Water Market and Trading Information
Workshop to help understand the water market within the community.
Capacity to Deliver - LP021-033
The issue
The water market is often difficult to follow and understand, with varying degrees of water literacy in the community. For this reason, information on the water market trends and drivers and water trading strategies were provided to the community. The project also aligns to NSW DPIE’s Western Enabling Regional Adaptation project in the Riverina Murray which recommend that Government facilitate greater regional participation in water planning and management by improving opportunities for communities to better understand policy processes, and that the irrigated agriculture sector operates in response to market forces through a deep understanding of water risk.
The solution
23 people attend the information session at the Wakool RSL Club to learn about the current water markets and water trading. Erin presented virtually through Teams as Covid prevented her from being able to present in person and Jeff Shannon who live close by was able to present in person. This case study provides a range of reference links for people to access. Erin presented information from Aither’s most recent water report at the time and catered specific subject matter to the Murray Region. The slide deck included key findings presented in two water market reports released by the Victorian Department of Environment, Land, Water and Planning. Jeff Shannon presented information on the current water market in both NSW and Victoria, the drivers for both permanent and temporary water supply and prices. and different strategies for securing water.
The impact
Attendees learnt about end of season carry over, the entitlement market, and how market prices respond to water availability. There are many factors that affect water pricing and water buybacks have contributed to increased water prices. Allocation prices are likely to be higher in the future and vary from year to year. The future climate sequence will be the highest driver of prices in the future. Businesses need to consider water strategies to manage risk against potential temporary allocation price volatlity to ensure water security in times of extreme dry. There is often a sensible mix balancing capital requirements with risk mitigation using a range of options/ products that are available: Permanent entitlements Temporary allocation in the spot market Forward allocation contracts Entitlement leases Carryover capacity The workshop provided valuable information to the community which will be reinforced via the WMLIG website and newsletters. We will provide reference links to updated annual water market reports for the southern MDB as they are made available.