A report from the National Water Commission about its water trading in the Murray-Darling Basin showed that the practice enabled farmers to survive the drought, however, certain restrictions have prevented irrigators from utilizing the full value of their water allocations.

The restriction, where Victoria caps 4 per cent of water being traded out of a district each year, may be lifted by the commission.

Commissioner Laurie Arthur said the water trade has helped farmers in terms of flexibility.

"If the drought has hit and they haven't got a critical mass of water to use, they are able to trade it to someone who can."

Also in the report, it showed a 10-year period to 2008-09, where the basin area experienced drought for the last seven years.

He stressed the need for a water trade for the benefit of the farmers and to help in irrigation. However, he said that many farmers were concerned that implementing a water trade may harm some of the regions.

"We found that concerns about the impact of trade out of a district or region were well and truly overstated in comparison with the impacts of drought and other factors," Mr Arthur said.

Mr. Arthur added there was "no discernible link at the regional level between patterns of water trade and socioeconomic indicators such as population or employment in irrigation".

He said that growth in water trade grew during 2006-07, but it declined the year after, with only one quarter of water being allocated for trading.