Australia's first national water markets report
17 December 2008
The CEO of the National Water Commission, Ken Matthews, today released the inaugural National Water Commission Australian Water Markets Report 2007-2008 and called for the removal of remaining barriers to trade in water.
Mr Matthews said, '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.'
The overall value of water market transactions for the year was approximately $1.68 billion, with almost all trading activity occurring in the Murray-Darling states.
Mr Matthews said, 'Given the protracted drought in the southern basin, that's good news because it shows that water trading has offered irrigators and other water users greater flexibly in responding to economic and climatic pressures.
'But we can do better. It is clear, for example, that even though this was an exceptional year for trading due to water scarcity, there is still negligible interstate entitlement trade.
'The findings in this report on the volumes of water available for purchase also suggest that the case previously put by the Commission for reviewing the 4% per annum interim threshold limit on permanent trade out of irrigation districts is stronger than ever.
'Compatible registers and more comprehensive water data reporting are urgently required. The Commission therefore welcomes COAG's decision to develop a national system to register water access entitlements and allocations and record transactions.
'The National Water Commission has also drawn attention to the need to monitor the impacts of water trade. This has become even more important in light of increasing water purchases by governments for environmental and urban needs, said Mr Matthews.
By publishing annual water markets reports, the Commission will progressively build an on-going source of more accountable market information. In future years these reports will be expanded to include trend analysis.
The Australian Water Markets Report was produced with assistance from the Allen Consulting Group and funded under the Raising National Water Standards Program.
Read the report.
Media Contact: Amanda Forman 02 6102 6013 / 0434 079 590
Backgrounder
Major findings of the National Water Commission Australian Water Markets Report 2007-2008
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.