The 2016-17 water year in the southern Murray-Darling Basin (sMDB) was characterised by modest entitlement price increases, sustained price declines in allocation markets, and the emergence of more sophisticated water allocation forward and carryover lease products.
Water allocation prices opened the year at around $170 per ML and declined steadily to close at approximately $40 per ML. The decrease in allocation prices was primarily driven by very wet climatic conditions during the 2016 winter and spring (one of the wettest on record) which resulted in high supply and reduced irrigation demand.
Entitlement prices held strong despite the low returns on the allocation market in 2016-17. The Aither southern Murray-Darling Basin Entitlement Index (AEI) shows that major entitlement types continued to maintain and increase their value across 2016-17. However, increases were not to the same extent observed in previous years (4 per cent increase in 2016-17 compared to 46 per cent in the previous water year).