Murray–Darling water prices unlikely to reach millennium peaks


Thursday, 07 March, 2019


Murray–Darling water prices unlikely to reach millennium peaks

ABARES research presented at the Outlook 2019 conference in Canberra this week revealed that water allocation prices in 2019/20 are unlikely to reach the peaks seen during the worst of the Millennium Drought.

ABARES Head of Farm Performance and Forestry David Galeano said, “Prices have been high in 2018/19, largely due to low allocation percentages and hot and dry seasonal conditions within NSW. In recent weeks, we’ve seen water allocations trading at around $450/ML.”

The ABARES water market outlook provides a range of possible allocation prices for 2019/20 under representative dry, average and wet scenarios.

“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,” Galeano commented.

“There is a risk that prices in the Murrumbidgee could increase even more than that next year, with the Murrumbidgee import limit estimated to remain in force unless conditions improve in NSW. 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.

“Aside from seasonal conditions, water demand in the lower Murray has continued to grow in recent years contributing somewhat to higher water prices. However, this growth is not unexpected and remains within the bounds of scenarios presented in a previous ABARES study,” Galeano said.

The ABARES water market outlook is available at http://www.agriculture.gov.au/abares/research-topics/water/water-market-outlook.

Image credit: ©stock.adobe.com/au/Romolo Tavani

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