The Northern Territory water controller wants to know why dozens of water licence holders are using only a small portion of their allocation.

The NT Department of Environment and Natural Resources is enforcing its ‘use it or lose it’ provision for the first time.

Water controller Alistair Shields has written to 29 licence holders about their water usage, after each was shown not to have used more than 10 per cent of their water entitlements for two consecutive years.

The licence holders are being told they have 12 months to the end of their licence condition, so they must start using more of the entitlement or tell the authorities why they have not.

All water licences granted since 2013 come with a condition that 90 per cent of the allocation must be used.

The authorities say they could contact anyone with low usage that does not at least have plans outlined to use their full allocation, but are starting with the lowest users.

“The licence conditions inserted in the water conditions, in general terms, talk about under-utilising water entitlements for three consecutive 12-month periods,” Mr Shields told reporters.

“There are a variety of reasons why someone may not have used a full water allocation.

“The idea behind the policy is to stop people getting a water licence allocation, holding on to it and hoping there is an opportunity to trade or do something in the future.

“It is about using water for economic development, so if people have plans, and there are legitimate reasons why those plans have not been implemented, then as water controller, I am more likely to exercise my discretion in favour of allowing people to keep their full allocation.

“If there has been no substantive reason put forward for a failure to use an entitlement, then that is a factor for me to be able to say; ‘I'm going to reduce part of your allocation and I expect you to go ahead and use the remaining amount’.”