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Water prices likely to remain high in southern Murray-Darling Basin

By Country News

Water prices in the southern Murray-Darling Basin are likely to remain high in 2020 to 2021, according to the latest Market Outlook report from the Australian Bureau of Agricultural and Resource Economics and Sciences.

ABARES’ farm performance and resource economics head David Galeano said rainfall in the Murray-Darling Basin was the lowest on record in 2019, and dry conditions had resulted in below-average water allocations in NSW and Victoria this year.

“Current water prices reflect those low allocation levels with prices across the southern Murray-Darling Basin in 2019 to 2020 averaging $673/Ml to February 2020,” Mr Galeano said.

“While prices are high, the volume of carryover water available has helped to keep prices below the highs of the millennium drought in 2007 to 2008 and 2008 to 2009.”

Under the dry and extreme dry scenarios, total water availability in the southern basin in 2019 to 2020 would be below levels observed during the worst of the millennium drought, with average annual water prices between $735 and $776/Ml.

For average and wet scenarios, the estimated average annual water prices would be between $293 and $435/Ml.

“A significant determinant driving prices in 2020 to 2021 will be where water is located, compared to where water demand is highest with recent increases in demand for irrigation water in regions below the Barmah choke,” Mr Galeano said.

“This along with water trade limits, including the new water trade limits for the Goulburn-Broken catchment, is expected to result in price differences between regions above and below the Barmah choke.”

For more information, visit: https://www.agriculture.gov.au/abares/research-topics/water/water-market-outlook-march-2020