Tapping into groundwater markets: Unlocking the future of water trade in South Australia's Limestone Coast

Groundwater resources in South Australia’s Lower Limestone Coast are divided between an unconfined aquifer, replenished by rainfall, and a deeper, irreplenishable confined aquifer. Both aquifers are already over-allocated, and climate change is projected to significantly reduce future recharge, threatening water availability. The region supports over 3,000 water licences for various uses, governed by regional legislation that is currently under revision to better address climate impacts, protect groundwater dependent ecosystems and encourage groundwater market growth. Despite provisions for temporary and permanent water licence transfers, the region’s groundwater market remains underdeveloped due to limited competitive pressure from surplus (unused) water and other barriers. This study applies Wheeler et al.’s (2017) water market readiness assessment framework to identify legislative and policy barriers, comparing the region to the South Australian River Murray water market. Our analysis leverages water register, usage, and trade data to assess current groundwater market performance, examining trade volumes, prices, and flow patterns. We employ scenario optimisation modelling to quantify potential benefits of increased groundwater trade and removal of trade barriers. Finally, we conduct up to ten semi-structured personal interviews with key groundwater user representatives, utilising a vignette study to investigate trading behaviour, concerns and barriers. The findings of this study will guide legislative revisions and inform efforts to remove trade barriers, promoting future groundwater trade.