Fewer farmers are getting out of irrigation in the Murray-Darling Basin, and those remaining are opting to trade their water entitlements flexibly in a strong market.

The competition watchdog says trade in private water rights has surged considerably in recent years, with heavier rainfall and better crop prices encouraging farmers to use their water assets better.

In its third annual Water Monitoring Report, the Australian Competition and Consumer Commission (ACCC) says farmers are buying and selling water according to rainfall, using brokers to move excess water around the system.

ACCC Commissioner Joe Dimasi said the commission was seeing a greater flexibility in the use of water around the basin.

"We're seeing water being put to its best use," he told AAP on Wednesday.