Water Week

EWN Publishing

Water trading market incidents of misconduct are “serious but are not widespread”; price of water has hit $800 to $1000 a megalitre

Posted by waterweek on 10 October 2007

Confidence in the emerging water trading market could be jeopardised by dodgy or incompetent brokers, according to The Australian Financial Review (7/9/2007, p. 7).

Misconducts serious but not widespread: A softly-softly approach is preferable to mandatory licensing, a report for the National Water Commission said. The report, by Allen Consulting Group, found that the reported incidents of misconduct were “serious but are not widespread” and that many of them related to teething problems in the market, which could be overcome as irrigators became more familiar with its operation.

Australia will never fully recover from drought: The price of water has hit record highs in recent weeks. Temporary seasonal water in the parched southern Murray-Darling basin has fetched $800 to $1000 a megalitre — roughly the price of a permanent water right in previous years. Experts at the forum on 6 September warned that Australia might never fully recover from the drought because of climate change.

Mandatory licensing of brokers needed: The chief executive of brokers Waterfind, Tom Rooney, told The Australian Financial Renew that mandatory licensing of brokers was needed if the market was to play a central role in reallocating water to where demand was greatest. “The industry does need some further form of regulation because it’s dealing with a resource of great importance to the nation,” he said.

Standard contracts for water sales: However, the report says market forces will “weed out” fraudulent operators. It recommends the development of standard contracts for the sale of temporary and permanent water and for engaging brokers. Water Minister Malcolm Turnbull said that as 80 per cent of water trades were assisted by intermediaries, their conduct was critical to the continued expansion of water markets. The National Water Commission acknowledged concerns about broker behaviour and that the lack of common trading rules could undermine market confidence. It said the report did not necessarily represent its views.

The Australian Financial Review, 7/9/2007, p. 7

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