Chief executive of the National Water Commission, Ken Matthews, has today released the inaugural National Water Commission Australian Water Markets Report 2007-2008, and called for the removal of remaining barriers to trade in water.

"Now that basic water trading mechanisms have been established in Australia, it is vital that we work to improve market performance," Mr Matthews said.

"We can do this by building confidence in water markets through more transparent and readily available information on prices, volumes and movements of water, as well as by minimising transaction costs and fast-tracking approval processes."

The overall value of water market transactions for the year was approximately $1.68 billion, with almost all trading activity occurring in the Murray-Darling states.

"Given the protracted drought in the southern basin, that's good news because it shows that water trading has offered irrigators and other water users greater flexibly in responding to economic and climatic pressures," Mr Matthews said.

"But we can do better. It is clear, for example, that even though this was an exceptional year for trading due to water scarcity, there is still negligible interstate entitlement trade."

There was only one interstate water access entitlement trade this year (200 ML), which occurred from Victoria to NSW.

However, water owners on-sold 1594GL of water allocations during the year and 14pc of that trading occurred across state borders.

Approximately 148GL of water allocation was traded into South Australia, with two-thirds coming from New South Wales (100GL) and the rest from Victoria (48GL).

"The findings in this report on the volumes of water available for purchase also suggest that the case previously put by the Commission for reviewing the 4pc per annum interim threshold limit on permanent trade out of irrigation districts is stronger than ever," Mr Matthews said.