Water costs predicted

By Country News

Even without rain, temporary water prices are not expected to reach the heights of the millennium drought next year, with the ‘‘worst case’’ scenario expected to see prices hit $473/Ml.

Australian Bureau of Agricultural and Resource Economics and Sciences estimates released last week reveal an average season in the Goulburn-Broken, NSW Murray and Victorian Murray irrigation districts would see water prices average $288.50/Ml while they could dip as low as $189.70/Ml with good rainfall.

ABARES’ farm performance and forestry head David Galeano told the ABARES Outlook Conference in Canberra last week that a number of factors, including increasing water demand in the lower Murray, were contributing to higher water prices.

‘‘However, this growth is not unexpected and remains within the bounds of scenarios presented in a previous ABARES study,’’ Mr Galeano said.

‘‘Under the dry scenario, water availability for the southern basin would fall overall, but still remain above levels observed during the worst of the millennium drought, back in 2007 to 2009, with ABARES’ model simulating an average annual water price of $473/Ml.

‘‘However, if we do see a shift to wetter conditions this winter, prices are expected to fall quickly and substantially, similar to what occurred in 2016-17.

‘‘It’s important to remember there’s still plenty of uncertainty about seasonal conditions in 2019-20.

‘‘Conditions better or worse than the scenarios tested are possible and hence water prices higher or lower than those estimated in our latest outlook remain a possibility.’’

The modelled dry scenario involves similar low allocations for NSW as this year, with storage reserves in Victoria expected to help limit allocation decreases in the scenario with the ABARES study stating ‘‘significant volumes’’ of irrigator carryover into 2019-20 are likely.