Water prices are expected to remain high in the new irrigation season, according to a new report from the Australian Bureau of Agricultural and Resource Economics and Sciences.
Drought conditions during the past 12 months have led to significant reductions in storage volumes and low opening allocations in 2019-20.
ABARES said water availability was being supported by significant carryover reserves, with about 31 per cent of 2018-19 supply (around 1600Gl) being carried into 2019-20.
Across the southern basin, about 3442Gl of allocation is forecast to be available for irrigation use in the ‘dry’ scenario by the end of 2019-20 (including carryover and excluding environmental water).
ABARES says in the ‘dry’ scenario, an average annual water allocation price for 2019-20 of about $526/Ml is estimated, with $651 estimated under the ‘extreme dry’ scenario (for the Murray below Barmah trading zones).
Prices are tipped to decrease substantially if conditions change, with annual prices of $332/Ml and $258/Ml estimated under ‘average’ and ‘wet’ scenarios, respectively.
The Barmah Choke trade constraint is expected to bind in the ‘dry’ and ‘extreme dry’ scenarios, leading to lower water allocation prices in the above Barmah trading zones: $491/Ml and $545/Ml respectively.