Water market development in Tasmania: comparisons with Victoria

Water markets are a demand management tool used by governments to respond to water scarcity. Australian water trading is well studied; however, little research exists outside the Murray-Darling basin. This study investigates water trading elsewhere, using a cross-jurisdictional water market comparison and case studies of the Tasmanian Midlands Irrigation Scheme (TMIS) and the similar-sized Victorian Macalister Irrigation District (VMID). Comparisons demonstrated that legislation and policy in Tasmania were less comprehensive relative to Victoria. Victorian water trading is integrated within the <i>Water Act 1989</i>, whereas two statutory instruments govern water trading in Tasmania, the <i>Water Management Act 1999</i> providing more points of comparison than the <i>Irrigation Clauses Act 1973</i>. Case studies showed greater participation in VMID water markets for both short-term and permanent transfers and greater monthly volumes of permanent and short-term transfers than the TMIS. For the TMIS temporary water market, a significant, downward monotonic trend over time was found but there was no monotonic trend for the permanent water market. The VMID showed no monotonic trend for short-term transfers and significant, upwards monotonic trends for permanent transfers. Both states showed a significant inverse association between short-term transfers and rainfall, indicating that water markets facilitate adaptation to climate variability, and risk management.