Carryover
Carryover can help to manage the risks of not having enough water or having too much water.
Carryover can help you to manage your own water availability. It’s an arrangement that allows you to keep your unused allocated water in the dams at the end of the season to use in the next season.
It gives water share holders more flexibility:
- to hold, use or trade water when it’s of the greatest value to their business
- to prepare for shortages due to drought.
However, if the weather turns wet, water carried over may end up being spilled before you can use it.
It’s important to understand the potential costs and benefits involved in carryover decisions. This will help you consider how opportunities to carry over might impact your business.
How to carry over unused allocation
If you decide to carry over unused allocation, you don’t need to do anything. Carryover happens automatically at the end of the irrigation season (30 June).
If you don’t want to carry over water, you need to trade excess allocation before the trading deadline. See Irrigation season dates.
Carryover is recorded against water shares, not in your allocation account (ABA). The maximum allocation you can carry over into the next irrigation season is the total volume of water shares associated with your ABA. Anything over that will be automatically written off at the end of the current irrigation season.
The reliability of water shares can be either high or low, but carryover is recorded against low-reliability water shares first.
Find out more about water shares and allocation.
Costs and benefits
A decision to carry over water between irrigation seasons may lead to a number of costs and benefits, depending on the season’s conditions.
Potential benefits of carryover:
- Unused allocation is available for use or trade in the next irrigation season without the need to purchase.
- You may have early access to water in the next season, particularly if opening allocations are low.
- It could mean protection against increases in the market price of water.
- If conditions are dry, buyers may be willing to pay higher prices for water.
Potential costs of carryover:
- There may be decreases in the market price of water.
- Evaporation losses could reduce the volume of carryover by 5 per cent.
- You might lose water if storages spill.
- If conditions are wet, water held in a spillable account may not be declared available for use or trade when you want to access it.
- Additional fees may be levied on storing water above your entitlement volume.
What to consider
Irrigators must make their own decisions about whether to carry over unused allocations.
The first thing to consider is the risk of low allocations.
The Northern Victoria Resource Manager (NVRM) regularly announces seasonal determinations and outlooks. These indicate the allocation levels for each system based on a range of seasonal conditions and scenarios.
It’s important to consider carryover when the allocation of high-reliability water shares for next season is less than 100 per cent.
The greater the volume you carry over, the more exposed you are to the risk of a spill.
Water carried over against high-reliability water shares is more exposed to the risk of a spill. Water carried over against low-reliability water shares is less exposed to this risk.
Once allocations begin in the new season, the maximum volume of water that can be allocated to your ABA – either as carryover or allocations – is the total volume of your water shares.
Allocations that exceed this volume go into your spillable account. For example, if you hold a 100 ML water share and 50 ML of carryover at the start of the season, any allocations up to 50 per cent would go to your ABA. Once allocations reach 50 per cent, any remaining allocations would go to your spillable account instead.
If you only had 20 ML of carryover at the start of the season, allocations would not go to your spillable account until they reached 80 per cent.
Once a Low Risk of Spill Declaration is made by the NVRM, any allocation remaining in a spillable account is returned to the available balance of the ABA for use or trade.
Any allocation returned attracts an additional storage charge. This is called an Above Entitlement Storage Fee, and it is due later in the season. Allocation that has spilled is not subject to this charge.
See Rural tariffs and charges for above-entitlement storage fees.
The market price of water can change a lot within a short time. Allocation prices can vary from less than $10 per ML to more than $1,000 per ML.
If conditions in the following season turn out to be dry, with limited allocations and buyers willing to pay high prices for water on the market, then the decision to carry over water may bring you a financial benefit.
If conditions in the following season turn out to be wet, with high allocations and buyers only willing to pay low prices for water, then the decision to carry over may be costly.
Calculate your carryover
Explore how different factors – such as outlooks and risks of spill – may affect you. Use the Victorian Water Register’s carryover calculator.
Alternatives to carryover
Your water broker may be able to advise you of alternatives to carryover that better suit your situation – for example:
- parking – carrying water over on another user’s low-reliability water share
- forward contracts – buying or selling allocation at a later date, either in the current water season or in a future water season.
Water trading
Like carryover, water trading can help you to manage your own water availability. You can buy water if you don’t have enough, or you can sell unused allocation.
See Water trading for more information.
More information
To find more about:
- carryover – see Victorian Water Register
- seasonal determinations, outlooks and the risk of spill – see Victorian Resource Manager
- storage levels and river flows – see Murray Darling Basin Authority
- seasonal streamflow forecasts – see Bureau of Meteorology.
If you have any questions about carryover, you can contact your water broker or call Lower Murray Water on 1800 808 830.
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Subject
Rural
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