WATER MARKETS REPORT 2019-20 REVIEW AND 2020-21 OUTLOOK
Thank You For further information Presentation delivered: Chris Olszak Erin Smith Director Water Markets Sector Lead | 18 August 2020 Principal Consultant Phone Phone +61 425 707 170 +61 410 207 852 Email Email chris.olszak@aither.com.au erin.smith@aither.com.au Citation Aither 2020, Water Markets Report: 2019-20 Review and 2020-21 Outlook. Presentation 18 August 2020. Melbourne, Aither Pty Ltd.
2019-20 2020-21 Three things you need to know about the 2019-20 water year, and what they mean for 2020-21. Entitlement prices 6% February to June End-of-season carryover The first month-on-month 1,200 GL (Victoria & NSW) pull back in the Aither Entitlement Index (AEI) for Equivalent to 50% of the water Allocation prices over three years. allocated in 2019-20 (Victoria & NSW). 74% January to June Largest price decrease since Millennium drought.
In 2019-20, we saw the largest price decrease in the second half of a water year Southern MDB allocation price since 2009-10 when the 74% Millennium drought broke. January to June 2019-20 2020-21
2019-20 Monthly volume-weighted average prices, southern MDB, (2018-19 to 2019-20) In 2018-19, $1,000 water allocation $900 prices steadily $800 Water allocation price (per ML) increased $700 throughout the $600 year. $500 $400 $300 $200 $100 $0 1/07/2018 1/10/2018 1/01/2019 1/04/2019 1/07/2019 1/10/2019 1/01/2020 1/04/2020 Source: Aither, 2020. Based on Victorian, New South Wales, and South Australian water registers. www.aither.com.au 5
2019-20 Monthly volume-weighted average prices, southern MDB, (2018-19 to 2019-20) In the first half $1,000 of 2019-20, $900 prices continued $800 Water allocation price (per ML) the upwards $700 trend from $600 2018-19. $500 $400 $300 $200 $100 $0 1/07/2018 1/10/2018 1/01/2019 1/04/2019 1/07/2019 1/10/2019 1/01/2020 1/04/2020 Source: Aither, 2020. Based on Victorian, New South Wales, and South Australian water registers. www.aither.com.au 6
2019-20 Monthly volume-weighted average prices, southern MDB, (2018-19 to 2019-20) In the second $1,000 half of the water $900 year, prices $800 Water allocation price (per ML) tumbled more $700 than 70 per 74% $600 cent. $500 $400 $300 $200 $100 $0 1/07/2018 1/10/2018 1/01/2019 1/04/2019 1/07/2019 1/10/2019 1/01/2020 1/04/2020 Source: Aither, 2020. Based on Victorian, New South Wales, and South Australian water registers. www.aither.com.au 7
Water supply during the first half of the water year was very 2019-20 tight; then it rained (a bit). Six-month rainfall deciles, Murray-Darling Basin First half of the year, July to December 2019 Second half of the year, January to June 2020 Source: Aither, 2020. Based on Bureau of Meteorology, 2019; 2020. www.aither.com.au 8
2019-20 Volume held in storage, southern Murray-Darling Basin major headwater storages, 2018-19 to 2019-20 10,000,000 9,000,000 8,000,000 Water held in storage (ML) 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Note: includes Dartmouth, Hume, Lake Eildon, Blowering and Burrinjuck Source: Aither, 2020. Based on Bureau of Meteorology, 2020. www.aither.com.au 9
2019-20 Volume held in storage, southern Murray-Darling Basin major headwater storages, 2018-19 to 2019-20 Drawdown on 10,000,000 storages was 4,053 GL 9,000,000 approx. half of 8,000,000 1,953 GL Water held in storage (ML) 7,000,000 the 2018-19 6,000,000 drawdown. 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Note: includes Dartmouth, Hume, Lake Eildon, Blowering and Burrinjuck Source: Aither, 2020. Based on Bureau of Meteorology, 2020. www.aither.com.au 10
2019-20 Volume held in storage, southern Murray-Darling Basin major headwater storages, 2018-19 to 2019-20 Drawdown on 10,000,000 storages was a 4,053 GL 9,000,000 year of two 8,000,000 1,953 GL Water held in storage (ML) halves in 2019- 7,000,000 6,000,000 20. 5,000,000 4,000,000 3,000,000 1,255 GL 2,000,000 699 GL 1,000,000 0 Note: includes Dartmouth, Hume, Lake Eildon, Blowering and Burrinjuck Source: Aither, 2020. Based on Bureau of Meteorology, 2020. www.aither.com.au 11
2019-20 Volume held in storage, southern Murray-Darling Basin major headwater storages, 2018-19 to 2019-20 Drawdown on 10,000,000 storages was a 4,053 GL 9,000,000 year of two 8,000,000 1,953 GL Water held in storage (ML) halves in 2019- 7,000,000 6,000,000 20. 5,000,000 1,914 GL 4,000,000 3,000,000 1,255 GL 2,000,000 2,139 GL 699 GL 1,000,000 0 Note: includes Dartmouth, Hume, Lake Eildon, Blowering and Burrinjuck Source: Aither, 2020. Based on Bureau of Meteorology, 2020. www.aither.com.au 12
2020-21 Timing of allocation increases will be crucial. Estimated consumptive water allocations, 15 December 2019 and 2020 (f). 3,500 3,000 77% 1,450 GL 2,500 Area planted to winter crops Volume (GL) 2,000 90% 1,500 (New South Wales; smaller increases in Victoria and South Australia) 1,000 500 0 15 December 2019 15 December 2020 (f) actual average inflows Source: Aither, 2020. Based on Victorian, New South Wales, and South Source: ABARES, 2020, includes irrigated and dry land winter crops. Australian water registers. www.aither.com.au 13
2020-21 Allocation prices unlikely to reach the same levels as 2019-20. Actions to watch ❸ ❶ ❷ Influence of 62 per cent more Inter-valley trade constraints, How much cotton will be carryover in the system than at esp. the Goulburn to Murray planted in the the start of 2019-20. trade rule review. Murrumbidgee? www.aither.com.au 14
End-of-season carryover was equivalent to 50 per cent of the total water allocated in End-of-season carryover 2019-20. (major Victorian and NSW entitlements) 1,200 GL (Victoria & NSW) 2019-20 2020-21
2019-20 Consumptive carryover on Victorian and NSW entitlements, (2016-17 to 2019-20) Year carryover was acquired Volume of 2,000 carryover 1,800 acquired in 2019- 1,600 20 was similar to 1,400 1,248 1,198 2017-18. 1,200 Volume (GL) 1,000 800 600 400 200 0 2016-17 2017-18 2018-19 2019-20 Source: Aither, 2020. Victorian Water Register and NSW Department of Planning, Industry and Environment. www.aither.com.au 16
2019-20 Consumptive carryover on Victorian and NSW entitlements and total water allocated, (2017-18 and 2019-20) Year carryover was acquired Volume of 7,000 60% Percentage of total water allocated carryover 6,000 50% acquired in 5,000 40% 2019-20 was Volume (GL) 4,000 30% similar to 2017- 3,000 18. 20% 2,000 1,248 1,198 10% 1,000 0 0% 2017-18 2019-20 Water allocated to major Victorian and NSW entitlements (end-of-season) Consumptive carryover (Victoria and NSW) Consumptive carryover as a percentage of total water allocated Source: Aither, 2020. Victorian Water Register and NSW Department of Planning, Industry and Environment. www.aither.com.au 17
2019-20 Consumptive carryover on Victorian and NSW entitlements and total water allocated, (2017-18 and 2019-20) Year carryover was acquired More carryover was brought in 7,000 60% Percentage of total water allocated 2020-21 than 6,000 50% would be 5,000 4,403 -45% 40% expected given Volume (GL) 4,000 30% 2019-20 3,000 2,405 allocations. 20% 2,000 1,248 1,198 10% 1,000 0 0% 2017-18 2019-20 Water allocated to major Victorian and NSW entitlements (end-of-season) Consumptive carryover (Victoria and NSW) Consumptive carryover as a percentage of total water allocated Source: Aither, 2020. Victorian Water Register and NSW Department of Planning, Industry and Environment. www.aither.com.au 18
2019-20 Consumptive carryover on Victorian and NSW entitlements and total water allocated, (2017-18 and 2019-20) Year carryover was acquired More carryover was brought in 7,000 60% Percentage of total water allocated 2020-21 than 6,000 50% would be 5,000 4,403 40% expected given Volume (GL) 4,000 30% 2019-20 3,000 2,405 allocations. 20% 2,000 1,248 1,198 10% 1,000 0 0% 2017-18 2019-20 Water allocated to major Victorian and NSW entitlements (end-of-season) Consumptive carryover (Victoria and NSW) Consumptive carryover as a percentage of total water allocated Source: Aither, 2020. Victorian Water Register and NSW Department of Planning, Industry and Environment. www.aither.com.au 19
2019-20 Consumptive carryover on Victorian and NSW entitlements and total water allocated, (2017-18 and 2019-20) Year carryover was acquired More carryover 7,000 60% was brought in Percentage of total water allocated 6,000 50% 2020-21 than 5,000 would be 40% Volume (GL) 4,000 expected given 30% 3,000 2019-20 20% 2,000 allocations. 10% 1,000 0 0% 2016-17 2017-18 2018-19 2019-20 Water allocated to major Victorian and NSW entitlements (end-of-season) Consumptive carryover (Victoria and NSW) Consumptive carryover as a percentage of total water allocated Source: Aither, 2020. Victorian Water Register and NSW Department of Planning, Industry and Environment. www.aither.com.au 20
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