In Victoria, most groundwater resources are fully allocated and so opportunities for new groundwater development or substitution for increasingly expensive and scare surface water can only occur through trading of license entitlements. Even in the 2008/9 drought year, groundwater usage exceeded 50% of the available licensed volume in only a few groundwater management areas. Moreover, between 50 to 70% of individual license holders use less than 5% of their allocation each year. However, little groundwater trading is occurring at present, so this study investigated what factors were influencing the uptake of groundwater trade in Victoria
In 2015/16, 3 focus group meetings were followed by interviews with 34 groundwater license holders and 5 water brokers to learn how participants were experiencing the developing Victorian groundwater trade market and asked them to identify barriers to trade. Using social research methods, the survey data contained insights into the circumstances of each groundwater user, financial factors, experience with administrative processes and people’s thoughts about the resource and trade management rules.
Water brokers and irrigators who have successfully traded noted that the demand and market is small, and there are few participants interested in trading, often due to factors such as unrealistic selling prices, expensive technical appraisals and burdensome administrative requirements and fees, especially when compared to surface water trading.
Groundwater trade could be facilitated by refining groundwater management plans, providing improved information, simplifying transaction processes and decreasing costs, as well as through demonstrating good resource stewardship and preventing third party impacts from trade. However, there are numerous individual circumstances that inhibit groundwater trading, so it is unlikely that policy and process changes alone can increase usage rates without greater demand for groundwater or more favourable farming economic circumstances.