The practice of water trading throughout the country has continued to grow, showing that seasonal conditions play very little role in the behaviour of the sector, a new National Water Commission (NWC) report has shown.

NWC Commissioner, Rob Freeman, said that the nation’s water market is continuing to mature.

“The 2011–12 annual water markets report demonstrates that irrigators are relying on Australia’s maturing water market in wet years as well as in drought times,” Mr Freeman said.

“In a second consecutive year of well-above average rainfall in eastern Australia, growth in both the allocation and entitlement volumes traded has shown that even when it is wet, irrigators are still seeking to buy and sell water.”

The report found that allocation trade was up 23 per cent from 2493GL in 2010-11 to 4297GL in 2011-12.

“This indicates many irrigators now accept and use water trading as a normal business tool, not just as a reactive response to droughts’” said Mr Freeman.

Trade in water entitlements also increased, up by 19% from 1204 GL in 2010–11 to 1437 GL in 2011–12. This was due in part to environmental water purchases by the Australian Government, which made up 22% of the water entitlement market in the Murray–Darling Basin in 2011–12.

Although trading volumes rose across the board, prices for both entitlements and allocations fell, reflecting wetter conditions and more abundant allocations.

Water trading in Australia continues to be strongly concentrated in the Murray–Darling Basin, which accounted for 85% of entitlement trade and 98% of allocation trade.

The full report can be found here