Water, water markets

Where’s the water?

17 July 2019

With the 2019-2020 season underway, we thought it would be interesting to see what allocation is currently available, which systems it is in and who holds it. The information below covers the southern-connected Murray-Darling Basin (sMDB).

Volume by owner

The volume of water currently held by various owners is shown in the table below (volumes in gigalitres). About 1,600GL of water is estimated to be available to private irrigators (mid July 2019).

PrivateEnvironmentWater Authorities
Carryover750609181
Determinations8501428
TOTAL1,600750189

The Environment is holding at least 750GL of allocation (there will be additional water being managed by various state environment organisations as well). While there may be some political pressure for the Environment to release some of its water to the market, we believe this will be unlikely off the back of the recent media around river health.

The water held by Water Authorities includes both urban authorities in Victoria and the private irrigation authorities in NSW noting the volume is likely to be higher (and therefore Private water volume lower). The water held by Victorian authorities is unlikely to be sold into the market this year as it will be kept as a reserve should the current season remain dry. On the other hand, water held by the NSW authorities will likely make its way to the market through various mechanisms including efficiency divides or direct sales into the market.

Private volume by system

While the volumes above are relevant, more important is where the Private water is currently held. The table below shows the volumes available by zone in mid-July 2019, along with the predicted end-of-season determinations under a dry inflow scenario.

SystemVolume at July 2019Predicted Volume
Murrumbidgee400400
Goulburn200450
Murray (above) 160270
Murray (below) 540860
South Australia300500
TOTAL1,6002,480

This season we have seen the Barmah Choke close early, restricting the trade of allocation from above to below the choke. Both the Goulburn & Murrumbidgee IVT’s had roughly 20GL of capacity to move water into the Murray system at the time of writing. We are likely to see both IVT’s close for reasonably long periods this season.

Lower Murray challenges

According to the recent report written by Aither for the Victorian Government water use below the choke is currently estimated to be 1,230GL per annum. The vast majority of water use in this region is by permanent horticulture and, while there is some ability to reduce water use, by-and-large it is relatively fixed.

Looking at the table above, there is currently 840GL available in the lower Murray region (Murray (below) + South Australia) with a projected volume of 1,360GL if inflows track on the dry scenario. This presents a small surplus of around 70GL. This surplus assumes no trade from other regions due to IVT or choke restrictions (theoretically 40GL could transfer with the current IVT balances increasing the surplus to around 110GL).

The biggest assumption is that the market is “perfect” and that all allocated water moves to horticulture. This market is less than “perfect” – many entitlement owners don’t sell their seasonal allocation while some only sell a portion. This will also impact on the volume available for carryover into next season.

(Hopefully) the above projections are “worst-case” however, pending a significant change with inflows and therefore increased determinations, we envisage there to be water availability pressure in the lower Murray region. We will likely see significant price differentials between different systems with trade restrictions preventing the movement of water.

Having an adaptable plan in place is critical. What volume of water do you require and when is it needed? What’s your strategy to acquire that water?

We will provide updates to this information as the season progresses.

Data sources

The information above has been extracted from a multitude of different sources including;