Eleventh annual Water Markets Report published

The eleventh annual Water Markets Report published on 7 August 2024 by Aither, a Ricardo plc company, summarises water trading activity and trends in the 2023-24 water year in Australia and provides insights into the outlook for 2024-25.

Ben Williams, Water Markets Advisory Lead at Ricardo said: "A dry start to the year, coupled with the forecast for a ‘super El Nińo’, saw allocation prices soar in the first three months 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 Nińo, and held their water. As a result prices rose to a point incongruous with water availability. But rains in early October saw markets fall quickly." 

Above average rainfall conditions persisted in the Murrumbidgee, however, dry conditions returned in the Murray and Goulburn valleys during the period February to June. By the end of June, inflows to the Murray had reached their lowest point since 2018-19.

Across the year, on average, allocation prices were higher this year than last year, at 76 AUD /ML, however this remains well below the long term average of 166 AUD per ML (2004-05 to 2023-24).

Looking ahead, Ben Williams commented: "Strong opening allocations and healthy levels of water in storage mean low water allocation prices are likely to continue in 2024-25."

In 2023-24, state water register data shows the estimated total value of major entitlements in the southern Murray-Darling Basin fell 1.9 billion AUD to 30.4 billion AUD, down 5.9%.

The Aither Entitlement Index (AEI) fell by 4% for a second consecutive year in 2023-24. Following a decade of 21% compound annual growth, the AEI has fallen 12% since reaching an all-time high in February 2023. The decrease reflects that water entitlement values are not immune to economic challenges, including interest rate increases and challenging commodity prices.

Commonwealth buybacks appear likely to arrest the decline in entitlement markets, as the government purchases entitlements to meet Basin Plan targets. Ben Williams noted: “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%.” 

Read the full Water Markets Report