The Southern Murray Darling Basin’s water entitlement markets experienced a significant decline in value over the 2023-24 period, with a loss of nearly $2 billion, despite ongoing Commonwealth buybacks aimed at stabilizing the market.
According to the eleventh annual Aither Water Markets Report, a Ricardo company, water trading activity and trends over the past year reflect a complex landscape influenced by both environmental conditions and economic pressures. The report offers insights into the market’s performance in 2023-24 and provides a cautious outlook for the coming year.
Advertisement:
Southern Murray Darling Basin Water Markets Lose Nearly $2 Billion in Value Despite Government Buybacks
Ben Williams, Aither’s Water Markets Advisory Lead, explained that a dry start to the year, combined with forecasts for a “super El Niño,” drove allocation prices up significantly in the first quarter of the year.
“Annual croppers were buoyed by high water availability and the prospect of great growing conditions, allocation sellers thought prices would rise with an El Niño, and held their water. As a result prices rose to a point incongruous with water availability,” Williams said. However, unexpected rainfall in early October led to a sharp decline in the market.
Despite above-average rainfall in the Murrumbidgee, the Murray and Goulburn valleys saw a return to dry conditions from February to June. By the end of June, inflows to the Murray had dropped to their lowest level since 2018-19.
Over the year, average allocation prices were higher than the previous year, reaching $76 per megalitre (ML), but this figure remains well below the long-term average of $166 per ML, recorded between 2004-05 and 2023-24.
Looking ahead, Williams noted, “strong opening allocations and healthy levels of water in storage mean low water allocation prices are likely to continue in 2024-25.”
Despite these conditions, the total value of major water entitlements in the southern Murray-Darling Basin dropped by $1.9 billion to $30.4 billion in 2023-24, marking a 5.9% decrease.
The Aither Entitlement Index (AEI), which tracks the value of water entitlements, fell by 4% for the second consecutive year. This marks a 12% decline since reaching its peak in February 2023, following a decade of 21% compound annual growth. The report suggests that this decrease reflects broader economic challenges, including rising interest rates and fluctuating commodity prices.
However, there are signs that the Commonwealth’s ongoing water buyback program may help stabilize the market. “Last month, the opening of the Commonwealth’s 70 GL southern Murray-Darling Basin water tender saw prices in most affected entitlement markets rise between 2% and 7%,” Williams added.
As the market navigates these challenges, stakeholders will be closely watching the impact of government interventions and environmental conditions on water entitlement values in the year ahead.
Related stories
NSW Rural Fire Service Aircraft Fleet
RFS Firefighters Unite North America and Australasia
Integrating Indigenous Knowledge into Bushfire Management
Air Taxis Coming to Australia: A New Era in Urban Mobility
Mistake State Forest: A Battle for Preservation
Targeted Logging Threatens Great Koala National Park
Replacing timber power poles saves our forests
Advertisement:
