The Western Australian Government has announced it will examine the viability of its current water allocation policy in the face of growing demand from both industry and consumer groups.

 

The Department of Water published a review of its policies on request of the State Minister for Water Bill Marmion.

 

The Department of Water current uses a first-in first-served mechanism, meaning that the department deals with applications for water entitlements in the order they are received.

 

The Department has found that the policy has worked well in most circumstances, but has begun to face problems as water resources approach full allocation.

 

“This is because it does not call for and evaluate multiple applications, nor does it direct water to the highest value use. There are a number of alternative means of prioritising how applications are assessed including auctions, merit selection, direct sale and random ballots,” the report found.

 

The Department was governed by the following considerations in its review

  • Efficient allocation of scarce resources
  • Efficient use of water
  • The process of releasing water should be fair and equitable
  • Support the operation of a market
  • Cost of implementation

 

The report found that the first-in first-serve method serves lower end applications. The report continues to find that auctions are a “preferred mechanism” for higher end applications. The report found that auctions will place a greater sense of value on water and would lead to less wastage.

 

The Department is seeking comments on this discussion paper before 28 October 2011. The comments will be considered in the preparation and finalisation of the policy on managing unallocated water in Western Australia.

 

The review can be downloaded here