Bridging the 6.5 Trillion Water Infrastructure Gap A Playbook 2025

CASE STUDY 21 Australian water markets Australia has developed one of the world’s most advanced water markets in the Murray-Darling Basin (MDB), where farmers, industries and state governments can buy and sell water rights. The market includes permanent rights (entitlements) and seasonal allocations, giving users flexibility to adapt to dry or wet years. Each year, billions of litres of water are traded, generating an estimated market turnover of over AUD 6 billion in 2021.51 Farmers use the market to secure water for high-value crops, lease rights for several years, or “carry over” unused water for the next season. While challenges remain around transparency and access, the MDB market has provided a model for managing scarce resources through pricing and trade.52 Public funds should back private capital and be used strategically to unlock it and bolster investment demand. Policy-makers should look beyond traditional financing approaches and explore market-based mechanisms that reward performance and enable flexible compliance, such as “blue certificates” and cap-and-trade schemes for water allocation. These instruments can stimulate demand for water investing, specifically targeting private capital. To operationalize such instruments, policy-makers should define eligible activities (e.g. volumetric savings and biodiversity conservation) and issuers (e.g. industrial users and farmers); establish monitoring and verification protocols; and develop transparent trading platforms. These instruments might also facilitate the creation of water service companies (WaSCos), which, like energy service companies (ESCos), focus on advisory services and capital raising related to water conservation and resilience. Market-based instruments Bridging the €6.5 Trillion Water Infrastructure Gap: A Playbook 34 Bridging the €6.5 Trillion Water Infrastructure Gap: A Playbook 34