or sell water allocations or entitlements, understanding this process is crucial for ensuring a smooth and compliant transaction. This guide provides a practical, step-by-step walkthrough of how to trade water in NSW, from finding a partner to finalising the application.

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Understanding the NSW Regulatory Framework

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Before initiating a trade, it is essential to understand the regulatory landscape. Water management and trading in NSW are primarily governed by two key instruments:

• The Water Management Act 2000 (WMA 2000): This is the principal legislation that establishes the framework for water management in NSW. It provides for the creation of water access licences and the rules for dealings (trades) involving these licences.³³
• Water Sharing Plans (WSPs): These are detailed plans developed for specific water sources (e.g., a particular river or groundwater system). WSPs set the local rules for water sharing between users and the environment, including specific rules that govern where and when water can be traded.³³

The key government bodies involved in the process are WaterNSW, which manages the state's rivers and water supply systems and processes trade applications, and the Department of Planning and Environment-Water, which is responsible for water policy and planning.¹⁰

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The Trading Process: A Practical Walkthrough

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Trading a water allocation (a temporary trade) in NSW generally follows a clear, three-step process managed by WaterNSW.

Step 1: Find a Trading Partner and Agree on Terms

The first step is to find a counterparty for your trade. You can find a buyer for your surplus water or a seller to meet your shortfall through several channels:

• Direct Negotiation: Approaching neighbours or other contacts within your water source.
• Using a Water Broker: Engaging a professional broker who can access a wider network of potential buyers and sellers and assist in negotiating a fair price.

Once a partner is found, you must agree on the key terms of the trade: the volume of water to be traded (in megalitres) and the price per megalitre.

Step 2: Complete and Pay for the Application

With the terms agreed upon, the official application process can begin.

• Download the Correct Form: You must use the appropriate application form from the WaterNSW website. For example, a "Form 71 for surface water assignment" is used for temporary trades in regulated river systems. It is critical to download a new, unique form for every trade to avoid processing errors.³⁶
• Pay the Application Fee: Each application incurs a processing fee. For regulated surface water, the fee is $59.56 (GST free). For unregulated water and groundwater, the fee is $58.16 (GST free). Payment is typically made through the Westpac PayWay online portal using a specific Biller Code (228627) and the unique reference number from your application form.³⁶
• Note on Variable Usage Charges: For some trades, particularly those involving a buyer whose licence is not linked to a NSW Works Approval, additional variable usage charges may apply. It is advisable to contact the WaterNSW Customer Service Centre to confirm these charges before submitting the application.³⁶

Step 3: Submit the Application

Once the form is completed and payment is made, the application must be submitted to WaterNSW for assessment and approval.

• Submission Methods: Applications can be submitted via email to water.trade@waternsw.com.au or by post to the WaterNSW office in Deniliquin.³⁶
• Submission Best Practices: To ensure efficient processing, it is recommended to email each application separately. Including your Supply Work Contract (SWC) reference number in the email subject line can also help WaterNSW track your application quickly if you need to make an enquiry.³⁶

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Key Considerations for NSW Trades

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Beyond the standard process, there are several important factors to keep in mind when trading in NSW:

• Customer Obligations (from 1 July 2024): New rules mandate that all information on trade forms, including the reason for the trade and the price, must be accurate and complete. Records substantiating this information must be kept for a minimum of five years.³⁶
• Third-Party Consent for Groundwater: For some groundwater trades, WaterNSW may require you to obtain consent from potentially impacted third-party bore owners before the trade can be approved.³⁶
• End-of-Season Deadlines: Strict deadlines apply for lodging trades at the end of the water year (June 30). Applications submitted close to the deadline may be subject to impact assessments that could result in a reduced volume or refusal.³⁶
• Trade Updates: Always check the "water trade updates" section on the WaterNSW website before lodging an application, as it contains important information about any current restrictions or changes that may impact your trade.³⁶

While the process for trading water in NSW is well-defined, it involves careful attention to detail to ensure compliance with all rules and regulations. Engaging an experienced water broker can streamline this process, helping to avoid common pitfalls and ensuring your trade is completed efficiently and correctly.

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