Author(s)

S. Wheeler, H. Bjornlund, M. Shanahan & A. Zuo

Abstract

This paper examines the factors that influence the price of water allocations and entitlements by using actual monthly prices paid for water allocations and entitlements from 1993 to 2007. Water allocation prices are influenced by seasonal factors, current water allocations received, some rural commodity prices and policy impacts. The price of water entitlements are most significantly influenced by current prices of water allocations, allocations currently received, seasonal factors and government water policy. Such an analysis highlights the importance of government policy in influencing water markets. Keywords: water markets, allocation water prices, entitlement water prices. 1 Introduction Australia has increasingly promoted markets in water allocations and entitlements as an integral part of agricultural water management. Water markets have been functioning in Australia since 1984 and by now farmers in all states can buy and sell water on a temporary basis (allocation trading), or on a permanent basis (entitlement trading), as required. Farmers may sell their ‘allocation’ each year (the amount the government announces each may receive each year, based on rainfall and water storage conditions) or their ‘entitlement’ (the amount of water that ‘by right’ is linked to their ownership of property and is permanently associated with that land (unless sold). Within the Goulburn-Murray Irrigation District (GMID) in Victoria market prices for both entitlements and allocations have increased considerably since

Keywords

water markets, allocation water prices, entitlement water prices.