The latest ABARES Water Market Outlook report indicates water allocation prices in the southern Murray-Darling Basin are likely to remain low in 2021–22.
ABARES senior economist Mihir Gupta said the Water Market Outlook provides a range of possible allocation prices for 2021–22 in wet, average, dry and extreme dry scenarios.
Based on the current climate outlook from the BOM, ABARES considers the average scenario to be the most likely.
“In the average scenario, prices are forecast to reach $141 per megalitre (ML), similar to prices in 2020-21 of $130 per ML,” Gupta said.
“In the more favourable wet scenario, prices are forecast to fall further to $74 per ML.
“High volumes of water carried over into 2021–22– the highest since 2017-18 – will support water supply. This will help keep prices low even in the dry and extreme dry scenarios, where prices are forecast to reach $250 per ML and $303 per ML respectively.
“The continuation of lower water prices will help to support agricultural production, especially commodities which are typically more sensitive to water prices, such as rice and cotton.
“However, trade limits in the southern basin are coming under increasing pressure leading to price gaps between catchments, with high water demand below the Barmah choke. Partly reflecting recent changes to the Goulburn to Murray trade limit, prices in Murray catchments are forecast to be $44 per ML higher in the average scenario, compared to the Goulburn.”
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