The Federal Government has released terms of reference for the Australian Competition and Consumer Commission’s inquiry into the Murray-Darling Basin water market.
The inquiry will look at options to improve the transparency and efficiency of the water market.
It will also examine changes in water use, carryover water, trade between water valleys and systems and the effect of water speculators on the market.
The Victorian Government is already conducting an investigation into water trading, headed by former MP Paul Weller.
Victorian Water Minister Lisa Neville has asked her department to look at the options and benefits of a completely transparent water trading system, to provide confidence the market is working for irrigators and not being distorted.
Federal Water Resources Minister David Littleproud said the government had listened to the concerns of farmers in delivering on this election commitment.
"I promised this thorough inquiry after hearing from farmers as I travelled up and down the basin," Mr Littleproud said.
"Farmers told me they had concerns around changes in water use, trade between valleys and the effect speculators have on the water market.
"It’s important to make sure the market is operating as intended — our regional communities depend on it.
"We need a transparent market in which farmers have timely access to accurate information.
“I invite farmers to participate in this inquiry.”
The government has asked the ACCC for an interim report to be delivered early next year, with a final report by the end of 2020.