Question 1

What is water leasing?

Accepted Answer

Water leasing is a formal agreement between the entitlement Lessor (Owner) and the Lessee (Purchaser) for a set period of time, generally between 3-5 years.
 It allows the Lessee to secure their future needs at a mutually agreed price all the while having access to the allocation granted in accordance with the seasonal determinations.

Question 2

What can be leased?

Accepted Answer

There are several types of leases for irrigation water.
ENTITLEMENT LEASE- Where the Lessee takes on the use of the Water Shares along with costs, for the agreed price and term.  This may include carryover capability, limited term transfers and in some cases annual payments in advance. Includes High Reliability and Low Reliability Water Shares.
ALLOCATION LEASE- Where the lessee has access to the allocated water set by seasonal determinations from High Reliability Water Shares.
GROUNDWATER & UNREGULATER SURFACE WATER TEMP TRANSFER- A temporary transfer of a licence involves a licence volume (ML) moving from the sellers' licence to the buyers' licence, or in some cases from a seller to a person that does not hold a licence.  The Water Act 1989 (Section 62) refers to the transfer of licence; however it can be helpful to think of temporary transfers as being like ‘leasing’. That is a temporary transfer is similar to leasing in that it is for a specified period of time and on terms agreed between the parties. So, like a lease, at the end of the temporary transfer period the licence volume is returned to the seller (the actual licence holder).

Question 3

What are the benefits for you as lessee of HRWS?

Accepted Answer

Ability to budget cost for the term of the lease
Longer term options can provide better average price returns over the term
Ability to sell temp water for profit or recoup
May have carryover space included
Same as owning water for the term of the lease
Usually 3-5 year terms 
Use lease as a tool for part of your water needs to provide security.

Question 4

What are the risks for you as lessee of HRWS?

Accepted Answer

The Temp/Allocation market may trade at lower price
Lease is subject to Seasonal Determinations- no guarantee of 100% allocation
Storage fees are payable
Locked into a fixed Agreement for the full term
Relying on lease as the sole water resource is risky, especially during dry periods
Storage fees and the full lease payments are due regardless of the seasonal allocation % which is determined.
Chance that allocation prices may fall under the lease price at some stage during the lease term.

Question 5

What are the benefits for you as lessee of LRWS?

Accepted Answer

Space to carryover unused water into a new season securely
Buy water at low cost to carryover
Ability to sell unused carryover space temporarily
Secured for the term of the lease
In rare event where Allocation is declared against LRWS, this would go to the Lessee

Question 6

What are the risks for you as lessee of LRWS?

Accepted Answer

The temporary Allocation price may be too high to capitalise and utilise space
Is now the best time to enter the market? Price?
Above entitlement storage fees may be payable
Locked into a fixed agreement for the full term.

Question 7

What are the benefits for you as a Lessor?

Accepted Answer

Utilise the water shares to provide secure and steady income for term
Reduced impact from the volatility of the temporary trade market 
Return on investment- A set and Forget option with regular income.
Water Partners manages the leases
Storage fees reimbursed.

Question 8

What are the Risks for you as a Lessor?

Accepted Answer

Temporary prices may increase and exceed the Lease price during the lease term
Fixed term agreement.
While it is possible to sell water shares that have been leased, it can make it harder to find buyer depending on the current temp price compared to the lease income.
3-5 years does not always suit Lessors- shorter term can be accepted by agreement.
During some cycles of wet periods, lease may be hard to place due to the low temp prices and unwillingness of lessees to commit.

Lease of Entitlement

Water Partners have a wide array of lease options for both buyers and suppliers, drawing on a network of water holders across Victoria.

What is Lease of Entitlement or Allocation?