Drought and climate change are driving high water prices in the Murray-Darling Basin

Water prices in the southern Murray-Darling Basin have reached their highest levels since the worst of the Millennium drought more than a decade ago. These high water prices are causing much anxiety in the region, and have led the federal government to call on the Australian Competition and Consumer Commission to hold an inquiry into the water market. 

The receding waters of Lake Pamamaroo, in western
 NSW, in February 2019. Reduced water supply, due to
 lower rainfall and higher temperatures, has been the
 main cause of increasing water prices.

Inevitably, whenever an important good becomes more expensive – be it housing, electricity or water – there is a rush to identify potential causes and culprits. In the past few years high water prices have been blamed on foreign investors, corporate speculators, state government water-sharing rules, new almond plantings and the Murray-Darling Basin Plan.

While some of these factors have had an effect on the market, they are in many ways a distraction from the simpler truth: that high water prices have mostly been caused by a lack of rain.

Read the story from The Conversation by a Senior Economist with the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Neal Hughes - “Drought and climate change are driving high water prices in the Murray-Darling Basin.”