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Lessons learned from water trading IAL2012

Lessons learned from water trading IAL2012. SA Murray Irrigation Entitlement 570GL. NSW Murray High Security 185GL General Security 16 69GL. NSW Murrumbidgee High Security 357GL General Security 1901GL. Vic Murray High Reliability 1185GL Low Reliability 301GL.

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Lessons learned from water trading IAL2012

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  1. Lessons learned from water trading IAL2012

  2. SA Murray Irrigation Entitlement 570GL NSW Murray High Security 185GL General Security 1669GL NSW Murrumbidgee High Security 357GL General Security 1901GL Vic Murray High Reliability 1185GL Low Reliability 301GL Vic Goulburn High Reliability 994GL Low Reliability 439GL

  3. Lesson 1 – Trading works • Recent ABRES Survey – 93% of irrigators consider the ability to trade is beneficial to their farm business • 2006/07 - 136GL of entitlement trade 2010/11 – 773GL of entitlement trade • NWC estimates that trading reduced the impact of the drought by $5b GDP

  4. Lesson 2 – Get the framework right NSW: Water management Act 2000 Vic : Water Act 1989 SA: Natural Resources Management Act 2004 • Water is traded across State boundaries – consistency in the framework required • Ill-conceived rules create perverse market outcomes • Small changes to rules can have big market impacts

  5. Lesson 3 – Information is king • Timely market information is essential • Poor transparency will result in stakeholders losing confidence • Intermediaries play an important role

  6. Allocation price 07 - 10

  7. Lesson 4 – The markets will evolve • More irrigators without permanent water entitlements • Investor groups in the business of owning and managing water (rural and urban) • New water products – forward water contracts, options, long term leases

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