WaterdexTM
What is the WaterdexTM?
Psi-Delta has developed a water pricing index of
permanent irrigation water, referred as the WaterdexTM.
The index, first released in
October 2005, is a measure of the capital price of water entitlements in
Australia, and is not an index of the value of temporary trades in
water. The index is reviewed and reported annually in October.
The WaterdexTM
is based on data supplied by around 30 water brokers. Each is usually the
broker that trades the largest volume of permanent trades of water in
each irrigation system.
The selection of irrigation
systems covered is based on the ANCID Benchmarking reports (available
at:
http://www.ancid.org.au/publications/index.html).
The index focuses on general
security irrigation water from regulated systems where the total volume
of entitlements owned by irrigators exceeds 90,000ML:
Psi-Delta uses the WaterdexTM
results
for its advisory work around Australia and provides this summary as a
free service to ANCID.
WaterdexTM
2009 – Results
The value of Australia’s water
assets decreased in 2009. The global financial crisis and the impacts of
continuing drought has resulted in a 3.5% decline in the average price
of irrigation water. 2009 saw the first decrease in water prices since
the index began in 2000. The Federal Government buyback supported prices
in a number of key systems including the Gwydir, Lachlan and the
Goulburn, while having contradictory price impacts on others. Water
prices fell by 35% on the Murrumbidgee despite heavy government buying
(halted by the NSW water embargo), while increasing 10% on the Namoi
where government buying was limited.
The collapse of Timbercorp and
Great Southern pushed the market lower as MIS schemes had been the
dominant players in many water markets. The collapse in dairy prices
over the last 12 months also pushed prices down as some dairy farmers
were forced to sell water entitlements.
Waterdex™ September 22nd, 2009
Water prices were again highest
on the Hunter River in NSW were the price declined to $2,500/ML slightly
more than Victoria’s Goulburn –Murray Irrigation systems. Water in the
Ord River of Western Australia remains remarkably cheap at around $8 per
million litres. The planned expansion of the Ord Irrigation Area should
see prices increase as industry demand rises.
Psi-Delta expects the price of
water to continue to decline in 2010 as the government buyback slows in
NSW and Victoria’s trade out limit is increased to 6%. The slowing of
the buyback and raising of trade out limits will increase the volume of
water available in the MDB putting downward pressure on prices. Overall
the price of water is expected to decline by less than 5% in 2010.
Psi-Delta water markets analyst Lex Batters sees uncertainty ahead
“Until 2008 we had a strong growth trend so it was easy to see where
prices were going. The dynamics of the market today indicate uncertainty
and there is potential for prices to drop but given climate change, not
for long”.
The overall value of water
assets included in our index throughout Australia has declined to
$16.3 billion in 2009.
WaterdexTM
2009 – Water Market Report
This year Psi-Delta has produced a water market report
which can be downloaded here -
WaterdexTM Report 2009
About the WaterdexTM
Psi-Delta’s WaterdexTM
is the oldest water index in Australia tracking the price of water
assets around Australia since 2000. The index is a weighted average of
asset prices of water entitlements in regional water systems larger than
90 gigalitres.
For more information please
contact Lex Batters at (03) 9093 0000
Disclaimer:
This document is for the
exclusive use of the client for which it was prepared and is not to
be relied upon by any other person. Psi-Delta has made every effort
to ensure that the information provided is accurate but errors and
omissions can occur and circumstances can change from the time that
the report or document was prepared. Therefore, except for any
liability that cannot be excluded by law, Psi-Delta excludes any
liability for loss or damage, direct or indirect, from any person
relying (directly or indirectly) on opinions, forecasts,
conclusions, recommendations or other information in this report or
document.
Specialist advice should be
sought to assist in any decisions made about buying, selling or
holding water entitlements.
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