The Victorian Water Act (1989) is the legislation that sets out how water is shared between users and the environment. All water in Victoria belongs to the Crown and its use is allowed through a system of entitlements and licences which apply to both surface and groundwater.
Water corporations are granted bulk entitlements to supply their customers – domestic and industrial users in the case of urban corporations like Melbourne Water, and irrigation users for rural water corporations like Goulburn-Murray Water (who hold the largest entitlements in the state).These are secure entitlements have been granted under the Act in perpetuity. Most of them involve storing water in dams, but have conditions included to provide for river base flows (passing flows). Irrigation customers hold water shares under these entitlements which belong to them and can be bought and sold. Urban customers do not hold water shares but have a right to be supplied under the bulk entitlement.
Individuals can also take water from rivers, streams and aquifers if they hold a licence. These licences operate under an overall cap that limits the amount of water that can be taken from a particular system. They generally last for 15 years but are usually renewed automatically, and can be traded between users.
A third category of water use is for stock and domestic purposes. Under the Water Act any individual has the right to take water for the following purposes: household use, watering of animals kept as pets, watering of stock, fire suppression, and irrigation of a kitchen garden. Water can be taken, used and stored free of charge and without a licence. In practice this category of use covers everything from a groundwater bore for watering the garden in inner-city Melbourne to dams for aesthetic or recreational purposes on rural residential properties to the watering of large numbers of cattle and sheep.
Finally, both surface water and groundwater recharge can be intercepted by deep rooted crops such as timber plantations and lucerne. Historically, these uses have been regarded as having little impact on overall water availability. However with changing land use and a decline in rainfall, stream inflows and groundwater recharge under climate change scenarios, the situation is changing.
From an environmental perspective, the problem with all these forms of consumptive water use is that they get first priority ahead of environmental flows for rivers. When there is plenty of water around this is not so problematic but when water is short and the going gets tough, the impact on rivers can be severe. To take one example: farm dams (or small catchment dams) are very widespread in Victoria – there are estimated to be over 350,000 of them . Many of them are for stock and domestic use, others belong to licence holders and are used for irrigation. Together they can have a very big impact in dry years (Table 3)
Table 3: Proportion of inflows captured by small catchment dams in the dry year 2006/07 
|Total catchment Inflows 2006/07 (ML)||34,600||16,500||62,400||82,100||192,700|
|Small catchment dam  usage (ML)||19,100||6,500||7,300||31,000||24,100|
|Evaporation from small dams (ML)||14,200||6,200||14,200||15,300||8,900|
|Total impact of small dams (ML)||33,300||12,700||21,500||46,300||33,000|
|% of inflows captured in small dams||96.2||77.0||34.5||56.4||17.1|
In the case of the Campaspe, almost all the available water was captured by the small dams and very little ended up in the river or the public dams. Not only is this a poor outcome for the environment, it is also inequitable for other users including urban customers who were subject to severe water restrictions.
Other examples of inequitable sharing are common – irrigation use is prioritised over environmental needs in the Murray and the Goulburn , while Melbourne’s water requirements impact on the Yarra and the Thomson. In all cases, the drier the conditions the bigger the inequity, and the smaller the share of the available water that ends up with the environment. In addition the Minister for Water has the power to redirect how water is shared when there is a water shortage – in every case where this power has been used, water has been redirected from the environment to consumptive use and the environment’s share has ended up being even smaller.
To resolve this inequity, four things need to happen:
1 State of the Environment Victoria Report (2008) op cit Part 3 p116
2 DSE (2008) Victorian Water Accounts 2006/07
3 Small catchment dams as defined in the State Water Reports include registered irrigation and commercial dams. However registered dams comprise less than 10% by either number or volume in any of the catchments included in this table
4 See DSE (2009) Northern Region Sustainable Water Strategy p 24
5 Environment Victoria and Environment Defenders Office have made recommendations on how this may be achieved in our report Bringing the Victorian Water Act into the 21st century (2010)
6 Commonwealth Water Act 2007 s4