The combined effects of increased water trading and farmers adopting practices to better utilise available water, have assisted irrigators in the southern Murray-Darling Basin to deal with historically low water allocations during the 2007-08 irrigation season, a new ABARE report has documented.

The report, Dealing with irrigation drought: the role of water trading in adapting to water shortages in 2007-08 in the southern Murray-Darling Basin, was released today by ABARE.

Overall, irrigators reported that their experiences with water trading had been positive, with most trades generally processed within a week or so.

However, some irrigators reported delays in processing interstate trades.

“All irrigators who were interviewed indicated water trading had a positive influence in the management of their businesses by providing greater flexibility to manage water requirements in times of water shortage,” ABARE’s executive director, Phillip Glyde, says.

Water markets have allowed buyers to reduce the impact of drought on farm production, through the purchase of additional water, and sellers to gain an interim income during times of low allocations that were inadequate to produce a viable crop.

The volume of allocations traded interstate increased from around 70 gigalitres in 2004-05 to 235 gigalitres in 2007-08.

“Trade into South Australia accounted for 63 per cent of total interstate trade," he says.

"The bulk of the water trades were temporary trades in water allocations, where the price ranged from around $200 to $1200 per megalitre across trading zones, in 2007-08.

"The net benefit of water trade into South Australia in 2007-08 was estimated to be $35 million.”

The report includes analyses of water trading data for the 2007-08 irrigation season and case studies of 10 irrigators across the southern basin who participated in water trading in that year.

The ABARE study was commissioned by the Department of the Environment, Water, Heritage and the Arts (DEWHA).