Since late October the temporary water market has sky-rocketed to above $1000 per megalitre in several zones, but there is an unexpected region topping the charts.
While there have been a few trades above $1000/ML below the Barmah Choke on the NSW and Victorian Murray this year, prices have reached a staggering $1235/ML on the Macquarie.
Water market consultant with Marsden Jacob, Simo Tervonen, said the situation in the Northern Rivers was dire.
"The NSW Border Rivers, Macquarie, Lachlan and Namoi's access to carry-over has been restricted and some people have no access to surface water at all, even though they have water in their accounts," Simo Tervonen said.
"In the Macquarie there's some industrial activity, mining, so they have a high capacity to pay, but it's not just them driving the market, there's also irrigators, although they would be mostly relying on groundwater this year if they have access to it."
Mr Tervonen said the Lachlan was trading at about $500/ML, well below Macquarie but a near-historic high for the catchment, which usually sees water sold for well below $200/ML.
He said it was difficult to make comments on the markets for the Border Rivers, Namoi and Gwydir as such low amounts of water were being traded.
Prices haven't yet reached Millennium Drought peak
The prices, although extraordinary, are not the highest ever seen, with water trading for up to $1500/ML during the Millennium Drought.
Fellow Marsden Jacob consultant, Rod Carr said late 2007 to early 2008 was the peak in the Millennium Drought.
"Prices in the Victoria Murray Below Choke and the Goulburn peaked at $1400-$1500 per megalitre, but it was only a small number of trades," Mr Carr said.
He said the peak only lasted a few weeks before a dramatic drop.
"We had a rain event and that really took the heat out of the market at that point of time," Mr Carr said.
"The average prices came back to the $300-$400 level and there was further allocation announced."
Mr Carr said he thought a similar fall would only be possible this season if there were significant and consistent rain events.
"It will rain again, it's just when and will it be in time for this season?" Mr Carr said.
Predicted to rise throughout summer
Mr Tervonen said it was more likely that prices would continue to rise.
"Historically speaking prices tend to peak in summer months, when irrigators need more water," he said.
"It's unlikely there wouldn't be mid-season demand this year, I can't see it being an exception for permanent plantings."
Mr Carr said it was the permanent plantations that would continue to purchase water despite high prices in the Southern Basins.
"Millennium drought evidence shows that the people paying for temporary water at its peak were often trying to keep a tree or vine alive," Mr Carr said.
"If you deprived a tree or vine of too much water it might not recover so they attempted to maintain viability.
"I think that same situation may emerge again for some but hopefully a lot of growers have learnt from the last drought, what can you do, how to maintain viability with the least amount of water."
