Murray-Darling water markets in good shape

7 March 2018

Increased demand for water for some crops such as almonds and cotton in the southern Murray-Darling Basin is being more than offset by decreased water demand for other crops such as pastures and rice, according to new ABARES research presented today at the Outlook conference in Canberra. 

While there has been a reduction in the supply of water with over 2000 gigalitres of entitlement recovered for environmental purposes, ABARES Assistant Secretary in charge of farm performance and forestry, David Galeano, said the development of water markets has left the southern Murray-Darling Basin in a good position to manage climate variability and take advantage of new opportunities.

“ABARES modelling suggests that under a rerun of the Millennium drought, water market prices would be no higher than the peaks observed in 2007−08 due to more flexible carryover rules and reduced underlying water demand for opportunity crops such as irrigated pastures,” Mr Galeano said.

“Since the last drought, changes to carryover rules have resulted in larger volumes of water being stored in dams between years, which leaves producers better positioned to manage dry periods.

“While water market reforms in the region have been successful, there remains some room for improvement to carryover rules and trade restrictions.

“Given the hydrology of the southern Murray-Darling Basin, some trade restrictions will always be necessary. But in the future it is going to be increasingly important to move more water efficiently across catchments and commodities, to ensure changing water demands continue to be met.”

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Further detail is also available in the ABARES Australian Water Markets Report 2016-17, also released today.

Last reviewed: 4 November 2019
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