NATIONAL WATER COMMISSION MARKETS REPORT 2007-08

The National Water Commission has, today, released it's first 'Australian Water Markets Report' relating to the 2007-08 water year. In releasing the Report the Chair of the NWC, Ken Matthews commented:

‘Water trading is a centrepiece of national water reform under the National Water Initiative. Now that basic water trading mechanisms have been established in Australia, it is vital that we work to improve market performance.

‘We can do this by building confidence in water markets through more transparent and readily available information on prices, volumes and movements of water, as well as by minimising transaction costs and fast-tracking approval processes.

‘This report provides the first ever consolidated national summary of water markets. It extends beyond the Murray-Darling Basin and features trading summaries for each state and territory, as well as information about their various operational practices, pricing and governance arrangements.’

This report, accessable at: www.nwc.gov.au.

Key findings are outlined as follows:

•The overall value of the water market transactions for the year was approximately $1.68 billion with most trading activity occurring in the Murray-Darling states.

•Activity in the water trading market has been driven in large part by the variable rainfall around Australia and the continuing severe drought in the southern Murray-Darling Basin.

•The total trade volumes are 921GL (water access entitlement) + 1594 (water allocation) = 2515GL in total.

•A key aspect of the report’s findings is that water owners on-sold 1 594 GL of water allocations during the year and 14 per cent of that trading occurred across state borders.

•Approximately 148 GL of water allocation was traded into South Australia, with two-thirds coming from New South Wales (100 GL) and the rest from Victoria (48 GL).

•Approximately 3% of the tradeable water access entitlements on offer, 921 GL were traded but there was negligible interstate entitlement trade.

•There was only one interstate water access entitlement trade this year (200 ML), which occurred from Victoria to NSW.

•Water purchased for the environment made up approximately 8% of the total water access entitlements traded.

•There was very limited trading activity in Western Australia, Tasmania, Northern Territory and the Australian Capital Territory-in comparison with the Basin states.

•The price of the water allocations traded varied greatly throughout the year, for example the price for Murrumbidgee High Security water ranged from $150 per ML to $1100 per ML, with an average price of approximately $540 per ML.

•The prices for water access entitlements were less volatile, but still ranged from $1000 to $2500 per ML in the Basin, with an average of approximately $1400 per ML.

Some very interesting reading, which I will make comments on over the next few editions!!