Water Wise: What the purchaser of agricultural land should know

Unusual cloud formation reflected in a farm dam

Water for irrigation is pivotal to any purchase of agricultural property where irrigation farming activities take place. The legal rights in respect thereof are however most often neglected during negotiations and the conclusion of agricultural property transactions. It is therefore essential to be informed about the various types of authorisations and water use rights as provided for in the National Water Act, 1998 (“NWA”).

Section 21 of the NWA sets out the different types of water uses and includes inter alia the taking of water from a water resource (i.e. surface or ground water/borehole water), water storage (i.e. dams) and impeding or diverting water in a watercourse (i.e. waterworks to divert water from a river to its place of storage).

Any water use will only be valid and legal if it falls in one of the following categories:

Schedule 1 of the NWA – where the water use is of low volume and impact and largely consistent with domestic use;
General Authorisation – in accordance with the volumes of water set out in the General Authorisation published from time to time;
an existing lawful water use (“ELU”); or
a licenced water use.

An ELU is a water use that was lawfully exercised on the particular property during the 2-year period preceding 1 October 1998 and which use must be verified and validated by the Department of Water and Sanitation in accordance with Section 35 of the NWA.

The determination of an ELU is a question of fact which can be established by the purchaser enquiring whether:

a scheduling certificate was issued by the relevant Irrigation Board or Water Users Association in the irrigation district or management area in which the property is situated;
there are any other water uses over and above the sellers’ scheduled water use rights in existence on the property; and
an application has been made under Section 35 of the NWA for verification of an ELU, or whether a certificate indicating the preliminary findings of such application has been issued.

As water is a scarce resource and the use thereof tightly regulated, a property’s water use rights can have a direct bearing on its purchase. It is therefore essential to ask the right questions to determine whether the property that you are purchasing does indeed have lawful water use rights associated therewith and a purchaser of agricultural land where irrigation takes place would be well advised to obtain professional advice and guidance in respect of the water use rights legally exercisable in respect of a particular property.