wfhc water trading pricing mdb

A Summary of Water Trade and Price Data for the

Southern Murray-Darling Basin David Kaczan, M Ejaz Qureshi and Jeff Connor

June 2011

Water for a Healthy Country Flagship Report series ISSN: 1835-095X Australia is founding its future on science and innovation. Its national science agency, CSIRO, is a powerhouse of ideas, technologies and skills. CSIRO initiated the National Research Flagships to address Australia’s major research challenges and opportunities. They apply large scale, long term, multidisciplinary science and aim for widespread adoption of solutions. The Flagship Collaboration Fund supports the best and brightest researchers to address these complex challenges through partnerships between CSIRO, universities, research agencies and industry. The Water for a Healthy Country Flagship aims to achieve a tenfold increase in the economic, social and environmental benefits from water by 2025. For more information about Water for a Healthy Country Flagship or the National Research Flagship Initiative visit www.csiro.au/org/HealthyCountry.html Citation: Kaczan D, Qureshi ME and Connor J (2011) A summary of water trade and price data for the southern Murray-Darling Basin. CSIRO: Water for a Healthy Country National Research Flagship, Canberra. 20 pp.

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A summary of water trade and price data for the southern Murray Darling Basin iii

CONTENTS Acknowledgments ....................................................................................................... iii

Abstract ........................................................................................................................ iv

1. Introduction ......................................................................................................... 1

2. Water Allocations and Diversions ..................................................................... 1

3. Water Prices ......................................................................................................... 3 3.1. Impact of climate and rainfall .................................................................................... 5

4. Water Trading ...................................................................................................... 6

Appendix A. Selected Diversions Data ............................................................ 9

Appendix B. Selected Entitlements and Allocations Data ........................... 10

Appendix C. Selected Price Data .................................................................... 14

Appendix D. Selected Trade Data ................................................................... 17

References .................................................................................................................. 19

LIST OF FIGURES Figure 1. Approximate annual diversion volumes in 11 major trading areas in the southern Murray-Darling Basin ............................................................................................................... 2

Figure 2. Approximate annual allocation volumes in 11 major trading areas in the southern Murray-Darling Basin ............................................................................................................... 3

Figure 3. Approximate prices for temporary water (allocations) averaged over the water season for four major trading areas in the southern Murray Darling Basin ............................. 4

Figure 4. Approximate prices for permanent, high security water (entitlements) averaged over the water season for four major trading areas in the southern Murray Darling Basin .............. 4

Figure 5. Approximate prices for permanent, high security water and low security water (entitlements) averaged over the 2007-08 water season for six major trading areas in the southern Murray Darling Basin ................................................................................................ 6

Figure 6. Approximate annual trade volume of temporary water allocations in 11 major trading areas in the southern Murray Darling Basin. A negative trade volume indicates trade out of a region; a positive trade volume indicates trade into a region. ..................................... 7

Figure 7. Approximate annual trade volume of permanent water entitlements in 11 major trading areas in the southern Murray Darling Basin. A negative trade volume indicates trade out of a region; a positive trade volume indicates trade into a region. ..................................... 8

LIST OF TABLES Table 1. Approximate annual diversion volumes in 11 major trading areas in the southern Murray Darling Basin ............................................................................................................... 9

Table 2. Base water entitlements in 11 major trading areas in the southern Murray Darling Basin* .................................................................................................................................... 10

Table 3. Announced allocations in 11 major trading areas in the southern Murray Darling Basin* .................................................................................................................................... 11

Table 4. Total allocations in 11 major trading areas in the southern Murray Darling Basin* . 12

Table 5. Percentage of entitlement allocated over a season ................................................. 13

A summary of water trade and price data for the southern Murray-Darling Basin iv

Table 6. Average, minimum and maximum allocations as a percentage of entitlements between 1997-98 and 2007-08 .............................................................................................. 14

Table 7. Approximate prices of temporary water allocations in 11 major trading areas in the southern Murray Darling Basin, averaged over the water season ......................................... 15

Table 8. Approximate prices of high security permanent water entitlements in 11 major trading areas in the southern Murray Darling Basin, averaged over the water season ......... 16

Table 9. Approximate annual trade volume of temporary water allocations in 11 major trading areas in the southern Murray Darling Basin* ......................................................................... 17

Table 10. Approximate annual trade volume of permanent water entitlements in 11 major trading areas in the southern Murray Darling Basin* ............................................................. 18

A summary of water trade and price data for the southern Murray-Darling Basin iii

ACKNOWLEDGMENTS This project was funded by Land and Water Australia through its Innovation Funding Program. The authors would also like to thank those individuals who provided the data presented in this report: Awadesh Prasad (MDBA), Bob O’Brien (Per Cat Water), Oscar Mamalai (MDBA), Henning Bjornlund (University of South Australia), Robert Brooks (Monash University), Orion Sanders (ABARE) and Rodney Coulton (NWC). The authors would like to acknowledge Stuart Whitten who as an internal reviewer provided useful comments and suggestions.

A summary of water trade and price data for the southern Murray-Darling Basin iv

ABSTRACT In Australia, water markets have been promoted as a preferred instrument to reallocate scarce water resources, and policy makers are promoting markets as a preferred mechanism to reallocate water between competing users. Data concerning water market operations (including volume of water traded and water market prices) is not easily accessible. This report presents an overview of the water market in the southern Murray-Darling Basin, Australia. The report compiles some broad data for a number of major southern system catchments or trading zones which represent most of the water allocations and trading in the southern Murray-Darling system. The report also presents volumes of water allocated, diverted and traded along with the factors which caused variation in water trading in the southern Murray-Darling System.

A summary of water trade and price data for the southern Murray-Darling Basin 1

1. INTRODUCTION This brief report is intended to present an overview of water market in the southern Murray-Darling Basin, Australia. Volumes of water allocated, diverted and traded in the southern Murray-Darling system have varied greatly over the past ten years. Factors contributing to such fluctuation have been a combination of policy choices, natural circumstances and attitudinal shifts. Widespread water trading is a relatively recent activity. Institutional reforms over the past 20 years have been focused on creating water markets by decoupling water and land property rights, and allowing water to flow from uses of low value to uses of high value with a minimum of transaction costs (CoAG, 2004). This process is ongoing. By 2007-08, the value of transactions in water markets was estimated at $1.68 billion (NWC, 2008). Data concerning water market operations is not easily accessible. The National Water Commission (NWC) has commenced an annual report series, the ‘Australian Water Markets Report’ which, in conjunction with the Murray Darling Basin Authority’s annual ‘Water Audit Monitoring Report’ series, will provide a central source of price, allocation, diversion and trade data in the future. The operations of water markets in the Murray Darling Basin over the past decade, however, are less well-documented. This report compiles some broad data for a number of major Southern system catchments or trading zones: The Murrumbidgee, the NSW Murray, the Goulburn, the Broken, the Loddon, the Campaspe, the Wimmera and Mallee, the Kiewa, the Ovens, the Victorian Murray and the South Australian Murray. These zones represent most of the water allocations and trading in the Southern Murray-Darling system. Data presented have been averaged over the water year, the twelve-month period from 1st July to 30th June. There is considerable complexity in the operations of the Murray-Darling Basin water market due to the number of governments which have a controlling stake in the Basin’s water resources. Due to accounting differences not all data are exactly comparable across jurisdictions and so data in this report must be considered approximate only and used cautiously. These differences also lead to alternative terminologies, however most regulatory features have broad equivalents across state borders. Following National Water Initiative or NWI (COAG, 2004) two principal definitions used in this report are: Water access entitlements: ‘a perpetual or ongoing entitlement to exclusive access to a share of water from a specified consumptive pool as defined in the relevant water plan’ Water allocations: ‘the specific volume of water allocated to water access entitlements in a given season, defined according to rules established in the relevant water plan’.

These result in two forms of trade: one in permanent entitlements and one in seasonal or temporary allocations.

2. WATER ALLOCATIONS AND DIVERSIONS

Given the severe climate circumstances and changes in the operations of the Murray-Darling Basin, water management, diversions in 2007-08 fell to only 40% of average diversions between 1997 and 2008 (see Figure 1, annual water diversion data is given in Table 1 of Appendix A while entitlement and allocations data are given in Tables 2 to 6 of Appendix B). There is some discrepancy between total diversions and total allocations, as shown in

2 A summary of water trade and price data for the southern Murray-Darling Basin

Figures 1 and 2, respectively.1 Total diversions over the last ten years have generally fallen short of the volume allocated although there are exceptions to this. Allocations are made progressively throughout the irrigation season; however, the area planted, which determines the water resource quantity utilised, is determined early in the season. The Murray-Darling Basin Commission (MDBC) (1999-2008) suggests that under-utilisation may be due to risk aversion during the current dry spell. A second contributing factor for any discrepancy is that in some instances farmers may make water diversions that do not count against allocations. For instance, supplementary access/water harvesting may be granted to farmers at times when dams are spilling. Unregulated stream use and conveyance losses will also play a role.

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Figure 1. Approximate annual diversion volumes in 11 major trading areas in the southern Murray-Darling Basin

1 The data of these figures were obtained from various sources and are summarised in Appendices 1 and 2.


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Figure 2. Approximate annual allocation volumes in 11 major trading areas in the southern Murray-Darling Basin

3. WATER PRICES Figures 3 and 4 show approximate prices of temporary and permanent water respectively for selected river basins.2 Tables 7 and 8 in Appendix C show approximate price of temporary and permanent water trading data. As shown in Figures 2 and 3 and Tables 7 and 8, annual trade price data is limited─especially in earlier years. This limitation is due to thin markets (a limited number of transactions occurred in young water markets) but also due to a lack of published records on this data. Water trading companies often keep their own records relevant for their time period and geographical extent of operation; however, prior to 2007-08 there was no centralised collection of this information, although this has now begun by the National Water Commission (see NWC, 2008).

2 The data of these figures were obtained from various sources and has been summarised in Appendices 3 and 4.


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Figure 3. Approximate prices for temporary water (allocations) averaged over the water season for four major trading areas in the southern Murray-Darling Basin

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Figure 4. Approximate prices for permanent, high security water (entitlements) averaged over the water season for four major trading areas in the southern Murray-Darling Basin

Prices for water entitlements in different basins follow similar trends however are quite different in absolute value. For instance, the price of high security entitlements in South Australia has tended to be higher than those in upper Victoria. The water exchange rates are a contributing factor to this; however there are a variety of other impediments that prevent arbitrage and thus price equalisation. Water allocation prices are much closer in value across basins.


The figures presented here are averaged across the water year; however, this obscures considerable intra-seasonal variation in the allocations market. Prices tend to peak in late September through to December when horticulture demand is highest (Bjornlund and Rossini, 2008). One of the key factors which increased water prices was the introduction of the CAP in 1995 with a permanent arrangement that took place in 1997 under an interim arrangement (i.e. the limit on total volume of water that can be diverted) to address concern of water scarcity. Although water trade was permitted prior to the CAP (primarily between farmers within the same irrigation district), there was little incentive to trade because increased demands for water were largely met through increased allocations (Mallawaarachchi and Foster, 2009). There has been a shift in irrigation water use over the past decade. Between 2000-01 and 2005-06 total irrigated land in the Murray-Darling Basin decreased by 9% (ABS, 2008). The area of grapevines increased by 35% over this time period, and the areas of other higher value horticulture crops such as almonds, nectarines and cherries increased by even more (ABS, 2008). There has been a relative shift away from lower value pasture production to horticulture activities, however the areas devoted to these crops are still much higher overall and total area under all horticulture related activities remains small (i.e. about 10% of total irrigated area). Total areas of perennial activities — including fruits and vineyards — remain small compared to the total irrigated area. The mix of crops found in each trading region influences the regional discrepancies in prices seen in Figures 3 and 4. Regions with a high proportion of pasture producers or annual cropping are likely to become sellers during periods of high scarcity (Brooks and Harris, 2008). There has been an increase in horticulture plantings by Managed Investment Schemes (MIS), financial entities that aggregate and invest individuals’ contributions on their behalf, over the past decade. Most MIS plantings have been on newly developed sites, requiring the purchase of water entitlements and thus influencing prices (Watson, et al. 2007).

3.1. Impact of climate and rainfall Climatic factors are also closely correlated with price movements in water markets. Significant drought years include 2002-03 and since 2005-06, both of which are associated with strong price spikes. The wetter year of 2004-05 saw prices fall again. These changes in the scarcity of water are also reported to impact on the trade volumes. It is likely that drought conditions would have motivated risk-averse irrigators to purchase water at the start of the season due to initial allocation uncertainty (Brooks and Harris, 2008). The impact of reduced rainfall has not only been felt in disjoint events, but appears to be part of a broader period of low rainfall. The majority of water years in the past decade have featured falls below average. A decrease in rainfall has a disproportionately severe impact on basin inflows in the Murray-Darling system. At the close of the 2007-08 water years much of the southern basin had received 60% or less of long-term average rainfall (NWC, 2008). Many major impoundments in the south east of Australia were less than 20% full. The 2200 GL that flowed into the Murray system in 2007-08 was the sixth lowest in 117 years of records (excluding the Darling and the Snowy Scheme). The preceding year was even drier with only 970 GL flowing into the system. South Australian high security water entitlements received allocations of less than 100% for the first time in 2002. By 2007-08, high security water entitlements in SA were receiving only 30-55% allocations. Low security entitlements remained at or close to zero for most of this water year. The impact of scarcity led to a considerable rise in water pries (NWC, 2008). The difference in allocations between high and low security water is responsible for the price discrepancy evident in Figure 5, and ongoing zero allocations may have led to the fall in price


of low security water in 2007-08. There are anecdotal reports that 2007 saw panic buying of water due to the anticipation of severe restrictions.

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Figure 5. Approximate prices for permanent, high security water and low security water (entitlements) averaged over the 2007-08 water season for six major trading areas in the southern Murray-Darling Basin

4. WATER TRADING Figures 6 and 7 show trade volumes for temporary and permanent water. Approximate volume of temporary and permanent water traded is shown in Tables 9 and 10 (Appendix D). Markets for temporary water, or water allocations, are more active than those for permanent water, or water entitlements. For example, in the 2006-07 irrigation season, only 18% of all trades were in permanent entitlements. Given the more substantive investment permanent water represents this is not surprising; however tax arrangements, future policy uncertainty, business structures, administrative complexity and irrigators’ attitudes also contribute to this (Shi, 2006). Temporary trading volumes tend to correspond with reduced allocations. Changing irrigators’ attitudes to water trading is a likely additional determinant of the trends presented in these data (Tisdell and Ward, 2003).

There remain significant barriers to trade that prevent the full realisation of anticipated gains (Brooks and Harris, 2008). The discrepancy in water prices between basins is due in part to such trade barriers. As permanent trade volumes have increased, regional limits against water trading, designed to maintain regional production, have been reached in some instances. These are in addition to physical constraints such as the Barmah Choke. The evolving regulatory structure of the trading system is also likely to be influencing trading patterns. There is a reported offsetting effect between temporary and permanent water trades. Some regions will buy permanent water whilst selling temporary water, whilst others engage in a reciprocal manner. Broadacre crops, being annual and of lesser value per unit of water, are the most common sellers during times of water scarcity. Perennial horticulture farmers, on the other hand are the most common buyers (Watson, et al. 2007).

In 2007-08, South Australia was the biggest importer of water whilst New South Wales was the biggest exporter. Mallawaarachchi and Foster (2009) estimated that the benefits of trade


to South Australia during the drought are approximately $31 million. The benefit to upstream water sellers was estimated to be $4 million. These estimates represent the gains from trade. Government investment in infrastructure and water purchases is a final factor likely to be driving the trends observed in these data. ‘The Living Murray’ programme was established in 2002 and will finish in 2009. High and general security permanent water entitlements, totalling 342.5 GL, have been purchased over this period with an additional 163.2 GL planned before the end of 2009 (MDBA, 2009b). Further purchases by the Commonwealth Government, under the ‘Restoring the Balance’ programme, are underway and in 2007-08, 34 GL was purchased. This will continue with $3.1 billion in funds allocated. It is likely that these operations have had an upward influence on water prices and are likely to continue to do so as they progress.

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Figure 6. Approximate annual trade volume of temporary water allocations in 11 major trading areas in the southern Murray-Darling Basin. A negative trade volume indicates trade out of a region; a positive trade volume indicates trade into a region.


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Figure 7. Approximate annual trade volume of permanent water entitlements in 11 major trading areas in the southern Murray-Darling Basin. A negative trade volume indicates trade out of a region; a positive trade volume indicates trade into a region.


APPENDIX A. SELECTED DIVERSIONS DATA Table 1. Approximate annual diversion volumes in 11 major trading areas in the southern Murray-Darling Basin

(GL) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Murrumbidgee 2455 2551 1910 2711 2348 1793 1775 1618 2200 960 515

Murray NSW 1863 1978 1212 2048 2113 879 1312 1241 1667 602 244

Goulburn 1807 1623 1452 1451 1591 1004 1529 1477 1495 621 659

Broken 39 26 25 17 27 39 31 27 29 21 16

Loddon 63 49 77 101 82 32 32 49 68 10 9

Campaspe 96 76 73 113 124 74 73 40 22 14 26

Wimmera-Mallee 184 153 116 98 93 63 70 53 75 10 46

Kiewa 12 9 9 11 6 12 5 4 4 6 4

Ovens 35 28 24 23 26 32 25 21 25 17 17

Murray Vic 1694 1765 1540 1678 1884 1701 1442 1466 1549 1383 779

,Murray SA 631 669 622 662 621 737 612 623 590 627 423

Source: MDBC (1999-2008) The approximate annual diversions figure includes diversions for stock, domestic purposes, industrial purposes and other municipal use. Some water users in Queensland, New South Wales and Victoria are not monitored at the water off-take (unregulated stream diversions) and so an estimate of these volumes is added to the monitored diversion. These estimates are based on planted areas and user returns. The accuracy of diversion volumes is expected to improve over time as more areas are fitted with meters. The diversion quantity may be drawn from a combination of the valley’s allocation, water traded in and water carried over.

10 A summary of water trade and price data for the southern Murray Darling Basin

APPENDIX B. SELECTED ENTITLEMENTS AND ALLOCATIONS DATA

Table 2. Base water entitlements in 11 major trading areas in the southern Murray-Darling Basin*

Base Water Entitlements (GL) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Murrumbidgee 2380 2791 2791 2773 2773 2774 2775 2764 3015 2968 2987

Murray NSW 2160 2230 2230 2180 2179 2180 2183 2233 2523 2556 2495

Goulburn 735 724 731 729 714 712 710 705 703 646 664

Broken 37 39 37 39 38 38 38 40 45 45 40

Loddon 287 287 282 283 282 286 264 286 292 288 292

Campaspe 283 285 286 279 290 276 288 288 285 291 267

Wimmera-Mallee 101 101 100 100 99 94 94 94 182 182 182

Kiewa 16 16 16 16 16 16 16 18 20 20 20

Ovens 57 57 57 56 55 53 53 44 63 63 62

Murray Vic 1190 1158 1202 1190 1200 1175 1233 1257 1272 1292 1314

Murray SA 753 769 766 794 794 790 805 793 772 898 753

Source: MDBC (1999-2008); MDBA (2009). *The sum of general and high security entitlements as well as unregulated stream entitlements where applicable. There is some divergence from trade data due to inconsistent accounting methodologies.


Table 3. Announced allocations in 11 major trading areas in the southern Murray-Darling Basin*

Announced Allocation (GL) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Murrumbidgee 2168 2420 2246 2566 2102 1539 1506 1461 1814 883 1132

Murray NSW 1835 2182 934 2083 2276 683 1666 1666 1477 291 57

Goulburn 850 724 731 729 714 449 710 705 703 245 374

Broken 51 58 55 57 56 38 55 58 63 30 22

Loddon 336 287 282 283 282 179 257 286 292 80 140

Campaspe 354 285 286 279 319 189 252 249 259 78 107

Wimmera-Mallee 128 96 100 81 93 81 67 67 155 0 150

Kiewa 16 16 16 16 16 16 16 18 20 4 20

Ovens 57 57 57 56 55 53 53 44 63 39 62

Murray Vic 1384 1961 1927 2008 2095 1377 1233 1257 1567 1209 435

Murray SA 871 876 850 877 777 857 859 812 891 394 346

Source: MDBC (1999-2008); MDBA (2009). *The base entitlement multiplied by the largest announced percentage allocation in the season. Announced allocations differ from both the total allocations in valley and the total water used (diversions). Total allocation is the sum of announced allocation, carryover of unused allocation from previous years and traded water. Total diversions over the last ten years have fallen short of the volume allocated, partially due to the nature of water management. Allocations are made progressively throughout the irrigation season, however the area planted, which determines the water resource quantity utilised, is determined early in the season. The MDBC (1999-2008) suggests that under utilisation may be due to risk aversion during the current dry spell.

12 A summary of water trade and price data for the southern Murray Darling Basin

Table 4. Total allocations in 11 major trading areas in the southern Murray-Darling Basin*

Total Allocation (GL) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Murrumbidgee 2137 2382 2133 2719 2431 1719 1726 1528 2138 1102 1075

Murray NSW 1861 2303 1505 2378 2246 953 1661 1914 2034 868 273

Goulburn 849 731 732 738 732 477 662 661 733 266 339

Broken 51 58 55 57 56 38 55 58 63 30 19

Loddon 335 285 279 283 279 165 255 283 311 71 120

Campaspe 352 284 286 275 316 182 252 250 278 79 114

Wimmera-Mallee 128 96 100 81 93 82 68 67 155 0 151

Kiewa 16 16 16 16 16 16 16 18 20 4 20

Ovens 51 56 57 56 55 53 53 44 63 39 62

Murray Vic 1407 1972 1925 2008 2081 1358 1266 1290 1526 1191 638

Murray SA 856 877 848 880 770 848 865 815 869 759 521

Source: MDBC (1999-2008); MDBA (2009).

The sum of announced allocations, inter-valley water trade and carryover of unused allocation from previous years.

A summary of water trade and price data for the southern Murray Darling Basin 13

Table 5. Percentage of entitlement allocated over a season

Announced Allocation (% of

Entitlement) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Murrumbidgee 91.1 86.7 80.5 92.5 75.8 55.5 54.3 52.9 60.2 29.8 37.9

Murray NSW 85.0 97.8 41.9 95.6 104.5 31.3 76.3 74.6 58.5 11.4 2.3

Goulburn 115.6 100.0 100.0 100.0 100.0 63.1 100.0 100.0 100.0 37.9 56.3

Broken 137.8 148.7 148.6 146.2 147.4 100.0 144.7 145.0 140.0 66.7 55.0

Loddon 117.1 100.0 100.0 100.0 100.0 62.6 97.3 100.0 100.0 27.8 47.9

Campaspe 125.1 100.0 100.0 100.0 110.0 68.5 87.5 86.5 90.9 26.8 40.1

Wimmera-Mallee 126.7 95.0 100.0 81.0 93.9 86.2 71.3 71.3 85.2 0.0 82.4

Kiewa 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 20.0 100.0

Ovens 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 61.9 100.0

Murray Vic 116.3 169.3 160.3 168.7 174.6 117.2 100.0 100.0 123.2 93.6 33.1

Murray SA 115.7 113.9 111.0 110.5 97.9 108.5 106.7 102.4 115.4 43.9 45.9

Source: MDBC (1999-2008); MDBA (2009); compiled by author.


Table 6. Average, minimum and maximum allocations as a percentage of entitlements between 1997-98 and 2007-08

Average allocation Minimum Allocation Maximum Allocation

Percent Percent Year Percent Year

Murrumbidgee 65.2 29.8 2006-07 92.5 2000-01

Murray NSW 61.7 2.3 2007-08 104.5 2001-02

Goulburn 88.5 37.9 2006-07 115.6 1997-98

Broken 125.5 55.0 2007-08 148.7 1999-2000

Loddon 86.6 27.8 2006-07 117.1 1997-98

Campaspe 85.0 26.8 2006-07 125.1 1997-98

Wimmera-Mallee 81.2 0.0 2006-07 126.7 1997-98

Kiewa 92.7 20.0 2006-07 100.0 Various

Ovens 96.5 61.9 2006-07 100.0 Various

Murray Vic 123.3 33.1 2007-08 174.6 2001-02

Murray SA 97.4 43.9 2006-07 115.7 1997-98

Source: MDBC (1999-2008); MDBA (2009); compiled by authors.

APPENDIX C. SELECTED PRICE DATA Historical price data at the sub basin scale is not well-documented, although data is now being published annually (see NWC 2009, for example). Water markets have undergone a period of development over the past decade and different water trading rules and record keeping requirements have prevented highly accurate records from being compiled. It should be noted that the data in Tables 7 and 8 is based on a wide range of different sources. It should not be assumed that the method of averaging prices over the water year is consistent for each data point, although most are based on a weighted average of the price at which all recorded trades took place by the water volume transacted. Some of the earlier data (pre 2002-03) are based on estimates made by industry members and are not based on systematic record keeping. These data present an overview of water prices only and their accuracy cannot be guaranteed.


Table 7. Approximate prices of temporary water allocations in 11 major trading areas in the southern Murray-Darling Basin, averaged over the water season

($/ML) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Murrumbidgee 86 495

Murray NSW 15 38 15 41 228 70 73 45 371 656

Goulburn 50 100 60 40 60 364 67 60 57 440 702

Broken 111

Loddon

Campaspe 123 119

Wimmera-Mallee

Kiewa 597

Ovens 597

Murray Vic 244 67 57 46 317 681

Murray SA 22.5 30 30 40 206 231 90 80 250 810 679

Source: NWC (2008); Pers. Comm. Bob O’Brian, Percat Water (July, 2009); Murray Irrigation Limited (2009); ABS (2006); Murrumbidgee Water Exchange (2009); DSE (2009); Bjornlund and Rossini (2008).


Table 8. Approximate prices of high security permanent water entitlements in 11 major trading areas in the southern Murray-Darling Basin, averaged over the water season

($/ML) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Murrumbidgee 903 1430 1460 1750 1825 2500

Murray NSW 2087

Goulburn 450 800 750 750 800 950 1202 1112 1045 1570 1602

Broken 1824

Loddon

Campaspe 1514

Wimmera-Mallee

Kiewa 1588

Ovens 1588

Murray Vic 1207 1110 1092 1814

Murray SA 575 625 875 975 1075 1375 1500 1450 1975 2550 2512

Source: NWC (2008); Pers. Comm. Bob O’Brian, Percat Water (July, 2009); Murray Irrigation Limited (2009); ABS (2006); Murrumbidgee Water Exchange (2009); DSE (2009); Bjornlund and Rossini (2008).


APPENDIX D. SELECTED TRADE DATA

Table 9. Approximate annual trade volume of temporary water allocations in 11 major trading areas in the southern Murray-Darling Basin*

(ML) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Murrumbidgee -30578 -37982 -115169 -30177 31487 -14489 -34708 8026 -5896 -96788 -139,096

Murray NSW 25922 9422 118055 3021 29983 36086 38927 5350 2645 46556 -17,506

Goulburn -518 7073 -656 8557 18151 27547 -27275 -26186 47244 39580 -64,121

Broken -815 0 0 0 0 0 0 0 0 0 -2,787

Loddon -381 -1878 -2979 -363 -3539 -14839 -1713 -3860 18400 -72 -21,825

Campaspe -1758 -385 -340 -3866 -2812 -6982 -53 1174 18363 9251 4,103

Wimmera-Mallee 0 0 0 0 0 750 700 -350 0 1260 1,120

Kiewa 549 0 190 0 0 0 0 0 0 0 0

Ovens -5668 -717 0 0 0 0 0 0 0 0 0

Murray Vic 23204 -4093 -238 -436 -13859 -19072 12939 20871 -56263 -39914 95,023

,Murray SA -15471 483 -1696 3255 -7261 -9001 6010 -1630 -24290 40128 144,375

Source: MDBC (1999-2008); MDBA (2009).

*A negative trade volume indicates trade out of a region; a positive trade volume indicates trade into a region.


Table 10. Approximate annual trade volume of permanent water entitlements in 11 major trading areas in the southern Murray-Darling Basin*

(ML) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Murrumbidgee 0 0 0 0 0 0 0 0 0 0

No data

Murray NSW -249 -3199 -2564 -176 184 283 1087 523 665 301

Goulburn 103 -1801 -2239 -1407 -6307 -940 -20488 –18146 -17842 -19192

Broken 80 0 -2 0 0 0 0 0 0 0

Loddon -321 -25 -206 -4 303 -1018 -4 5 14 -8856

Campaspe 0 0 0 -1411 0 2566 0 8 -175 -8498

Wimmera-Mallee 0 0 0 22 0 0 0 0 0 0

Kiewa -22 100 17 60 0 0 2 -32 0 0

Ovens -20 -275 0 0 0 0 -2 53 0 60

Murray Vic 429 1650 -1998 -2970 6004 -1011 20224 12667 15203 21916

Murray SA 0 3550 4778 4475 1480 120 -503 4778 2135 14022

Source: MDBC (1999-2008); MDBA (2009).

*A negative trade volume indicates trade out of a region; a positive trade volume indicates trade into a region.


REFERENCES ABS (2006) ‘Water Access Entitlements, Allocations and Trading 2004-05’, Australian Bureau of Statistics, Canberra. ABS (2008) ‘Water and the Murray Darling Basin – A Statistical Profile, Chapter 4 – Agriculture in the Murray Darling Basin’, Australian Bureau of Statistics, Canberra. Bjornlund, H and Rossini, P (2008) 'Are the fundamentals emerging for more sophisticated water market instruments?', Paper presented on the 14th Annual Conference of the Pacific Rim Real Estate Sociey, Kuala Lumpur, January. Brooks, R and Harris, E (2008) ‘Efficiency gains from water markets: Empirical analysis of Watermove in Australia’, Agricultural Water Management, vol. 95, pp. 391-399. CoAG (2004) ‘Intergovernmental Agreement on a National Water Initiative’, National Water Commission, accessed online 10th Apr, 09 at < http://www.nwc.gov.au/www/html/117-national-water-initiative.asp > DSE (2009) ‘Victorian Water Register: Trading of Water Shares’, Department of Sustainability and Environment, accessed online 29th July, 2009 at < http://www.waterregister.vic.gov.au/Public/Reports/WaterTrading.aspx > Mallawaarachchi, T and Foster, A (2009) ‘Dealing with Irrigation Drought: the role of water trading in adapting to water shortages in 2007-08 in the southern Murray Darling Basin’, Australian Bureau of Agricultural and Resource Economics, Canberra. MDBA (2009a) ‘Water Audit Monitoring Report: Report of the Murray-Darling Basin Authority on the Cap on Diversions’, Murray Darling Basin Authority, Canberra. MDBA (2009b) ‘The Living Murray Environmental Water Recovery Progress Report ’, Murray Darling Basin Authority, Canberra. MDBC (1999 – 2008) ‘Water Audit Monitoring Report: Report of the Murray-Darling Basin Commission on the Cap on Diversions’, Murray Darling Basin Commission, Canberra. Murray Irrigation Limited (2009) ‘Water Exchange Annual History Data’, accessed online 29th July, 2009 at < http://www.murrayirrigation.com.au/content.aspx?p=20021 > Murrumbidgee Water Exchange (2009) ‘History’, accessed online 29th July, 2009 at < http://www.murrumbidgeewater.com.au/index.php?id=6&no_cache=1 > NWC (2008) ‘Australian Water Markets Report 2007-2008’, National Water Commission, Canberra. NWC (2009) ‘Australian Water Markets Report 2008-2009’, National Water Commission, Canberra. Shi, T (2006) ‘Simplifying complexity: Rationalising water entitlements in the Southern Connected River Murray System, Australia’, Agricultural Water Management, vol. 86, pp. 229-239. Watermove (2009) ‘Price History for Trading Zone’, accessed online 29th July, 2009 at < http://www.watermove.com.au/results/pricehistoryforzone.asp?rgn_id=1 >


Watson, D, Barcley, E and Reeve, I (2007) ‘The Economic and Social Impacts of Water Trading: Case studies of the Victorian Murray Valley’, RICDC Publication No. 07/121, Rural Industries Research and Development Corporation, Canberra. Tisdell, J and Ward, J (2003) ‘Attitudes toward water markets: An Australian Case Study’, Society and Natural Resources, vol. 16, pp. 61-75.

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