Unbundling separates the traditional entitlements of water rights in districts and take and use licences on waterways into a:

• Water share: high-reliability and low-reliability where people have had access to sales water
• Delivery share, or extraction share on waterways
• Water-use licence, or water-use registration for non-irrigators

Compared to the old bundled entitlements, water shares are easier to trade and can be mortgaged separately, leased and held without land.

Access to sales water has been converted into legally recognised low-reliability water shares. As part of meeting Victoria’s commitment to the Living Murray Initiative, the landmark sales water agreement resulted in 20% of these being dedicated for environment use.

Fairer tariffs come with delivery shares, as well as greater farmer flexibility to manage how water is delivered. Water entitlements unbundled in northern Victoria from 1 July 2007 were water rights, domestic and stock allowances and take and use licences for regulated water systems managed by Goulburn-Murray Water and Lower Murray Water.

Water entitlements unbundled in southern Victoria from 1 July 2008 were water rights and diversion licences on the Werribee/Bacchus Marsh and Thomson/Macalister water systems managed by Southern Rural Water.

At this stage unbundling does not apply to groundwater, unregulated waterways or recycled water.

Irrigators and diverters can continue operating exactly as they did before unbundling, but now have greater flexibility to manage their water use and their risks.