Controlled allocation FAQs

1. What is the controlled allocation order?

Controlled allocation orders make new water access licences available. The order made in October 2021 makes aquifer access licences available in specific groundwater sources that have unassigned water. The order does not include any groundwater sources where current water requirements have reached or are close to reaching the long term average annual extraction limit set in a water sharing plan.

The Minister or delegate can make a controlled allocation order at any time under section 65 of the Water Management Act 2000. Anyone can apply for a water access licence if they have acquired that right under a controlled allocation order.

Buying water through a controlled allocation gives the new licence holder a share in a groundwater source. One share equals one megalitre unless an available water determination applies. Even though you may hold a licence and shares you will also need one or more approvals to take the water (unless an exemption applies).

Before participating in a controlled allocation process you should investigate whether you will be able to extract the amount and the quality of groundwater​ at your proposed location to suit your intended purpose (see FAQ 5). This is because ​groundwater yield and quality can vary within a groundwater source.

Detailed information about the controlled allocation process is available in the Order’s ‘Terms and Conditions’. Please ensure you have read and understand the order and the Terms and Conditions before making an application.

2. How is unassigned water calculated?

Unassigned water is calculated by first subtracting current water requirements (the sum of all licensed entitlement plus water required to meet basic landholder rights) from the long term average annual extraction limit. Factors such as shares reserved for licences yet to be converted/issued and future urban water supply needs may also affect the amount of unassigned water.

For more information on how unassigned groundwater is determined, see the Strategy for the controlled allocation of groundwater (PDF, 33.08 KB).

3. How many shares are released under the 2021 Controlled Allocation Order?

Schedule 1 (PDF, 421.41 KB) of the Order specifies the groundwater sources included in this order and the amount of shares available in each groundwater source.

The department takes a precautionary approach in each controlled allocation by releasing a small amount of unassigned groundwater to prevent over-allocation of groundwater resources.

Under this approach, the level of commitment is reviewed as it approaches 80% of the long term average annual extraction limit (LTAAEL), consistent with the Strategy for the controlled allocation of groundwater (PDF, 33.08 KB). This strategy aims to ensure enough groundwater remains available to meet future priority water needs such as urban water supply and predicted growth in basic landholder rights.

4. How do I know if shares are available in my groundwater source under a controlled allocation?

Schedule 1 (PDF, 421.41 KB) of the Order lists the groundwater sources (and water management zones where availability is restricted to a particular zone in a groundwater source) where shares are available. The map Groundwater sources map (PDF, 3373.16 KB) shows these groundwater sources. Before making an application we suggest you contact WaterNSW (1300 662 077) to confirm which groundwater source(s) or water management zone(s) apply to you.

If your groundwater source isn’t part of a controlled allocation process, you may be able to buy shares or temporary allocation in your groundwater source through the water market.

5. How can I tell if the groundwater at my location is of suitable yield or quality for my needs?

If you want more information about the potential depth to groundwater, water quality or yield in your area, you may be able to get information about existing bores from the Government’s groundwater database. Contact WaterNSW (1300 662 077) or send a request for bore details in your area to waterdataservices@waternsw.com.au.

WaterNSW can also advise you about the licensing and approval requirements if you want to drill a bore (test bore) to investigate the groundwater prospects in your area.

6. How do I get a licence and shares through the controlled allocation process?

Under a controlled allocation order a person (or other legal entity) can register their interest in acquiring the right to apply for a licence with a specified number of shares in a particular groundwater source.

The right to apply for a licence is won based on the highest price offered per share. Other terms and conditions also have to be met to acquire this right.

More detail on how to register your interest in a licence and shares under this process is in the ‘Terms and Conditions for the Controlled Allocation Process' in Schedule 2 of the Controlled Allocation Order (Various Groundwater Sources) 2021 .

7. What type of licence will I get through the 2021 controlled allocation process?

If successful you will receive a water access licence of the category ‘aquifer access licence’, which is granted in perpetuity.

Once your new access licence has been granted, it must be registered with NSW Land Registry Services on the Water Access Licence Register to become legally effective. Registration must occur before taking or trading any water under the licence. Instructions on how to register will be provided when your licence is granted. For information about licence registration and fees please contact the Land Registry Services on 02 8776 3575 or 1300 396 076 (regional callers).

8. Can I trade the aquifer access licence I receive under the controlled allocation process?

Yes. You can trade your aquifer access licence in the same way that all other aquifer access licences can be traded under the rules of the relevant water sharing plan and the Access Licence Dealing Principles Order 2004.

9. Do I have to apply for an access licence if I already have one?

Yes, shares bought through a controlled allocation are new shares so you receive a new access licence.  If you would like to merge your new licence with an existing licence of the same category, you can do this later through a dealing. Contact WaterNSW on 1300 662 077 for more information on dealings.

10. Is there a limit to the number of shares I can buy?

Yes, each controlled allocation order specifies the number of shares released for each groundwater source. You can register interest in any amount of shares up to the total number of shares made available in a groundwater source.

11. What if I want more shares than are offered through the controlled allocation process?

The Minister may make further controlled allocation orders. Shares and temporary allocation can also be bought through the trading market.

12. Why are minimum prices set?

Minimum prices per share are set to encourage water use efficiency and the maximum economic benefit for the water. The minimum price is set based on prices paid in other similar groundwater sources through previous controlled allocations, water trading and other current market indicators. The registration of interest process will determine the final price to be paid.

13. Where can I take groundwater from under my new aquifer access licence?

The aquifer access licence will only allow water to be taken from the groundwater source for which you applied and that is specified on your licence. However, groundwater made available through the October 2021 controlled allocation order cannot be taken from these management zones:

  • the Lachlan Fold Belt Murray-Darling Basin (Mudgee) Management Zone in the Lachlan Fold Belt Murray-Darling Basin Groundwater Source, or
  • the Spring Ridge Management Zone in the Gunnedah-Oxley Basin Murray-Darling Basin Groundwater Source.

14. How do water sharing plan rules apply to aquifer access licences and shares obtained through the controlled allocation?

All groundwater sources across NSW are managed under a water sharing plan and the requirements of the Water Management Act 2000 apply (unless exempt). Water sharing plans set rules and mandatory conditions that are specific to each groundwater source for activities that involve groundwater extraction and apply to these aquifer access licences in the same way they apply to any other aquifer access licence in the groundwater source.

Water sharing plans set limits on water extraction (the long term average annual extraction limit) for all water in a water source, including saline or contaminated water. These legally binding plans include rules for water trading, water accounts and for how water is shared by different users and the environment. The plans also set out the mandatory approval conditions that apply to water supply work approvals (see FAQ 15), including rules to minimise impacts on other groundwater users, dependent ecosystems, water quality and groundwater sources.

The release of unassigned groundwater under the October 2021 controlled allocation order will not result in any long term average annual extraction limits in water sharing plans being exceeded.

You can find out more by visiting water sharing plans.

15. What approvals do I need before I can take and use my groundwater?

In most cases you will need to hold one or more approvals under the Water Management Act 2000 before you can use a water supply work to take water from the groundwater source. You may also need to apply to amend your water access licence under section 71W of the Act to nominate a specified water supply work or extraction point under your licence.

Under the Environmental Planning and Assessment Act 1979, you may be exempt from the need to hold an approval under the Water Management Act 2000 for State significant development that is authorised by a development consent or the carrying out of a State significant infrastructure if it has been approved by the Minister (or delegate).

In determining an approval application under the Water Management Act 2000, WaterNSW or NRAR will undertake an environmental assessment. This involves assessing the likely impacts on the groundwater source, connected water sources, the users of these water sources and dependent ecosystems. An approval application may be refused, regardless of the (related) licence being granted. If an approval is required but has been refused, and you proceed to take water under your licence, you may be in breach of the Water Management Act 2000 in relation to your use of the water, or construction and use of the work or your carrying out of the controlled activity (as applicable).

Contact WaterNSW (1300 662 077) for more information about approvals and dealings under the Water Management Act 2000.

Contact the Department of Planning, Industry and Environment (1300 305 695) for more information about the Environmental Planning and Assessment Act 1979.

16. When can I start taking my groundwater?

Shares are credited to licence accounts at the start of each new water year (1 July) and are credited as 1 share = 1 megalitre (ML) unless an available water determination (AWD) applies, in which case each share may equate to less than 1 ML.

For licences and shares granted under a controlled allocation process part-way through a water year, the shares are credited on a pro-rata basis depending on when in the water year they are credited in accordance with section 85 (4) of the Water Management Act 2000.

You can start taking groundwater once you have registered your licence with NSW Land Registry Services and obtained the appropriate approval/s (see FAQ 15 on approvals).

17. What happens if I don’t find suitable groundwater when I drill a bore at my location? 

If this happens, you may be able ​to sell some or all of your shares on the water market – either permanently (permanent trade) or annually (temporary trade) through an assignment of allocation (see FAQ 8 about trading your licence).

18. Can I combine my surface water with my groundwater?

No, groundwater cannot be combined with, or stored, in surface water infrastructure and water access licences cannot be combined if they are different categories of licences.

Contact WaterNSW (1300 662 077) to discuss your options.

19. Can the controlled allocation order be extended or repealed? 

The controlled allocation order remains in effect until it is repealed by the Minister (or delegate). This means, the order is not required to be extended. We expect the order to be repealed once the controlled allocation process is complete.

20. How does a controlled allocation order relate to the Murray Darling Basin Plan?

In March 2014, NSW signed up to implement the Basin Plan. This plan sets sustainable diversion limits for groundwater resources in the Murray Darling Basin Plan. These limits equate to the long term average extraction limits in water sharing plans. The release of unassigned groundwater under a controlled allocation order will not result in any of the sustainable diversion limits in the Basin Plan being exceeded.

21. How does a controlled allocation order relate to the NSW Aquifer Interference Policy?

The NSW Aquifer Interference Policy (PDF, 505.49 KB) covers aquifer interference activities including dewatering for mining, exploration, quarrying and construction.

This Policy sets out the water licensing requirements for aquifer interference activities to ensure the water taken by them is properly licensed and accounted for in all affected water sources. Anyone who takes water through carrying out an aquifer interference activity must hold a water access licence unless an exemption applies. The water that is required to be held can be purchased on the market or obtained through a controlled allocation order.

The NSW Aquifer Interference Policy also explains approval requirements for the activity/development and defines minimal considerations that must be taken into account when assessing the impacts associated with aquifer interference activities.

The minimal impact considerations are also used to assess the impacts of State significant development and State significant infrastructure proposals that are aquifer interference activities and form the basis for the advice that is provided to the relevant approval body – generally the Planning and Assessment Division of the Department of Planning, Industry and Environment.

22. Will the release of water under a controlled allocation process allow water to be taken from connected surface water systems?

No. All groundwater systems that are highly connected to surface water are fully committed and do not have unassigned water. Under this order, shares are only being released from groundwater sources that are not fully committed or highly connected to surface water.

23. Will the release of licences with a share component under this controlled allocation process affect the water available for food production or the environment?

No. The process will not affect existing licences and shares held in a groundwater source and will not impact on planned environmental water or reduce the amount of water able to be taken and used to grow food.

Under this order water licences are only made available in groundwater sources with unassigned water. Only a portion of the unassigned water is released to ensure that the total water extractions in a groundwater source remain below the limits set in the relevant water sharing plan.