Transcript Slide 1

Lessons learned from water trading
IAL2012
SA Murray
Irrigation Entitlement 570GL
NSW Murray
NSW Murrumbidgee
High Security 185GL
General Security 1669GL
High Security 357GL
General Security 1901GL
Vic Murray
Vic Goulburn
High Reliability 1185GL
Low Reliability 301GL
High Reliability 994GL
Low Reliability 439GL
Lesson 1 – Trading works
• Recent ABRES Survey – 93% of irrigators consider
the ability to trade is beneficial to their farm
business
• 2006/07 - 136GL of entitlement trade
2010/11 – 773GL of entitlement trade
• NWC estimates that trading reduced the impact of
the drought by $5b GDP
Lesson 2 – Get the framework right
NSW: Water management Act 2000
Vic : Water Act 1989
SA: Natural Resources Management Act 2004
• Water is traded across State boundaries – consistency
in the framework required
• Ill-conceived rules create perverse market outcomes
• Small changes to rules can have big market impacts
Lesson 3 – Information is king
• Timely market information is essential
• Poor transparency will result in stakeholders losing
confidence
• Intermediaries play an important role
1/06/2010
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1/12/2009
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Allocation price 07 - 10
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
Lesson 4 – The markets will evolve
• More irrigators without permanent water
entitlements
• Investor groups in the business of owning and
managing water (rural and urban)
• New water products – forward water contracts,
options, long term leases