Australian Government water purchasing in the Murray-Darling Basin

The Australian Government will not be undertaking any further water purchases. The Government will continue to prioritise investment in water-saving infrastructure to achieve the water recovery required under the Basin Plan.

Read more about the investment package.

Under the Sustainable Rural Water Use and Infrastructure Program, the Australian Government has committed $3.1 billion to purchase water to assist with bridging the gap to the sustainable diversion limits in the Murray-Darling Basin Plan 2012.
Sustainable diversion limits limit how much water can be used in the Basin by towns and communities, farmers and industries, while keeping the rivers and environment healthy.

The government has recovered water through:

  • water purchases
  • infrastructure investments
  • other state and federal recoveries.

See progress on water recovery.

Previous purchases

The Australian Government has purchased water for the environment since 2008. Early on, the department had great success using open, competitive tenders. However, over time less offers were received during these open tenders. Outside open tenders, the department started to receive more unsolicited offers to sell water.

In 2014, the Government released the Water Recovery Strategy for the Murray–Darling Basin. The strategy outlined the government’s approach to recovering water for the environment, while maximising positive outcomes for farmers and communities in the Basin. This included prioritising water recovery through infrastructure investment over water purchasing. Any water purchases that were conducted focussed on high priority, strategically important initiatives.

Considering an offer

When considering a sell offer, the department sought advice from the:

  • Commonwealth Environmental Water Holder (CEWH)
  • Murray-Darling Basin Authority (MDBA).

For example, the CEWH may provide advice on if and how a particular water type would benefit the environmental water portfolio, while the MDBA may be asked to analyse how the water type may contribute to environmental outcomes.

The department also considered:

  • the seller’s business rationale for offering the water for sale
  • any potential impact on the broader community, the environment or state governments.

The Australian Government tries to minimise any potential socio-economic impacts.

Since August 2015 the department has received over 100 unsolicited offers to sell water entitlements to the Australian Government. Some of these offers have aligned with the Australian Government’s goals and have resulted in water being purchased. Others have presented challenges. For example, in some cases, the water entitlements on offer could not be protected from downstream extraction. The department could only consider these offers if adequate protections were in place. Otherwise the water would be of limited benefit to the environmental water portfolio.


The department’s assessment process evaluated each offer to determine whether the:

  • water would contribute to bridging the gap to the sustainable diversion limits
  • offer is within, or close to the market price as informed by expert valuations
  • offer would meet the Commonwealth Procurement Rules.

If an offer passed the assessment process, the department sought approval from the Minister to purchase the water through a limited tender arrangement with the seller.

When the department purchases water entitlements, they are transferred from the seller to the Australian Government. The Commonwealth Environmental Water Holder then manages the water. They ensure it delivers the best environmental outcomes, while benefitting river communities.

Find out more about the Commonwealth Environmental Water Holder.

Previous strategic water purchases

Since April 2015 the Australian Government has secured 68,267.8 megalitres of water, on average over the long term, for the environment (as at 31 March 2020) using limited tender arrangements.

Find out about water purchases made for:

Australian Government water purchases are also reported on:


This water is being used to make a real difference to the environment and the communities that depend on it. Environmental flows have:

  • helped fish spawning, including the largest Murray cod spawning event in the last 20 years
  • provided breeding habitats for thousands of waterbirds
  • supported the recovery of important native wetland and riverbank plants
  • helped to reconnect rivers in the Basin.

See the Flow-Monitoring Evaluation Research (Flow-MER) website for more information about how Commonwealth water for the environment is making a difference to the Basin’s rivers, wetlands and floodplains.

Groundwater purchases

The Australian Government needs to bridge the gap to the groundwater sustainable diversion limits. The Basin Plan requires groundwater extractions in the Queensland Upper Condamine Alluvium to be reduced by 38.45 gigalitres.

Find out more about groundwater purchasing.

1,500 gigalitre cap on surface water purchasing

In 2015, the Australian Government legislated a 1,500 gigalitre cap on surface water purchases to provide certainty to Basin communities that the government is prioritising infrastructure investment over water purchasing. This has been a key component in ensuring the Basin Plan delivers a balanced outcome for the economy, for Basin communities and for the environment.

See progress on water recovery.

Independent review

The Department of the Environment engaged the CSIRO and EY to develop options to improve the water purchasing program. One option presented was a different process to purchase water entitlements. Rather than calling for offers from interested parties, as occurs in an open tender process, it was suggested the department investigate using limited tenders to provide greater flexibility for both the department and sellers.

Publication details

Dr Andrew Reeson and Dr Stuart Whitten, 2015


​Document Pages File size
Motivating the Market PDF 25 426 KB
Motivating the Market  DOCX 25 222 KB

If you have difficulty accessing these files, please visit web accessibility.

Survey of water entitlement sellers under Restoring the Balance in the Murray-Darling Basin

The Department of the Environment released a commissioned report by Marsden Jacob Associates that independently assessed the impact on participating irrigators of water sales to the Commonwealth. See Survey of water entitlement sellers under the Restoring the Balance in the Murray–Darling Basin Program.

Further information

Contact us for more information on Australian Government water purchasing in the Murray-Darling Basin.

Email: Water Purchasing
Phone: (02) 6272 2004​

Last reviewed: 26 August 2021
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