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The comments follow calls by Mr Joyce on Tuesday for the federal government and states such as NSW to release water to lucerne growers  so that struggling farmers could get feed for their starving stock.

The water holder echoed a statement by Phillip Glyde, chief executive of the Murray-Darling Basin Authority, that noted ample water was available from irrigator holdings within the storages.

For instance, environmental water entitlements account for just 8 per cent of water in NSW's water storages in the basin, and about 13 per cent in Victoria, Mr Glyde said.

"There is a functioning water market in place, and there is water now available on the market for purchase," the water holder said.

The NSW government announced this week it would release 15,000 megalitres of environmental water onto the market, with sales going to help drought-affected regions.

Mr Joyce said the NSW contribution was less than half the size of Lake Burley Griffin in Canberra, and more should be released.

In response to Mr Joyce's call, new federal Environment Minister Melissa Price told Fairfax Media: "The current demand for Commonwealth environmental water in most valleys exceeds the supply, and so most of the Commonwealth Environmental Water Holder's available water for this year has been committed to meet environmental needs."

Ms Price noted a decision announced by the agency's head Jody Swirepik on Tuesday to release 20,000 megalitres of water in Victoria's Goulburn Valley.

"Careful management of environmental water over a number of years has allowed the Environmental Water Holder to release this water while meeting [Ms Swirepik's] legal obligations in the Goulburn Valley," Ms Price said.

She added that while the water holder would "explore options to trade water where possible, [it] must be certain that trade is not detracting from environmental outcomes".

Ms Swirepik's predecessor David Papps was also critical of Mr Joyce's plans, telling Fairfax Media that they would amount to a "death certificate" for major ecosystems such as the Macquarie Marshes and the Narran Lakes, and would also breach the Water Act.

Others have noted that it would be impossible to ensure any water releases would be snapped up by fodder growers and not by major cotton or nut farm irrigators - a view supported by the Water Holders.

"As the Commonwealth Environmental Water Holder uses an open tender process to trade water, there is no mechanism to decide how water purchased on the open market would be used," the agency told Fairfax Media.