The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has indicated that water prices in the southern Murray-Darling are likely to remain high this year.
Head of Farm Performance and Resource Economics at ABARES, David Galeano said the Bureau’s latest water outlook report revealed rainfall in the Murray-Darling Basin (MBD) in 2019 had been the lowest on record.
“These dry conditions have resulted in water allocations in NSW and Victoria being well below average in 2019-20,” Mr Galeano said.
“Current water prices reflect those low allocation levels with prices across the southern MDB in 2019–20 averaging $673 per Megalitre (ML) to February 2020,” he sad.
He said that while prices were high, the volume of available ‘carry over’ water had helped to keep prices below the highs of the Millennium Drought of 2007-2009.
He said the latest Water Market Outlook report provided a range of possible allocation prices for 2020-2021 under varying rainfall scenarios.
“Under the dry and extreme dry scenarios, total water availability in the southern basin in 2019-20 would be below levels observed during the worst of the Millennium Drought, with ABARES estimating average annual water prices of between $735 and $776/ML,” Mr Galeano said.
He said that in the average and wet scenarios, a shift to better seasonal conditions would improve the total volume of water availability, with ABARES estimating average annual water prices of between $293 and $435/ML.
“While the current Bureau of Meteorology climate outlook suggests an almost equal likelihood of rainfall above or below median levels, it’s important to remember there’s still much uncertainty,” Mr Galeano said.
“Conditions better or worse than the scenarios tested are possible – and hence water prices could be higher or lower than those estimated in our latest outlook.”
ABARES has released the data behind the Water Market Outlook, along with an accompanying dashboard visualisation, allowing users to explore in-depth some of the key data underpinning the water trade model.
The Bureau’s 15-page Water Market Outlook – March 2020 report can be accessed at this PS News link.