A new permanent water pricing record has been set this week for Murrumbidgee general security water markets with the recent sale of a sizable 500 megalitres entitlement for over $2700/ML.
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See subscription optionsChief executive officer of Waterfind, Tom Rooney, said the recent sale puts the total value (held between all water right holders) of water in the Murrumbidgee Valley at over $9 billion dollars.
He said this meant water was now among the most substantial assets held in the region and the first time, total water values in the region had crossed this threshold.
The record price was set as the result of a Murrumbidgee general security permanent trade, where a 500ML parcel sold for $1.36 million.
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The permanent sale occurred through the Australian Water Tender in which Waterfind exclusively operates and at a time where an all time low was recorded for temporary water pricing in the valley at $2/ML.
Mr Rooney said that pricing in the temporary market could fluctuate greatly from one season to another.
"For example, just two years ago, prices were above $760/ML, where the same market bottomed out at $2/ML for the last trades of the season just a week or so ago," Mr Rooney said.
"Temporary prices are more reflective of the current annual water conditions experienced in the valley, where permanent prices are more reflective of the long term demand and outlook for the major commodities grown in the region."
Mr Rooney did, however, say the current permanent pricing records had been influenced by entitlement shortages, resulting from previous buy-backs and other water transfers to the Commonwealth Environmental Water Holder.
Murrumbidgee general security water entitlements have experienced significant growth in recent years and Mr Rooney said in 2014 the same water that recently sold was trading for less than $1000/ML, and since then, water holders of this class had more than $3.2 billion dollars of capital growth.
This has contributed to water as one of the fastest growing assets in the region.
With this rapid rise would also be associated risk and opportunity.
He said the opportunities could involve the ability for farmers to reset their cost of financing as lower loan value ratios could pose lower risks and decreased costs of farm financing.
The risks involve tax and farm financial planning, which Mr Rooney said was imperative for farmers.
The Australian Water Tender closes June 15, 12pm.
