Bendigo based water broker H2OX raises concerns over 'written-off' irrigation allocations

Bendigo-based water broker H2OX claimed despite the best efforts of Victorian water authorities to inform allocation holders, there was still a substantial amount of write-off at the end of the season.

"According to the Victorian Water Register, a total of 30GL of allocation was 'socialised' at the end of the 2018-2019 irrigation season - 12.1GL in the Goulburn and 17.8GL in the Murray," H2OX business development manager Craig Feuerherdt said.

"By conservative estimates that's $12-15M worth of allocation.

"That 30GL could have supplied 2,000ha of permanent horticulture or nearly 5,000ha of dairy in the 2019-2020 season."

He said the water would have been returned to the resource pool, which added one per cent to opening determinations for the 2019-20 entitlements.

Read more: Northern Victorian seasonal determinations have been released

"The vast majority of this water would have been lost against small volume accounts - typically by those who own a small block with a few megalitres for stock and domestic use," Mr Feuerherdt said.

"Even if they fully understood the water market, and knew the value of their allocation, the 'difficulty' in trading 1-2ML seems insurmountable."

He said at the end of the 2017-18 season, 15GL was written off, between the Murray and Goulburn systems, demonstrating a massive under-valued resource.

But a DELWP spokesman said 2018/19 saw a reduction of 30 per cent in the amount of water being written off.

"The write off volume of customer accounts for 2018/19 was close to 10GL," the spokesman said.

He agreed 30GL of water allocation had been recorded as 'write off' in the Victorian Water Register.

But 20GL of this was 'written off' as part of project management requirements for the Connections Project.

That included an adjustment of about 12GL made to the Goulburn Murray Irrigation District modernisation offset account and a further 8GL retired to cover the volume held in Greens Lake.

A spokesman for Goulburn-Murray Water said at the end of May, the total amount of water deemed to be "at-risk", excluding that held by the Victorian Environmental Water Holder, was 44GL.

G-MW worked to ensure customers with water at risk were contacted and advised of their options, making more than 350 phone calls and sending more than 1000 emails and SMS messages.

"This proactive communication approach helped increase understanding of carryover rules," the spokesman said.

Mr Feuerherdt said figures from the Victorian Water Register showed there were more than 13,000 high-reliability entitlements held in the Murray and Goulburn, which had a volume less than 10ML, for an average volume of 3.2ML.

"In fact, 52pc of the total number of entitlements are less than 10ML, but they account for only 2.2pc of the total entitlement volume."

While the unbundling process was "fair", it had also introduced major inefficiencies to the market.

"One irrigator had 8.2ML, so it's not just small volumes," he said.

"It's too costly to trade, and people don't understand the water market.

"But how do we make those small volumes accessible to the broader market?

Aggregated, the water became far more useful, but the cost of selling small parcels of entitlements was seen as prohibitive.

"People say it's just half a megalitre or two megalitres, and it wasn't worth it, last time they looked.

"Small volume entitlements are costly to trade and aren't appealing to most water users.

"The water authorities need to provide each entitlement owner with an invoice for their holdings and manage all the payments."

Mr Feuerherdt said with every megalitre of critical importance, it was imperative that market inefficiencies were removed, and entitlement owners realised the full value of their asset.

"This can only be done by the Victorian water authorities (Goulburn-Murray Water and Lower Murray Water) in conjunction with the Victorian Government."

Read more stories like this on Australian Dairyfarmer