Water prices are coming down, according to Psi-Delta Waterdex Market Report 2008-2009.

Waterdex is Australia's national index of water entitlement prices and tracks the prices of permanent water entitlements in all surface systems of over 90 000 Ml.

During the 2008-2009 water year Waterdex decreased by three per cent, compared to a seven per cent decline of the ASX200 during the same period.

Over a two-year period, Waterdex increased by five per cent, while the ASX200 has declined by 27 per cent.

This demonstrates the possible investment for irrigators in most irrigation districts around Australia that have delivered substantial capital growth.

The report indicates that the Federal Government water buyback program has provided a level of stability to Waterdex during the past two years.

The buyback has also had a large impact on the volumes of water traded.

However, water prices have remained steady in many of the systems where the buy-back has been most active, incuding the Goulburn System in northen Victoria.

The report suggests water prices might drop during the next year, but in the next five years the long-term growth trend will resume.

In the Murray-Darling Basin, the price of permanent water entitlements fell by 3.5 per cent this year.