{"id":"F2010L02471","name":"Murray-Darling Basin Agreement (Schedule D - Conversion Factors and Exchange Rates) Protocol 2010","slug":"murray-darling-basin-agreement-schedule-d-conversion-factors-and-exchange-rates-protocol-2010","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":437509,"registerId":"F2010L02471-fast-fetch-1775954315813","compilationNumber":null,"startDate":"2026-04-12","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Murray-Darling Basin Agreement (Schedule D - Conversion Factors and Exchange Rates) Protocol 2010","content":"---\nmeta-content-style-type: text/css\nmeta-content-type: application/xhtml+xml; charset=utf-8\n---\n\n?xml version=\"1.0\" encoding=\"utf-8\" standalone=\"no\"?>\n\n![](image.001.png)\n\nMurray-Darling Basin Agreement (Schedule D — Conversion Factors and Exchange Rates) Protocol 20101\n\nThe MURRAY-DARLING BASIN AUTHORITY, in consultation with the Basin Officials Committee and having considered the advice, if any, given by each person nominated by a Contracting Government under subclause 6 (3) of Schedule D to the Murray-Darling Basin Agreement, makes the following Protocol under clause 6 of Schedule D to that Agreement and section 18E of the Water Act 2007.\n\nI, ROB FREEMAN, Chief Executive of the MURRAY-DARLING BASIN AUTHORITY, authenticate that the Authority validly made the following Protocol on 30 August 2010.\n\n|  |  |\n| --- | --- |\n| <br>ROB FREEMAN<br>Chief Executive<br>7 September 2010 |  |\n\n\nContents\n\n \n\n 1 Name of Protocol \n\n 2 Commencement \n\n 3 Revocation \n\n 4 Application \n\n 5 Definitions \n\n 6 Conversion factors \n\n 7 Application of conversion factors \n\n 8 Applications to convert lower reliability entitlements \n\n 9 Suspension of conversion\n\n 10 Exchange rates \n\n 11 Application of exchange rates \n\n 12 Reviews of exchange rates and conversion factors\n\n \n\n \n\n \n\n \n\n1 Name of Protocol\n\n  This Protocol is the Murray-Darling Basin Agreement (Schedule D — Conversion Factors and Exchange Rates) Protocol 2010.\n\nNote   This Protocol deals with matters referred to in paragraph 6 (1) (d) of Schedule D to the Agreement.\n\n2 Commencement\n\n  This Protocol commences on the day after it is registered.\n\n3 Revocation\n\n  All protocols made under paragraph 6 (1) (d) of Schedule D to the Agreement before 1 December 2009, and all provisions of any such protocol, that apply to exchange rate trade are revoked.\n\n4 Application\n\n  This Protocol applies to conversion of entitlements and exchange rate trade.\n\n5 Definitions\n\n  In this Protocol:\n\nAct means the Water Act 2007.\n\nGSEC means a New South Wales General Security Access Licence.\n\nHR means a Victorian High-Reliability Water Share.\n\nHSEC means a New South Wales High Security Access Licence.\n\nLR means a Victorian Low-Reliability Water Share.\n\nSA LIC means a South Australian water licence.\n\nNote    Several other words and expressions used in this Protocol have the meaning given by the Act (including the Agreement), for example:\n\n Authority\n\n exchange rate trade.\n\n6 Conversion factors\n\n  To convert entitlements to which Table 1 applies, the conversion factor to be used is determined in accordance with Table 1.\n\n \n\nTable 1\n\n \n\n- Item Column 1 Column 2 Column 3 Column 4\n- For this valley… for a conversion between … the conversion factor …\n- for a conversion from a lower reliability to a higher reliability entitlement is … for a conversion from a higher reliability to a lower reliability entitlement is …\n- 1 Murray New South Wales a High Security and a General Security entitlement 0.6 1.6667\n- 2 Murrumbidgee a High Security and a General Security entitlement 0.55 1.8182\n\n\n7 Application of conversion factors\n\n (1) Conversion factors determined by this Protocol are to be applied in accordance with this section.\n\n (2) To convert an entitlement of one type (initial entitlement) into and entitlement of another type, the volume of the initial entitlement must be multiplied by the relevant conversion factor (if a conversion factor applies to the transfer).\n\n \n\n8 Applications to convert lower reliability entitlements\n\n  A State must approve an application to convert a lower reliability entitlement to a higher reliability entitlement in any year when:\n\n (a) the allocation under the lower reliability entitlement is 100% and none of the water allocated has been used or transferred; or\n\n (b) the allocation is less than 100% by a certain volume (the gap) and:\n\n (i) the applicant, at the time of making the application, has acquired an additional volume at least equal to the gap; and\n\n (ii) none of the water allocated has been used or transferred.\n\n9 Suspension of conversion\n\n (1) If a State Contracting Government, under a law of the State, decides to suspend the conversion of one type of entitlement into an entitlement of another type, within 1 or more valleys in the State, the State Contracting Government must notify the Authority in writing of the suspension. The notice must be given at the same time as the State Contracting Government notifies the suspension as required by the law of the State.\n\n (2) If a State Contracting Government, under a law of the State, decides to end the suspension of the conversion of one type of entitlement into an entitlement of another type, within one or more valleys in the State, the State Contracting Government must promptly notify the Authority in writing that the suspension has ended. The notice must be given at the same time as the State Contracting Government notifies the end of the suspension as required by the law of the State.\n\n (3) A notice under subsection (1) or (2) must set out the reasons for the decision.\n\n (4) If the Authority receives a notice under subsection (1) or (2), the Authority must inform the other State Contracting Governments of the decision.\n\n10 Exchange rates\n\n  The exchange rate to be applied to a transfer of an entitlement is the rate determined in accordance with Table 2.\n\n \n\nTable 2\n\n \n\n| From<br>To | New South Wales Murray  HSEC | Victoria Murray  HR | SA LIC | Goulburn  HR | Murrumbidgee  HSEC |\n| --- | --- | --- | --- | --- | --- |\n| New South Wales Murray  HSEC | 1.0000 | N/A | N/A | N/A | N/A |\n| Victoria Murray  HR | N/A | 1.0000 | N/A | N/A | N/A |\n| SA LIC | N/A | N/A | 1.0000 | N/A | N/A |\n| Goulburn  HR | N/A | 1.0000 | 1.0000 | 1.0000 | N/A |\n| Murrumbidgee HSEC* | N/A | N/A | N/A | N/A | 1.0000 |\n\n\nNote: N/A means not applicable.  For these cases, exchange rate trade is not available.\n\n11 Application of exchange rates\n\n (1) Exchange rates determined by this Protocol are to be applied in accordance with this section.\n\n (2) To calculate the volume of an entitlement of a particular type to be created in a State of destination, the volume of the entitlement to be cancelled, extinguished or suspended in the State of origin must be multiplied by the relevant exchange rate.\n\n12 Reviews of exchange rates and conversion factors\n\n  A State Contracting Government may ask the Authority to review a conversion factor or exchange rate if:\n\n (a) the total volume of a particular type of entitlement in a valley changes by at least 8%:\n\n (i) from 19 May 2006; or\n\n (ii) from the time a conversion factor or exchange rate is determined or altered by amendment to this Protocol;\n\n for any reason (including because of the conversion of               entitlements within the valley); or\n\n (b) any substantial change is made to a relevant existing best practice hydrological model (including any re-calibration or major improvement to a feature of the model); or\n\n (c) a new type of water entitlement is created in a State; or\n\n (d) an amendment is made to legislation or a statutory plan within a State that may affect exchange rates or interstate transfers of entitlements under Schedule D to the Agreement.\n\n \n\n \n\nNotes\n\n1. All legislative instruments and compilations are registered on the Federal Register of Legislative Instruments kept under the Legislative Instruments Act 2003. See www.frli.gov.au.\n\n \n\n \n","sortOrder":0}],"analysis":{"flash_summary_failed":{"failed":true,"reason":"Unauthenticated. Configure AI_GATEWAY_API_KEY or use a provider module. Learn more: https://ai-sdk.dev/unauthenticated-ai-gateway","source":"analysis-cron"},"kimi_summary":{"content_quality":"ok","complexity_score":4,"scope_assessment":{"changed":false,"description":"This Protocol appears tightly scoped to its original purpose. It deals specifically with conversion factors and exchange rates as authorised by clause 6 of Schedule D to the Murray-Darling Basin Agreement. The revocation clause (section 3) only removes prior protocols on the same specific topic, and the application clause (section 4) limits operation to 'conversion of entitlements and exchange rate trade'. There is no evidence of scope creep beyond the technical mathematical framework for water trading."},"complexity_factors":["Multiple defined terms (5 explicit definitions plus incorporated terms from parent Act/Agreement)","Cross-references to Schedule D of the Murray-Darling Basin Agreement and section 18E of the Water Act 2007","Mathematical conversion tables requiring careful reading of row/column intersections","Conditional logic in section 8 (conversion approvals require 100% allocation or gap-filling acquisitions)","Nested notification requirements in section 9 (suspension notices must be simultaneous with state law notifications)","Four separate triggering conditions for reviews in section 12 (percentage changes, model updates, new entitlement types, legislative amendments)","Technical water management terminology (GSEC, HR, HSEC, LR, SA LIC, 'allocation', 'valley')"],"plain_english_summary":"This Protocol sets the mathematical rules for converting and trading water entitlements in the Murray–Darling Basin, prescribing conversion factors between reliability types and limited interstate exchange rates. It affects irrigators, state governments that must approve or suspend conversions, and the Murray–Darling Basin Authority that maintains and reviews rates. By fixing clear exchange rules and review triggers, it provides transparency, reduces disputes, and allows temporary suspensions in scarce or changed conditions."},"flash_summary":{"complexity_score":4,"scope_assessment":{"changed":false,"description":"This Protocol does not broaden the original policy purpose; it revokes earlier protocols dated before 1 December 2009 and replaces them with a specific set of numeric conversion factors and an exchange-rate matrix for particular entitlement types and valleys (clauses 3, 6, 10). The instrument stays within the narrow functional scope authorised by Schedule D (conversion factors and exchange rates) and mainly provides operational detail (multipliers, procedural rules for approvals and notifications, and review triggers) rather than extending the policy to new subject matter."},"complexity_factors":["Short instrument (12 substantive clauses plus two small tables)","6 defined or specially-noted terms in interpretation (Act, GSEC, HR, HSEC, LR, SA LIC) and reliance on definitions in the Water Act and Agreement","Two small tables with numeric factors (Table 1: conversion factors; Table 2: exchange-rate matrix) — limited scope but requires correct mapping","Several conditional approval rules for conversion (clause 8 has two alternative tests)","Notification and coordination mechanics between States and the Authority (clause 9) — procedural dependencies","Multiple review-trigger conditions (clause 12) including an 8% volume-change threshold and model or legal changes","Cross-references to Schedule D of the Agreement and the Water Act 2007, creating external dependencies for some terms and powers"],"plain_english_summary":"**What this Protocol does (mechanics)\n\n- Sets the specific numerical conversion factors used when changing water entitlements between different reliability classes in two valleys (Murray and Murrumbidgee). (See clause 6 and Table 1.)\n  - Murray (New South Wales): converting from lower-reliability to higher-reliability uses factor 0.6; converting from higher to lower uses 1.6667.\n  - Murrumbidgee: converting from lower to higher uses 0.55; converting from higher to lower uses 1.8182.\n- Explains how to apply those factors: multiply the volume of the existing entitlement by the appropriate factor to produce the new entitlement volume. (Clause 7.)\n- Sets rules for when a State must approve conversion of a lower-reliability entitlement into a higher-reliability entitlement: either the lower-reliability allocation is 100% and unused, or the allocation is short by a defined gap but the applicant has already acquired additional volume at least equal to that gap and none of the allocation has been used or transferred. (Clause 8.)\n- Allows State governments to suspend conversions in one or more valleys under State law; the State must notify the Murray–Darling Basin Authority (the Authority) with reasons, and the Authority must inform other States. (Clause 9.)\n- Sets interstate exchange rates (how much entitlement in a destination State is created when an entitlement is cancelled or extinguished in the origin State). The Table in clause 10 shows which interstate transfers are allowed (many pairings are \"not applicable\") and, where allowed, the numerical rate (the Table in this Protocol shows permitted trades are effectively 1.0000 where available).\n- Explains how to apply exchange rates: multiply the cancelled entitlement volume in the origin State by the exchange rate to get the volume created in the destination State. (Clause 11.)\n- Establishes when a State may request the Authority to review a conversion factor or exchange rate: e.g. when the total volume of a particular entitlement type in a valley changes by at least 8% (since 19 May 2006 or since the rate was last set), when there are substantial changes to hydrological models, when a new entitlement type is created, or when relevant laws or plans are amended. (Clause 12.)\n\n**Who this affects\n\n- Holders of the specified water entitlements in the listed valleys and States (holders seeking to convert entitlement types or to use interstate exchange-rate trade). (Clauses 4, 5, 6, 10.)\n- State governments, which retain decision-making power over suspensions and must approve certain conversions. (Clauses 8 and 9.)\n- The Murray–Darling Basin Authority, which records the Protocol, receives State notices and coordinates review requests. (Clauses 1, 9, 12.)\n\n**Why it matters (stated purpose and practical implications)\n\n- The Protocol implements the Schedule D function of setting conversion and exchange rules and numbers so that conversions and interstate transfers are calculable and administrable (see clause 1 and Note to clause 1).\n\n- Practical implications and incentive effects (mechanical, not normative):\n  - Volume arithmetic and value: the conversion factors change the physical quantity of entitlement when changing reliability class (clause 7 and Table 1). A holder converting from a lower to a higher reliability class receives a smaller volume (factor < 1); converting from higher to lower yields a larger volume (factor > 1). That directly affects the size of the asset being held or sold and thus its market value.\n  - Interstate trade constraints: the exchange-rate table (clause 10) permits only certain interstate pairings (many pairings are marked N/A). Where trade is permitted the rate in the Protocol is 1.0, so the traded volume is one-for-one in those limited cases; most interstate transfers between the listed entitlement types are not available under this Protocol.\n  - Timing and procedural constraints: approvals for converting lower-to-higher reliability require either a full unused allocation or acquisition of extra volume equal to any shortfall (clause 8). That creates a compliance step and an upfront acquisition cost for some conversions.\n  - State discretion and coordination: States can suspend conversions under their laws and must notify and explain the suspension to the Authority; the Authority informs other States. States also may request reviews of rates and factors (clauses 9 and 12). This preserves State-level control over when conversions or exchange trades operate in particular valleys.\n\n**Costs, incentives and trade-offs (mechanisms)**\n\n- Who pays and who gains: an entitlement holder changing type pays or gains in quantity via the conversion factor. Buyers and sellers in secondary markets will bear or capture price adjustments reflecting these volume changes. States bear administrative costs of approvals, notifications and possible review processes; the Authority bears coordination costs.\n- Incentives and substitution: conversion factors and the limited set of allowed interstate pairings alter incentives to convert or trade. For example, a low conversion factor for lower->higher reliability (0.55–0.6) discourages some conversions unless the higher reliability carries a premium that offsets the reduced volume.\n- Compliance and transactional friction: the requirement that allocations be unused (and in some cases that additional volume be pre-acquired) creates an operational barrier and paperwork for converters (clause 8). Suspensions and their disclosures add regulatory uncertainty for market participants (clause 9).\n- Review triggers and model dependence: reviews can be requested when entitlement volumes change by at least 8% or when hydrological models change materially (clause 12). That ties the stability of conversion/exchange numbers to physical realities and modelling updates, but also opens the numbers to periodic revision, which can affect market expectations.\n\n**Implementation risks and administrative discretion**\n\n- Administrative discretion is located mainly with State governments (suspensions, approvals) and the Authority (receiving notices, coordinating reviews). (Clauses 8, 9, 12.)\n- Risk of market disruption if States suspend conversions or request frequent reviews — market participants face timing risk and possible re-calibration of conversion/exchange numbers.\n\n**Bottom line**\n\n- This Protocol produces a short, rule-based system for converting between particular entitlement types in two valleys and for a narrow set of interstate exchanges. It fixes the arithmetic (multipliers), sets limited procedural conditions for approvals, preserves State decisionmaking on suspensions and enables periodic review when volumes, models or laws materially change. (Clauses 6–12.)"}},"importantCases":[],"_links":{"self":"/api/acts/murray-darling-basin-agreement-schedule-d-conversion-factors-and-exchange-rates-protocol-2010","history":"/api/acts/murray-darling-basin-agreement-schedule-d-conversion-factors-and-exchange-rates-protocol-2010/history","analysis":"/api/acts/murray-darling-basin-agreement-schedule-d-conversion-factors-and-exchange-rates-protocol-2010/analysis","conflicts":"/api/acts/murray-darling-basin-agreement-schedule-d-conversion-factors-and-exchange-rates-protocol-2010/conflicts","importantCases":"/api/acts/murray-darling-basin-agreement-schedule-d-conversion-factors-and-exchange-rates-protocol-2010/important-cases","documents":"/api/acts/murray-darling-basin-agreement-schedule-d-conversion-factors-and-exchange-rates-protocol-2010/documents"}}