2019 Ricardo Water Markets Report

​2018-19 will be remembered as a year when widespread dry conditions collided with strong and growing water demand to significantly increase water prices.

Allocation prices in the southern Murray–Darling Basin (MDB) are now being sustained at levels that were only observed briefly in the Millennium Drought. During the 2018-19 water year, average monthly allocation prices increased from approximately $230 per ML (July 2018) to above $550 per ML (June 2019). Likewise, entitlement prices increased for the sixth consecutive year.

Multiple demand side factors drove prices upwards. For example, dry conditions prompted winter croppers to enter the market early in the year to finish off their crops. Murrumbidgee irrigators committed to large areas of cotton and some were caught out by the lack of allocations to their entitlements, resulting in them also needing to enter the allocation market to finish off their crops. Ongoing investment in new almond developments (and other permanent horticulture) in the lower Murray also played a significant role in driving demand. Conversely, rice growers were priced out of the market almost entirely and dairy farmers endured a tough year with unfavourable milk prices and high water and fodder costs driving production down, resulting in some farm business exits.

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