The diagram below shows the relationship of various products based on price and security. Lower priced, less secure products are located at the bottom left while higher priced, more secure products are located at the top right.
Security in this context can refer to two things. Firstly the carryover security ie the lower the risk of spill the more secure a product is. Alternatively, it can refer to yield security ie the reliability of an entitlement class to deliver allocation to the Lessee.
When choosing a product, it is important that you consider the requirements for your enterprise. Are you happy to pay a lower price and potentially not receive any allocations? Do you need to have absolutely certainty that a specific volume of water be delivered be delivered?
Each product also need to be considered in the context of the allocation and permanent water markets. For instance, securing parking space is one thing but does it make sense if you need to pay a high price in the allocation market to fill it? Is purchasing entitlement a better financial decision than leasing it?
As always you should seek advice from appropriate finance and business professionals before making any decisions.
H2OX prides itself on providing impartial information about available water products. If you have any questions or want to learn more please call us on 1800 988 118.