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ABARES forecasts lower water prices in 2021-22

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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.

“The average water price across the southern Murray-Darling during 2020–21 is currently $154 per ML, much lower than the annual average of $587 per ML experienced in 2019–20,” ABARES’ senior economist Mihir Gupta said.

Water prices have fallen sharply in 2020–21 from the highs experienced in 2019–20, as the recent La Nina event has led to more favourable seasonal conditions and irrigation water supply.

“This has allowed allocations across all major catchments and securities in the sMDB to reach levels above the historic average.”

The Water Market Outlook provides a range of possible allocation prices for 2021–22 under wet, average, dry and extreme dry seasonal conditions.

In the wet and average scenarios, prices are likely to fall in response to improvements in water supply, with ABARES estimating average annual prices of $57 per ML and $114 per ML respectively.

“The volume of water carried over into 2021-22 is likely to be high, based on the volume of water that has been allocated but not used so far in 2020- 21,” Mr Gupta said.

“The additional water carried over will help keep prices below 2019-20 levels, even in a dry or extreme dry scenario, where prices are forecast to reach $284 per ML and $323 per ML respectively.”

The latest ABARES Water Market Outlook and accompanying dashboard visualisation can be accessed on the ABARES website.

You can also watch ABARES’ video briefing – to view click on the image below.

 

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