There is no evidence of water hoarding in southern Murray-Darling Basin water markets, according to a new paper in the Australian Journal of Agriculture and Resources Economics.

Key points:

  • Withholding water from the market can, in theory, affect the price
  • The researchers say they could find no evidence that anyone was “hoarding” water
  • Water market data is collected by the Bureau of Meteorology and individual registers in each Basin state.

During the recent drought, many irrigators along the Murray and Murrumbidgee rivers accused corporate investors in the water market of holding back water as prices rose, to sell or lease it to them at higher prices.

At the time, prices for temporary irrigation water were climbing to levels not seen since the previous Millennium Drought, pricing many irrigators out of the market.

They peaked in the Lower Murray zone at $970 a megalitre (ML) in November 2019. However, they have since eased, presently sitting around $100/ML.

Researchers at the University of Adelaide analysed trade data between 2008 and 2020 and found no evidence to support the claim that anyone in the market was ‘hoarding’.

“Hoarding is pretty simple,” lead author Dr Adam Loch said.

“If anyone is, in large enough quantities, holding water out of the market, then in theory, they can affect the price.

“We didn’t find any evidence of anyone withholding water off the market at any point during the period of concern, roughly between 2017 to 2020.

“If anything, when you look at the trend in the data, that particular period saw a jump in both trade volumes and trade count, so if anything, there was more activity, not less.”

Because the data available to the researchers does not contain any information about who is making the trades, Dr Loch said that finding applied to all market participants — irrigators and corporate investors.

During the recent drought, many irrigators along the Murray blamed investors in the water market who did not farm for pushing up prices in the market.(

ABC News: Peter Healy


Evolving opinions

Riverland grape grower Brett Proud was among the many irrigators angry and suspicious of the behaviour of corporate investors in the water market, especially during the drought.

“I think many farmers, when they’re confronted with a problem, are very good at finding a way to fix it,” he said.

“And one of the logical explanations for rising prices was that someone was withholding water from the market, to sell it later at a much higher price.”

Grape grower Brett Proud believes the lack of transparency in water markets creates a ‘traumatic’ experience when prices get too high.(

Supplied: Brett Proud


That frustration and anger in southern Basin communities led the federal government to direct the Australian Competition and Consumer Commission (ACCC) to open an inquiry into water markets.

Mr Proud has since changed his opinions about the influence of corporate investors in the water market but said his opinion during the drought highlighted the need for better information and more transparency in the market.

“[For the water market], there is no other decision making in farming where you spend such a vast amount of money based on no evidence, and it is quite traumatic at times.”

But sharp spikes in water prices will remain a feature of the southern Murray-Darling Basin because climate change is increasing the number of dry seasons, and demand for the capped pool of irrigation water is rising.

In Victoria, despite a pause on new developments, water demand from permanent plantings of almonds, citrus and table grapes below the Barmah Choke is increasing as existing crops mature.

In Victoria and New South Wales, a number of these orchards are owned by corporate investors.

“In average to extreme dry water availability scenarios, there is a risk that total permanent horticulture water needs may exceed the total volume of water available for consumptive use,” a recent study for the Victorian Government found.

As permanent plantings of crops like almonds mature, demand for water is increasing and will put upward pressure on southern Murray River water prices.(

ABC Landline: Pip Courtney


Difficult data

Access to data about Australia’s water markets is not at the level of the stock or housing markets.

In its interim report into water markets, the ACCC was critical of how difficult it was to access quality market data.

“Fragmentation makes it difficult to know what the current market price is and how much water is available for trade,” the interim report said.

Unlike the stock and housing markets, Dr Loch said the water market lacked transparent, robust and independent data.

“Water markets haven’t reached the same level of quality,” he said.

“We don’t have futures prices, we can’t differentiate between different type of trades, we don’t reliably prices assets, and we don’t have reliable supply, demand and inventory predictions.”

Water market data is collected by the Bureau of Meteorology and individual registers in each Basin state.

The ACCC’s interim report was critical of the many separate stores of water market data and their inaccessibility.

“Further investment is now required for trade approval authorities, the BOM and the legislative frameworks that empower them to ‘catch up’ with developments in water markets,” the interim report said.