This report is the third annual companion to the Australian water markets report series.
The Australian water markets reports provide information that summarises activity in Australian water markets. It includes information on water market structures.
The trends and drivers report:
- provides an overview of the geographical location of markets and trading mechanisms
- analyses trends in volumes and prices of entitlement and allocation trades, with national, southern Murray–Darling Basin (MDB), northern MDB, and outside-MDB analyses
- analyses the key market drivers (why is water being traded).
The 2011–12 year was the second consecutive above-average rainfall year, following a series of below-average rainfall years from 2001 to 2010. By comparing water market outcomes during wetter and drier periods, the report provides strong evidence that markets are being used by participants as an important business tool for responding to varying seasonal conditions.
Improved water storage levels and water availability in the southern MDB in 2011–12 resulted in an increased volume of entitlement trade, while prices declined. The Australian Government continued to be a major participant in the market in the southern MDB as part of its buyback program.
Allocation trade has continued to grow every year since 2007–08. Some of the drivers of this increase have however changed over that period of time.
Outside the MDB, recent flooding in Queensland and continued low rainfall in Western Australia have been reflected in the levels of trade. Trading in Tasmania is expanding with new irrigation regions being developed.
Outcomes in the water market are assessed mainly with reference to prices and volumes traded. Water markets are complex, with many interlinking drivers, however the main driver of water trading activity in the MDB continued to be the positive seasonal and weather conditions. Other drivers of water trade include regulatory and legislative conditions, agricultural market factors and environmental protection initiatives.