Australian water markets: trends and drivers 2007–08 to 2010–11
Australian water markets: trends and drivers, 2007–08 to 2010–11 is the second companion report to the Australian water markets report series.
The Australian water markets reports provide statistics that summarise activity in Australian water markets, together with information on water market structures. The aim of this trends and drivers report is to:
- analyse trends in market activity (how much water is being traded and where)
- analyse the drivers influencing market outcomes (why is water being traded).
The report focuses on the southern Murray–Darling Basin (MDB), where the majority of water trade occurs. However, it also provides information on trade outside the MDB.
Findings
In many respects, the 2010–11 water year was an extraordinary one. Near-record high rainfall caused a rapid rebound in water availability in eastern Australia. These conditions gave the Commission an opportunity to examine the response of water markets to marked changes in water availability.
Patterns that had been established in the years of the millennium drought became weaker, reflecting plentiful supply and lower demand. In contrast, drought conditions persisted in southwest Western Australia.
Water's relative abundance in 2010–11 meant that allocations were traded in large volumes at far lower prices than in previous years. As prices fell, the transaction costs of trading became proportionally more significant for a given volume. This is thought to have contributed to the fact that the average volume of water exchanged with each trade jumped sharply.
There was also a significant shift in water entitlement trade in 2010–11. Fewer entitlements were traded, and prices were lower. Drivers of those changes included the seasonal conditions, as well as a reduction in purchases by the Australian Government as part of its buyback program. With more water available, it is likely that buyers are taking more time to consider their options before purchasing entitlements.
Trade outside the MDB saw a sharp decline in allocation trading, whilst entitlement trading continued to grow steadily.
The report
The Commission acknowledges the assistance of Deloitte Touche Tohmatsu, which developed this report, along with the entities that provided data either directly to the Commission or to the Bureau of Meteorology under the regulations of the Water Act 2007. The Commission also acknowledges the assistance of the states and territories in validating and improving the information provided.
Documents for download
Full report
Australian water markets: trends and drivers, 2007–08 to 2010–11 (PDF 6.9MB)
Sections
Section 1: Introduction (PDF 1.4MB)
Section 2: Overview of the MDB (PDF 1.5MB)
Section 3: Allocation trading in the MDB (PDF 2.4MB)
Section 4 Entitlement trading in the MDB (PDF 2.1MB)
Section 5: Trade outside the MDB and 6: Groundwater trading (PDF 2.8MB)