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Water Rights as Property

Water Rights as Property[1]


Kellehers Australia was involved this week in assisting the Law Council of Australia in its submission to the Senate Inquiry on the Integrity of the Water Market in the Murray-Darling Basin.

This important Inquiry followed the recent Four Corners exposé of apparent corruption in water use along the Murray-Darling River system.  Allegations of ‘water theft’ in the Murray-Darling Basin – usage of water beyond the user’s entitlement – highlights a weakness in the current system of water rights. This weakness can be illustrated by contrasting water rights with land rights. Unauthorised use of the river water is an interference with private water rights due to the scarcity of water as a resource and government caps on available allocations.

In most Australian states, water rights are ‘unbundled’ from land rights. However, there is still a long way to go before property rights in water are as clear or secure as rights to land.

In Victoria, the basic water right is a ‘water share’, which gives its owner a right to access water in a ‘declared water system’[2]. Water shares can be traded and mortgaged. The quantity of water available under a water share is limited through ‘water allocations’ which control the quantity of water that can be taken in any given ‘water season’[3]. These water allocations attach to water shares but can also be traded. The water rights system exists not just to protect holders of water rights – it is an essential tool for managing water as a scarce resource.

In instances where a person’s land rights are interfered with, there may be a cause of action in trespass or private nuisance, along with criminal offences such as forcible entry[4]. There is no equivalent mechanism for water rights holders. Further, where an owner of property has the right and power to exclude other people from accessing or using land, enforcement of water rights is centralised – the State is the only body capable of providing a remedy where a user ‘steals’ water by exceeding their water entitlement. If the public authority responsible for policing water usage does not have the practical capability or willingness to effectively enforce water rights limits, those rights, for all other owners, lose the characteristic of exclusivity. Water users would be able to disregard the restrictions on water access. By contrast, a landowner seeking to protect his or her property rights does not need to complain to a public authority. Thus, a private land right is exclusive[5]. This is not necessarily the case for a water right.

Kellehers considers that there could be benefit in creating a private enforcement mechanism for water rights. The Murray-Darling water ‘theft’ allegations call into question the exclusivity of water rights. Allowing landowners to enforce water rights themselves could go some way to addressing this issue and render water rights closer to land rights, as well as protecting the security and value of those water rights.

[1] Freeman Zhong and Leonie Kelleher.

[2] Water Act 1989 (Vic) s33F.

[3] Ibid.

[4] Crimes Act 1958 (Vic) s207.

[5] See Kevin Gray, ‘Property in Thin Air’ (1991) 50 Cambridge Law Journal 252, citing Victoria Park Racing & Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479.

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