Big river means ……. small allocation – why?

15/09/2021

Murrumbidgee General Security Allocation Situation.

‘Our dams are full, and the river is running a banker. How come we’re not getting any allocation increases?’ This is the big question I’m hearing from irrigators right now.

Yes, our dams are almost full: Blowering is at 94.5% and Burrinjuck at 95.3% today, and the river is full; 24,517 ML flowing today at Darlington Point. So why do we only have 52% General Security allocation, with no increase since 15th August?

There are a number of reasons, and we’ll attempt to explain them here. As of today 15/9/21:

  • The total current usable resource (dams plus minimal inflows) = 2976 GL.
  • This 2976 GL is committed in the following way (source NSW DPIE):
  1. You’ll see that roughly, the bottom half of the circle (the colours) is pretty much committed to higher security uses.
  2. The top half (47%) of the circle in the two light blues is what is available for General Security allocation.
  3. That 47% of the available resource now equals 1400 GL.
  4. Of that 1400 GL, 415 GL is carryover water, average held is 22%.
  5. This means the average available water for GS licences (C/O plus allocation) is now 74%, not just the 52% allocated.
  6. But 1400 GL – 415 GL = 985 GL available to be allocated to users of General Security water.
  7. 985 GL represents 52% of the river’s total General Security entitlement holdings of about 1894 GL.
  8. So, you’ll see there is currently no space to hold further water to allocate.
  9. Added to this, those big river flows we’ve seen have given us supplementary or surplus flows for most of our usage this season. So, all the water that has been used hasn’t come off users’ allocations.

So, what has to happen before we see allocations increase?

A few things will help:

  • We start to use allocated water while the dams remain full. Once supplementary flows stop, any water used by irrigators will reduce the 985 GL currently set aside for us, thereby creating ‘space’ for further allocation increases.
  • Remember, in the next six weeks or so we should see a sizeable plant of annual summer crops, particularly cotton and rice. They’ll use a swag of water once they get going.
  • Other water uses (the bottom half of the circle) start to use some of their allocated volume as well, creating further space.
  • Wetter than average conditions continue in the catchment to keep the dams full and those increased in-flows are able to be captured.

DPIE conservatively predicts general security allocation increases, that even with average inflows we’re likely to see allocations in the 60% range in November and 65% in February. Also, remember that any carryover you hold (average is 22%) can be added to allocation numbers.

There is a really detailed explanation of all of the above (including the graphics and a comparison with last year) on the Department’s website, and its updated regularly: https://www.industry.nsw.gov.au/__data/assets/pdf_file/0009/462087/WAS-Murrumbidgee-20210915.pdf

What does this mean for temporary water pricing?

I feel very brave making predictions in this market, but the signs would say we’ll see reasonably stable pricing until allocation volumes start to increase, then they should ease slightly as water becomes more available later in the year. A range of things will impact this though:

  • continued wetter than average conditions, and therefore further supplementary flows,
  • how big an annual crop planting we see – cotton, rice, maize etc,
  • what summer water-use conditions are like,
  • what autumn conditions are like, and
  • what appetite there is in the 22/23 carryover market.

How can Aquire help?

If you have further questions about any of this, by all means give us a call.

But more critically, we’d like to understand your water situation in more depth, and what all the above means to your own situation. That way we can help you make more strategic decisions about your water plan, perhaps even considering multiple-year scenarios.

Your water broker shouldn’t just buy or sell water for you based on today’s market; they should understand the full situation before recommending any actions.

Aquire sure does business differently.

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