Random ballot ‘a fairer system’ in 139,000ML inter valley trade

First-in, first-served trading of water into the lower Murray River has been scrapped in favour of a new method, when limits are lifted on Wednesday.

Inter-valley trading on a first-in, first-served basis has been replaced by a randomised ballot for irrigators trying to get water through the Barmah Choke or out of the Goulburn.

Limits will be lifted for a few hours this week to allow 139,000 megalitres of water to be traded out of Goulburn and Upper Murray valleys, where it is worth about $175/ML, into the lower Murray River where it can be sold for more than $300/ML.

Brokers and irrigators have a seven-hour window this Wednesday to lodge trade applications, with successful applicants then randomly selected to share in a $17m premium on the downstream trading of water into the Lower Murray market

The move puts an end to the old first-in first-served system that allowed brokers with the fastest internet and data scraping software to edge out irrigators.

In 2020 The Weekly Times first reported on a water trader using web-page data scraping software to instantaneously drag the Barmah Choke trade number off the MDBA website as soon it appeared, which was then fed into computer code that automatically lodged a transfer application.

The tech-savvy water trader was able to dominate the limited downstream trade openings, offering to get water through the choke for a $50/ML fee.

Since then the Australian Competition and Consumer Commission’s 2021 Murray-Darling Basin water markets inquiry called on the states to “improve equity of access to inter valley trade opportunities”.

Victorian Farmers Federation water council president Andrew Leahy welcomed the randomised ballot, saying irrigators had been pushing for a fairer system for years.

Even Australian Water Brokers Association president Andrew Martin said the randomised ballot was “a fairer system, in terms of giving everyone a go”, but it meant “there’s a lower probability of getting it through, unless you have a fair bit to play with”.

H2OX chief executive Lex Batters said rather than running a ballot, “an alternative would be to auction off the space (transmission capacity) in the IVT”, with the revenue going back to water corporations, who could offer discounts to irrigators.

He said carbon and water market operator Xpansiv, which owns H2OX, already manages auctions in the capacity of the Tasmanian gas pipeline.

Inter-valley trade limits were introduced to ensure water could be reliably delivered to downstream users and protect the river environment from damaging high summer flows.