2025 Ricardo Water Markets Report

Entitlement type	No. traded	Volume traded (ML)	Estimated turnover value (million)	Estimated turnover (%)	Average annual gross return (%)
Vic 1A Greater Goulburn HRWS	705	38,766	$168	5%	2.6%
Vic 1A Greater Goulburn LRWS	357	21,015	$20	5%	No allocation
Vic 6 Murray (Dart to Barmah) HRWS	169	8,238	$35	4%	2.9%
Vic 6 Murray (Dart to Barmah) LRWS	109	5,601	$5	5%	No allocation
Vic 7 Murray (Barmah to SA) HRWS	634	21,173	$149	3%	2.5%
Vic 7 Murray (Barmah to SA) LRWS	152	10,356	$22	6%	No allocation
NSW Murray 10 GS	26	26,834	$51	2.9%	6.6%
NSW Murray 10 HS	0	0	$0	0%	1.5%
NSW Murray 11 GS	64	9,863	$30	3.9%	5.9%
NSW Murray 11 HS	54	7,252	$65	5%	1.8%
NSW Murrumbidgee GS	49	32,514	$99	2%	2.4%
NSW Murrumbidgee HS	26	6,435	$56	2%	1.9%
SA Murray HS	181	9,737	$69	2%	2.6%
Total	2,526	197,783	$771	3%

 

Source: Ricardo, 2025. Based on Victorian, New South Wales and South Australian water registers, 2025.

Note: Volume weighted average prices were generated using data reported on the state-based water registers; market values may differ. An exception was NSW Murray 10 HS whose VWAP is based on     Ricardo’s estimated average monthly Fair Market Unit Value in 2024-25. While there were no recorded trades in 2024-25, the gross return is based on our estimated Fair Market Unit Value.

 

4.5. Groundwater markets

Groundwater markets start picking up.

Groundwater markets saw increased activity in 2024‑25, the first annual increase since 2019-20. Drier conditions in 2024-25 led irrigators to mitigate water security risks. Groundwater offers a more secure water supply than surface water but usually has higher pumping costs.

Eleven priced entitlement trades totalling 3.3 GL were recorded in major groundwater zones (Lower Lachlan, Lower Murrumbidgee and Lower Murray), up from seven trades (1.8 GL) in 2023-24. This is still well below the peak of 7.5 GL of priced trades in 2021‑22.

Similarly, the volume traded or transferred (including $0 trades) in 2024-25 was 4.5 GL, up from 2.7 GL in 2023‑24, but below the peak of 11.6 GL in 2019‑20.

Between 2023‑24 and 2024‑25, annual VWAPs for:

• Lower Murrumbidgee Deep Groundwater decreased by 9% from $4,062 per ML to $3,706 per ML (although this is an aggregate of three zones)
• Lower Murray Groundwater decreased by 4% from $2,456 per ML to $2,350 per ML
• Lower Lachlan Groundwater saw the first recorded trades since April 2022, with an annual VWAP of $3,700 per ML.

 

Figure 18. Individual water entitlement trades (priced trades only, $0 trades excluded) and volumes (bubble size), major groundwater entitlement markets, 2012-13 to 2024-25.

Source: Ricardo, 2025. Based on New South Wales Water Register, 2025.

Note: NSW Lower Murrumbidgee Deep Groundwater Source Aquifer is an aggregate of the three zones in this aquifer. This reflects the way in which trades for these entitlements are recorded on the NSW Water Register.

 

4.6. Northern MDB markets

Northern Basin market activity increasing – driven by Commonwealth buybacks.

Northern Basin market activity rose for the second year in a row in 2024-25, up 12% from 2023-24 to 11.3 GL. The key driver was Commonwealth water recovery towards Basin Plan targets. Due to limited connectivity and trades usually associated with land transfers, trade activity for northern Basin entitlements is generally lower than that of their southern Basin counterparts. Standalone entitlement trades in major northern MDB markets are shown in Figure 19.

With 46 trades processed in major northern markets in 2024-25, understanding current market prices via VWAPs can be challenging. However, key movements in 2024-25 included:

• NSW Macquarie and Cudgegong GS increased 81% from $2,216 per ML to $4,019 per ML. However the 2023-24 VWAP was driven by a one-off $1,500 trade.
• NSW Lower Namoi GS increased 27% from $9,703 per ML to $12,326 per ML, (total volume traded at 1.8 GL). Ricardo analysis indicates Commonwealth water purchases continue inflating this price, with 1.5 GL of trade recorded at $11,622 per ML.
• NSW Lachlan GS was an exception, down 14% from $1,952 per ML to $1,682 per ML. However, the 2023-24 VWAP was inflated by recorded Commonwealth purchases based on Ricardo’s analysis

 

Figure 19 Individual water entitlement trades (priced trades only, $0 trades excluded) and volumes (bubble size) for active northern Murray-Darling Basin entitlement markets, 2013-14 to 2024-25.

Source: Ricardo, 2025. Based on New South Wales Water Register, 2025.

Note: Data based on 71Q licence-to-licence transfers, which tend to be unrelated to land transfers.

Note: No priced trades were recorded on the NSW Water Register for: 1) NSW Lower Lachlan GS in 2021-22 and 2022-23; and 2) for NSW Gwydir GS in 2021-22 and 2022-23. 

Note: Six NSW Namoi GS entitlement trades were recorded in 2023-24 at $6,350 (39 ML), $9,913 (945 ML), $9,913 (43.5 ML), $8,500 (33 ML), $8,500 (68 ML) and $9,913 (213 ML) but due to axis constraints, are not included.

Note: Eight NSW Namoi GS entitlements trades were recorded in 2024-25 at $13,000 (276 ML, 1,215 ML), $6,000 (3 ML), $8,250 (100 ML), $8,100 (21.5 ML), $10,000 (62 ML and 138 ML) and $8,500 (5 ML). Due to axis constraints there are not included.

 

5.0. Policy & Management

 

5.1. The year in water policy and management

The 2024-25 water year marked the push towards delivering the Basin Plan, with the release of tenders for the recovery towards the 450 GL additional water for the environment, and closure of the remaining Bridging the Gap surface water target.

 

The Restoring Our Rivers Act 2023 extended deadlines and lifted the purchase cap

The Restoring Our Rivers Act 2023 (ROR Act) introduced legislative changes that enable the full implementation of the Basin Plan, including the extension of delivery timelines and the removal of the 1,500 GL cap on Commonwealth water purchases. This has enabled the government to enter the market and initiate the tender process for the full recovery of the Basin Plan.

Legislative amendments extended timeframes for delivery on the Plan included:

• SDLAM supply projects have been extended to 31 December 2026.
• Additional time for new SDLAM projects to be proposed by June 2025.
• Delivery of the Basin Plan, including 450 GL additional water by 31 December 2027.

 

Recovery Targets

In July 2024, the Government released their Trading Strategy, Framework to deliver the Basin Plan in Full, and Addendum to the Basin Plan Regulation Impact Statement, to enable delivery of the Restoring Our Rivers Act recovery targets.

There are three key recovery targets under the Basin Plan;

Bridging the Gap 

A Basin-wide target for purchases to recover water to ‘bridge the gap’ between historic water overuse and a sustainable level of use. The 2018 Basin Plan Amendment reduced this target from 2,750 GL/y to 2,075 GL/y.

The Bridging the Gap target is broken down into local targets, known as Sustainable Diversion Limit (SDL) resource units, with 29 surface water and 80 groundwater across targets in the Murray-Darling Basin.

Each SDL resource unit has a local target and a shared target, which contribute towards the full 2,075 GL/y recovery target. The Commonwealth is in the process of balancing these targets and ensuring full recovery is met.

450 GL additional water for the environment

Focused on the southern Basin, the 450 GL/y additional environmental water target seeks to achieve enhanced environmental outcomes while minimising socio-economic impacts. This was an in-principle agreement as part of the 2018 amendments to the Basin Plan, with the ROR Act 2023 expanding its scope of recovery methods to include voluntary water purchases, infrastructure projects, and changes to water management rules.

After reconciliation of the Bridging the Gap recovery volumes, 79.6 GL of over-recovered water has been credited towards the target as of March 2025.

Sustainable Diversion Limit Adjustment Mechanism (SDLAM) target

Also focused on the southern Basin, SDLAM projects aim to achieve equivalent environmental outcomes while using less water, thereby reducing the amount of water taken from the consumptive pool for recovery. This is to be achieved through supply and constraint projects throughout NSW, Vic, and SA.

The 2023-24 MDBA Annual Report Card notes that as of June 2024, 13 projects are complete and operational, 10 are likely to be delivered in full by 31 December 2026, and four likely to be delivered in part by 31 December 2026. The remaining eight are unlikely to be delivered by the 2026 deadline.

The 2023 MDBA Assurance Report estimates a shortfall of between 190‑314 GL/y against the SDLAM target, which is to be determined after reconciliation. The report indicates that the higher end of the range is more likely. The Commonwealth is obligated to recover the full SDLAM target under Basin Plan legislation, meaning that once the final shortfall has been reconciled, there is potential for the need to open new tender programs for water purchases or for the Commonwealth to enact a mandatory SDL adjustment.

 

2024-25 Tender Programs

In 2024, the Commonwealth launched several Expression of Interest (EOI) and tender programs to meet the recovery targets ahead of the revised delivery dates. 

 

450 GL/y Tender Outcomes

The Commonwealth announced that as of July 2025, they have recovered 157.3 GL towards the 450 GL target, with another 129.3 GL planned to be recovered by the end of 2025. This plan includes 7.8 GL of water savings infrastructure projects, 19.9 GL accepted offers through Selected Catchments tender that has not yet been contracted, and up at an additional 101.6 GL through current ongoing voluntary water purchase activities.

Since the opening of the Restoring Our Rivers Selected Catchments tender – a 70 GL tender - Ricardo has identified that the Commonwealth has signed 137 contracts with 103 unique suppliers, with the contract values totalling $123.3 million.

Ricardo has been able to match 74% of these contracts to the corresponding 102 trades on state water registers. These trades total over 24.4 GL, with a total contract value of over $88 million across the four catchments. It can be noted that there have been no matched trades in the Ovens catchment, nor have the Commonwealth reported any accepted offers or contracts.

 Table 9. Identified trades from the 70 GL/y tender

Zone	Total Volume (ML)	Total Contract $	VWAP
NSW Murray 10 GS	2,040	$4,633,632	$2,271
NSW Murray 11 GS	5,758	$18,804,827	$3,266
NSW Murray 11 HS	1,882	$20,090,865	$10,675
NSW Murrumbidgee GS	10,014	$31,985,147	$3,194
NSW Murrumbidgee Supplementary Water	1,115	$1,279,602	$1,148
SA Murray HS**	385	$2,768,900	$7,192
Vic 6 Murray (Dart to Barmah) HRWS	336	$1,522,685	$4,529
Vic 6 Murray (Dart to Barmah) LRWS	1,583	$1,854,473	$1,172
Vic 7 Murray (Barmah to SA) HRWS	350	$2,605,012	$7,449
Vic 7 Murray (Barmah to SA) LRWS	1,025	$2,529,480	$2,468
Total	24,487	$88,074,623

 

Figure 20. Share of volume purchased by state in the 70GL/y tender.

Source: Ricardo 2025. Based on Victorian, New South Wales, and South Australian water registers, 2025.

 

Figure 21. Share of volume purchased by state in the 70GL/y tender.

Source: Ricardo 2025. Based on Victorian, New South Wales, and South Australian water registers, 2025.

Figure 20 shows that of the total EOI available in the four catchments where purchases have been made for the 70 GL/y tender, the tender entitlements currently only account for 0.3%. However, the total share of held environmental water (HEW) within these systems accounts for 33% of total EOI. 

With the EOI 1 and EOI 2 still in progress, and both focused on the southern Murray Darling Basin, to achieve the full 450 GL target, the proportion of HEW in these catchments is highly likely to increase.

Figure 21 highlights the proportional success of the 70 GL/y tender in purchasing entitlements in NSW compared to Vic and SA. NSW accounts for 85% of identified purchases from the tender, amounting to 20,718 ML, compared to Vic with 13% for 3,323 ML, and SA with only 2% for 385 ML.

Proportionally, the majority of the entitlements purchased have been GS / LRWS, accounting for 85% of purchased entitlements, with HS / HRWS accounting for 5%, and supplementary water accounting for the remaining 12%.

This could be indicative of the types of entitlements that have been offered to the Commonwealth through the tender, or that the Value for Money framework rates these entitlements higher, making them more likely to be purchased.

With a remaining target of 292.7 GL/y (as at 31 March 2025, as officially documented) towards the 450 GL/y target, the Commonwealth is likely to continue these purchase programs in line with the Portfolio Budget Statement 2025-26. This outlines the planned performance to procure 100 GL each financial year, until the total is met by 31 December 2027, to be achieved through both the purchase programs and the Resilient Rivers Program.

Beyond the 70 GL/y tender, the only successful contract reported from EOI 2 (large parcels) was a $121.3 million sale from Duxton Capital. Duxton reported this sale to the market, stating that it consisted of:

• 3,101 ML HS entitlements in NSW.
• 13,114 ML HRWS in Vic.
• 14,419 ML GS in NSW.

No further trades have been lodged on AusTender for the EOI 1 or 2 processes.

 

Future Tender Programs

While the Commonwealth have not yet announced any future tenders, their trading strategy and the Budget papers suggest they are seeking to acquire 100 GL/y over the forward estimates until the full 450 GL has been recovered.

Beyond the 450 GL, there remains a possibility that the government will initiate a tender process to address the 605 GL SDLAM shortfall once reconciliation has been finalised and the shortfall confirmed.

The re-election of the Commonwealth Labor Government means that the current Commonwealth water policy is unlikely to change substantively; however, with a change of Minister, there may be some variation. Nevertheless, the forecast budget deficits may impact funding for future water purchase programs. While the government remains committed to delivering the Basin Plan in full, constrained fiscal conditions may necessitate a more pragmatic and cost-effective approach.

 

AWEP Purchases

The Aboriginal Water Entitlements Program (AWEP) is a $100 million initiative aimed at purchasing water entitlements for First Nations peoples in the Murray–Darling Basin, supporting cultural, social, economic, spiritual, and environmental outcomes.

Managed by DCCEEW, AWEP launched its Water Market Intermediary–led limited tender on 11 November 2025 and its Market–led limited tender on 9  July 2025. Both tenders have been extended until 31 December 2025.

As of 9 July 2025, AWEP has completed purchases totalling $1.2 million, securing 290 ML of water entitlements.

Market participants have noted the difference in purchasing strategies between AWEP and other Commonwealth water purchase programs, where AWEP is adopting a more commercial approach to negotiations. Importantly, entitlements acquired through AWEP remain within the consumptive pool.

In collaboration with the Advisory Group, AWEP is also exploring how temporary water allocations might be used and traded, while enduring water holding arrangements are being developed.

DCCEEW is currently seeking surface water entitlements in 12 catchments across the Murray–Darling Basin, in accordance with its Strategic Purchasing Framework.

Table 10. AWEP Water Purchases as of 9 July 2025*

 

1 July	Water reforms start taking place from the Restoring Our Rivers Act – data standards and water market information obligations
4 July	Minister for Water and DCCEEW announce the first tender for water purchases for the 450 GL recovery target, and release their Trading Strategy, Addendum to the Regulation Impact Statement
8 July	Northern Basin Connectivity Expert Panel Final Report released
15 July	First tender for the 450 GL water purchase strategy opens - 70 GL. SDL Compliance Statement released.
5 July	DEECA release VWR post trade opening report – Barmah Choke and Goulburn-Murray
8 July	Restoring Our Rivers selected catchment open tender published – 70GL/y
August	DCCEEW releases their Policy Position Paper for Water Markets Intermediaries Codes and Statutory Trust Accounting Framework. IGWC releases Controls Supporting Compliance with the Basin Plan.
20 August	IGWC releases their SDL Compliance Statement 2022-23
20 August	Basin Plan Report Card released
9 September	Mandatory climate reporting: Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 released
11 September	Restoring Our Rivers selected catchment open tender closed
18 September	Bridging the Gap 2024 strategic water purchases open tender published
30 September	EOI 1 and EOI 2 water purchases opened
1 October	DEECA releases their Broker Compliance Report
15 October	Goulburn – Murray trade opening was delayed due to a technical issue with the Victorian Water Register
31 October	DEECA releases their annual report 2023-24
November	AWEP Intermediaries Led tender opens
11 November	Goulburn-Murray post-trade report released
13 November	Bridging the Gap 2024 strategic water purchases open tender closed
14 November	Rescheduled Goulburn – Murray trade opening
27 November	EOI 1 and EOI 2 water purchases closed
18 December	MDBA Constraints Relaxation Implementation Roadmap published
10 December	Draft National Water Agreement document published
20 December	Strategy to improve the health of the Upper Murrumbidgee published
15 January	VWR releases trade transparency data report
22 January	Commonwealth Future Drought Fund Investment Strategy released
11 February	First Nations Water Strategy 2025-30 published
20 February	Tropical Cycle Alfred reported by BoM
25 February	Restoring Our Rivers Trading Strategy update released
March	DCCEEW Releases Water Markets Intermediaries Trust Accounting Exceptions and Code Exemptions consultation paper. A large algal bloom is starting to affect the SA coastline.
10 March	AWEP Market Led Purchasing tender opens
25 March	Commonwealth Budget released
26 March	Vic and NSW announce joint protocol for Barmah Choke opening
28 March	Federal election announced for 3 May 2025
14 April	River Murray Flood Report released by SA Government
May	Lake Eyre received the most significant floodwaters in 15 years
3 May	Federal election held – Labor re-elected
12 May	MDBA Basin Plan Report Card published
15 May	Duxton Water announces $121 million water entitlement sale to the Commonwealth
19 May	Murray Watt announced as the new Minister for Environment and Water
June	Water Amendment (Water Markets Intermediaries Code and Trust Accounting Framework) Regulation 2025 overview released
5 June	QLD Government directs SunWater to start Paradise Dam works
15 June	MDBA Basin Wide Environmental Watering Strategy published
25 June	Bridging the Gap strategic purchase of groundwater rights – northern Basin tender published
30 June	AWEP market-led tender closes
1 July	Water markets Intermediaries Code comes into effect – phase 1

 Figure 22. Timeline of Murray-Darling Basin water policy events 2024-25.

5.2. Summary of key water policy events

Effective from 1 July 2025, the new Water Markets Intermediaries Code and associated statutory trust accounting requirements come into force, aiming to enhance transparency and integrity in Australian water markets.

The mandatory code obliges intermediaries to operate in good faith, prioritise client interests, manage conflicts of interest, and provide comprehensive information to clients. 

Crucially, any intermediary receiving client money must establish and maintain a dedicated water market trust account, adhering to strict rules for handling funds, maintaining detailed client ledgers from 1 October 2025, and undergoing annual audits by an independent auditor. These changes are enforced by the ACCC, and seek to enhance protection, standardise practices, and build greater confidence in water markets.

 

Restoring Our Rivers Program Update

Under the Restoring Our Rivers Act, the Commonwealth has committed $494 million over four years, from 2023-24, to improve water delivery infrastructure. The funding supports the Resilient Rivers Program, which contributes to the 450 GL of environmental water by improving water savings.

Applications opened in January 2024, with ten projects already approved, including the recent Victorian-led Broken Reconfiguration Project. This project, approved in June with $132.1 million to advance its business case and associated costs, commenced with a feasibility study in 2023. 

Implications for water market participants: Water recovered through successful Resilient Rivers programs will reduce the amount of water needed to be purchased by the Commonwealth. Programs will enhance the delivery infrastructure and yield beneficial environmental outcomes for water sources.

 

Updates to Barmah Choke Opening Processes

WaterNSW and DEECA have updated the protocol for managing applications for the July 2025 Barmah Choke opening, a new approach that will also apply to Goulburn to Murray trade openings in 2025. 

This update aims to make the process more equitable and efficient, particularly in response to consistently high demand during trade events, while also reducing the administrative burden. A key change is the shift from a "first come, first served" approach to a "submission window", with eligible applications from both NSW and Victoria being combined and randomised to ensure fair assessment, all overseen by an independent observer.

Implications for water market participants: Participants engaging in trade opening must ensure they are informed of the new processes ahead of time to access trade opportunities.

 

2025-26 Budget

The 2025-26 Budget focused on exercising spending restraints to minimise the forecast deficit, reflected in the limited measures, especially with regard to water policy.

This Budget only saw one measure relating to the delivery of water outcomes, which was not for publication due to commercial sensitivities, however, it allocated funding towards additional voluntary water purchases ahead of the 31 December 2027 deadline.

The DCCEEW Portfolio Budget Statement notes the recovery of 450 GL of water to be on track for their announced recovery of 100 GL per year, until the deadline of 31 December 2027, upon which the full 450 GL is to be recovered.

The National Water Grid Fund (NWGF) was only allocated $87.7 million in new projects. Which comes after the 2024-25 Budget deferral of $592.3 million over 5 years for the same projects, pending business cases and planning works.

Implications for water market participants: Fiscal repair and cost of living relief was at the forefront of this year's budget, leaving little room for spending on new policy measures. While existing programs will be continuing, the Government is signalling a move to a more fiscally conservative economy.

 

Water Markets Information – Pre-Trade Data Obligations

The Commonwealth has released its final policy position paper on Water Markets Information Pre-Trade Data Obligations, aiming to improve transparency, integrity, and accountability in water markets, and align with recommendations from the 2021 ACCC Inquiry and 2022 Reform Roadmap.

These new obligations come into effect on 1 July 2026 and require data providers to submit water market information to the BoM for regulatory purposes. This enables the publication of data sets on a centralised hub while granting the ACCC and IGWC full access for enforcement.

Specifically, water market intermediaries with line-matching platforms and Basin State authorities to provide allocation trade offers from 1 July 2026, with all intermediaries required by 1 July 2027. Non-compliance will incur financial penalties, with pre-trade data publication by the BoM slated for 1 July 2027.

Implications for water market participants: New obligations will start to be implemented from 1 July 2026, non-compliance with the new regulations will result in financial penalties.

 

2025 Loddon Rationing Event

On 5 March 2025, GMW enacted the first rationing event in the Loddon Valley Irrigation Area since the introduction of the Place of Take Framework in November 2023. The event was sparked by high demand during the irrigation season, driven by strong water availability following a very dry winter and spring, combined with more recent hot conditions.

The event meant irrigations would be limited to only taking a percentage of their delivery share to ensure there is available capacity in the channel for supply.

During the rationing cycle, the amount allowed to be taken is based on the delivery shares attached to the service point. The expected level of demand during a rationing cycle will determine the percentage of rationing to be used. This is the percentage of a delivery share that irrigators are entitled to over a rationing cycle, which typically lasts 10 days but may vary.

The rationing event ended on 28 April 2025, after heavy rainfall across the area.

Implications for water market participants: Water users in the Loddon Valley Irrigation Area should stay informed about future rationing events. Lower Murray water users should take note of the impact of this rationing event in the Loddon to see what lessons can be learnt.

MDBA Constraints Relaxation Roadmap

The MDBA released their Constraints Relaxation Implementation Roadmap to assist Basin States and the Commonwealth with the delivery of water for the environment. The Roadmap builds upon the original Constraints Management Strategy 2013, which also aimed to advise governments on the constraints affecting environmental water delivery, through 12 key findings.

The purpose of constraint relaxation measures is to improve environmental outcomes and management by reducing barriers to environmental flows, thereby allowing increased flows between rivers and floodplains. This enables environmental outcomes to be achieved without the need for further Commonwealth water purchases.

Implications for water market participants: The Roadmap has 12 findings that aim to guide governments and communities to enable relaxation, and with the 31 December 2026 SDLAM deadline approaching, it is expected that these measures continue to be rolled out in the near future, in order for the Basin Plan to be delivered in full.

 

6.0. Outlook

 

6.1. Climate and rainfall outlook

Above average rainfall conditions forecast for the start of 2025-26, but there is uncertainty.

Rainfall outlooks by the Bureau of Meteorology for 2025-26 indicate wetter conditions are expected throughout the MDB to the end of 2025. This is consistent with International Meteorological Agencies (5 of 8 models).

With 2025-26 now underway, rainfall has been average to above average so far in the southern Basin (Figure 21). The current three-month rainfall outlook indicates at least a 60% chance of rainfall exceeding the median across the MDB (Figure 22).

BoM models suggest a neutral El Niño–Southern Oscillation (ENSO) until December. Similarly, these models expect a neutral Indian Ocean Dipole (IOD) in the coming months, possibly briefly being negative between September and October. A negative IOD usually drives above average rainfall in southern Australia.

A key driver for future allocations to entitlements in 2025-26 will be the distribution of rainfall. Rainfall in the headwater catchments will be critical.

 

Figure 23. One-month rainfall deciles, Murray-Darling Basin, July 2025 (issued 31 July 2025).

Source: Ricardo, 2025. Based on Bureau of Meteorology, 2025.

 

Figure 24. August-October rainfall outlook (issued 31 July 2025).

Source: Ricardo, 2025. Based on Bureau of Meteorology, 2025.

 

6.2. Allocation market outlook

Lower opening allocations than previous years.

Despite dry conditions and lower storage volumes, most high-security entitlements in the southern NSW and SA MDB enjoyed high opening allocations, equal to those in 2024-25. Allocations to general security and Victorian high reliability entitlements opened lower than 2024-25:

• Opening allocations were 31% for Vic Goulburn HRWS and 39% for Vic Murray HRWS. These are the lowest opening allocations since the 2019-20 and 2021-22 fiscal years, respectively.
• Opening allocations were 1% for NSW Murray GS (lowest since 2020-21) and 4% for NSW Murrumbidgee GS (lowest since 2019-20).
• SA Murray HS opened at 100% for the fifth consecutive year.

This means that the opening water availability decreased from 2024-25. Water available on 1 July 2025 was estimated at 1,513 GL, 44% lower than 2024-25 (estimated 2,722 GL).

Overall carryover volumes into 2025-26 were lower than in previous years (~2,100 GL) and are below the peak of 2023-24 (~3,200 GL). This is driven by dry conditions and reduced end of season water availability. The total carryover volume is still comparable to the 10-year average (~2,300 GL).

With a reduced risk of spill in the Victorian Murray and Goulburn (43% and 25% respectively), it's likely volumes currently held in Victorian spillable accounts will be made available later this year.

 

Figure 25. Opening allocations made to major southern Murray-Darling Basin entitlements, 2022-23 to 2025-26.

Source: Ricardo, 2025. New South Wales Department of Planning, Industry and Environment, 2025; Northern Victoria Resource Manager, 2025; South Australian Department for Environment and Water, 2025.

Note: In-text estimates of the volume of water allocated and carryover volumes include zones Vic 1A Greater Goulburn, Vic 6 Murray, Vic 7 Murray, NSW Murray and NSW Murrumbidgee. See Notes and Figure Notes sections for further details. 

 

Reduced confidence in peak summer irrigation water availability.

In early 2025-26, allocation prices in the lower Murray and Murrumbidgee are around $260, $190 in the Goulburn and $230 in the upper Murray.

Reduced water in storage and lower carryover volumes mean irrigators should expect more volatile water availability and higher allocation prices. If at least average inflows eventuate, consumptive water availability could reach around 4,664 GL by the start of the peak irrigation season.

This year’s forecast is lower than last year’s available volume (about 5,600 GL) by early December. This is driven by lower forecast allocations to Murray general security entitlements compared to last year (32% compared to 47% allocated last year). Improved allocations will require substantially improved inflows to Murray headwater storages.
Ricardo’s view is that allocation prices in the next few months will be mainly driven by inflows to major storages.

BoM’s current climatic outlook (July 2025) is closer to average rainfall conditions over the storages. However, a shift to drier conditions could lead to even higher prices, with general security entitlements forecast to receive almost no additional water by the summer period.

 

 

6.3. Entitlement market outlook

The outlook for entitlement prices remains strong in the short term. The Commonwealth has not indicated that there will be a shift in water policy under new Minister Murray Watt. It remains likely the Commonwealth will shortly call for tenders for those who responded to Expression of Interest 1, with additional confidential negotiations with large water holders under Expression of Interest 2 likely to be conducted shortly too. This is likely to underpin entitlement prices and reduce supply to the broader non-Commonwealth entitlement market.

Challenging market conditions persist for some irrigators, especially winegrape growers and dairy farmers, which means the two-speed entitlement market noted in 2024-25 is likely to continue. Countering this trend is the limited entitlement supply available to the broader market. This may lead to increased competition between investors and corporates, including some who are buying back in after selling to the Commonwealth, which can put upward pressure on entitlement prices. 

High reliability and high security entitlement markets

As noted over the past two seasons, winegrape growers and dairy farmers have been selling entitlements to support their broader business operations. Whilst export market conditions (China) have improved, there is still a significant oversupply of red wine grapes. Rising allocation prices, lower milk prices, lack of succession planning and consolidation of dairy processors are proving challenging for many dairy farmers. In many instances, sales from these market sectors have been smaller parcels at prices below the prevailing market; this is expected to continue in 2025-26. This would most likely affect the Victorian Goulburn HRWS market.

Trade tariffs announced by the US government have been a source of confusion for many; however, Australian agricultural producers seem well placed relative to their overseas competitors. Almond prices have improved, and exchange rates have moved in favour of exporters, improving the outlook for investment in Australian agriculture.

Based on data Ricardo has collated, 33% of all purchases towards the 450 GL target have been high reliability or high security entitlements, 90% of which were from Duxton Water’s sale to the government. Just 5% of purchases under the 70 GL tender have been high reliability or high security. However, market activity remains high for these entitlements, with recent sales of SA Murray HS in South Australia exceeding prices paid by the Commonwealth. Recent sales for NSW Murray and Murrumbidgee HS, along with Vic 7 Murray HRWS, have all exceeded entitlement market prices in 2024-25.

Some of these buyers are replacing entitlements that were sold to the Commonwealth for significantly higher prices; thus, they are less price-sensitive than other market participants. This behaviour is expected to continue while the Commonwealth remains an active market participant. Others are also looking to secure their water supplies due to ongoing concerns about future droughts and climate change.

Low reliability and general security entitlement markets

Demand for low reliability entitlements has remained relatively strong, reflecting the importance of securing carryover to manage water security risks. The exception has been in the Goulburn. This is likely due to changes to administrative processes for the Goulburn IVT, resulting in the implementation of a randomised selection process. While most market participants have broadly welcomed this as a more equitable approach, the changes have led to a softening of demand for Goulburn low reliability entitlements as participants hold off on purchases while evaluating their water strategies. Prices for Murray low reliability entitlements, especially those below the Barmah Choke, are likely to remain strong, given that there is no need to navigate downstream trade restrictions in this region.

If dry conditions persist, demand for general security entitlements may experience some softening. Prices have remained relatively stable over the past year, except for Commonwealth transactions, which have been higher. We are likely to see additional volumes purchased by the Commonwealth, which means we can expect to see more of these higher priced trades on water registers.

 

6.4. Policy and regulatory influences

Delivery of the Basin Plan in full by 31 December 2027

At the time of writing, we are yet to hear much on water policy from new Minister, Murray Watt. DCCEEW released an update on voluntary water purchase programs at the beginning of July; however, it was unclear when a tender for EOI 1 would be opened. It suggested that the government was consulting with irrigation infrastructure operators (IIOs) and Basin State governments on the socio-economic impacts of recovery under EOI 1. Nevertheless, we expect that DCCEEW could call for offers in the first quarter of the new water year.

The statement from DCCEEW also mentioned EOI 2, stating that the process of engaging with large water holders is still ongoing and there may be multiple tenders staged throughout the remainder of this calendar year.

The 2023 Restoring Our Rivers Act extended the delivery timeframe and provided additional funding to progress delivery; however, there is still a significant amount of work to be done.

The extended timeframes for delivery on the Plan included the extension for SDLAM supply projects to 31 December 2026, and delivery of the Basin Plan, including 450 GL additional water by 31 December 2027.

As of 31 March 2025, the Commonwealth still has a significant amount of water to be recovered to deliver in full, these include:

• 450 GL additional environmental water - 292.7 GL remaining
• Bridging the Gap - 6.7 GL surface water and 3.2 GL groundwater remaining
• SDLAM projects - 190-314 GL shortfall after reconciliation

With the December 2026 deadline looming, and the Murray-Darling Basin suggesting that the SDLAM shortfall is likely to be at the higher end of the shortfall range, there is likely to be an increased focus on delivering these projects.

As the SDLAM recovery targets are legislated under the Basin Plan and must be delivered, the Commonwealth would seek to recover this water through additional tender programs, or through a mandatory SDL adjustment which would directly reduce the amount of water available for consumptive use.

If the Commonwealth were to enact the SDL adjustment, it would result in a reduction in allocations to entitlements, or a decrease in the volume of entitlements legally mandated by the Commonwealth. This would likely be a targeted approach in nominated regions and systems, where SDLAM projects have underperformed or the environmental benefit would be greatest. The outcome of the shortfall will not be determined until reconciliation has been concluded after 31 December 2026.

While the 605 GL SDLAM recovery is legislated under the Basin Plan, the recovery of the 450 GL additional environmental water is an in-principal agreement between Basin states and the Commonwealth. In its first term, the Albanese Government had pledged to recover the full 450 GL; however, there is no legislated requirement for this.

Basin Plan Review Updates and Progress

The Basin Plan Review is scheduled for release in late 2026 and will assess the effectiveness of the Basin Plan to date, as well as its progress in implementing the outlined objectives. It will also set out the direction of Murray-Darling Basin policy for the next decade. The review will focus specifically on environmental outcomes, First Nations involvement in water management, climate change risk assessments, and SDL outcomes.

The MDBA released the 2024 Basin Plan Early Insights Paper, which is used to inform the 2026 Basin Plan review. This has formed the basis for the roadmap to the Basin Plan Review, to help engage with stakeholder and provide input into key success indicators.  The report included key challenges, areas of focus, and emerging themes that will inform the 2026 Basin Plan Review.

The report found that full implementation of the Basin Plan remains critical to Australia’s water use in future climate scenarios and to ensure a sustainable balance of water use. The report found that while progress has been made, significant work remains and challenges persist, especially under future climate conditions.

Water market participants should stay up to date with future updates and take the opportunity to contribute to any consultation on the 2026 Basin Plan Review. 

 

References

Australian Broadcasting Corporation (2025). Kati Thanda-Lake Eyre set for most substantial water fill in at least 15 years. Available at https://www.abc.net.au/news/2025-04-12/floodwaters-kati-thanda-lake-eyre-water-fill-largest-lake/105157580 [Accessed 15/7/2025].

Australian Broadcasting Corporation (2025). South Australian drought sets low-rainfall records in farming areas. Available at https://www.abc.net.au/news/2025-06-10/south-australia-drought-sets-low-rainfall-records-farming-areas/105376286 [Accessed 15/7/2025].

MDBA (Murray-Darling Basin Authority) (2025). End of day Barmah Choke transactions data. Available at https://www.mdba.gov.au/managing-water/water-markets-trade/interstate-water-trade/barmah-choke-trade-balance [Accessed 15/7/2025].

Murray Irrigation Limited (2025). Daily sales data. Available at (current water year only) < https://www.murrayirrigation.com.au/live-daily-sales> [Accessed 28/6/2025].

NSW Government (2025). Interactive Combined Drought Indicator map and timeseries. Available at https://www.dpi.nsw.gov.au/climate_applications/interactive-drought-map [Accessed 15/7/2025].

Northern Victoria Resource Manager (NVRM) (2025). Outlook for the 2025/26 season. Available at <https://nvrm.net.au/outlooks/current-outlook > [Accessed 17/07/2025].

Victorian Water Register (2025). Trade opportunities each year between zones. Available at < https://www.waterregister.vic.gov.au/water-trading/market-insights/trade-opportunities> [Accessed 17/07/2025].
NSW Government (2025), Usage dashboard. Available at < https://water.dpie.nsw.gov.au/our-work/allocations-availability/water-accounting/usage-dashboard> [Accessed 15/7/2025].

SA Government (2025). Crop and pasture reports. Available at https://pir.sa.gov.au/primary_industry/grains/crop_and_pasture_reports [Accessed 10/7/2025].

 

About Australia's Water Markets

 

Background

In Australia, there are two distinct but related water markets: entitlement markets and allocation markets.

Entitlement markets enable the trading of water entitlements. Water entitlements are ongoing rights to receive an annual share of available water resources in a consumptive pool (e.g., a river system or catchment). They are analogous to a land property right, are generally secure and mortgageable in the same way, and have substantial value. Each catchment typically has a small number of entitlement ‘classes’, and generally all entitlements within a given class are homogenous.

Allocation markets enable the buying and selling of water allocations. Water allocations are the volumes of water allocated to water entitlement holders during the water year (1 July to 30 June). They are a physical good analogous to a commodity, and are extracted from water courses and applied as inputs to production or the environment. Based on the water availability and demand at a given time, the value of water allocations per unit varies (usually expressed in $ per megalitre (ML)).

There is no single national Australian water market. Rather, there are many individual markets determined by the hydrological characteristics of physical water systems. Where hydrological connectivity exists, such as in the southern Murray-Darling Basin, trade between markets or zones is possible.

ENTITLEMENT MARKETS

Purpose, use and operation

An entitlement specifies an annual volumetric share of available water resources in a specified catchment or system. Entitlement holders receive their share of the available water resources as water allocations. Allocations vary from year-to-year based on rainfall, inflows, water held in storage and other factors. The entitlement market enables trade in the ongoing right to receive these water allocations. Entitlements can be held by virtually any party in any location.

The entitlement market is largely used by irrigated agricultural producers, but is increasingly being used by investors, water utilities (including urban suppliers) and environmental water holders. These water market participants use the market to modify their long-term arrangements for facilitating production, or meeting environmental requirements, or urban demand.

State government agencies govern the operation of entitlement markets, including rules and regulations regarding how and where trade can occur. Depending on the jurisdiction, other agencies (such as land titles or property registration agencies) will be involved. Third parties (such as exchanges, brokers and conveyancers) often play a role in facilitating entitlement trade.

Key drivers of market outcomes

The value of water entitlements is largely determined by their reliability characteristics. Reliability characteristics differ across entitlement classes. Higher reliability entitlements provide larger volumes of water allocations over the long term, and more consistently provide water allocations each year than lower reliability entitlements.

Trade in entitlements is related to longer-term production decisions and the characteristics of different irrigated agricultural enterprises, including their tolerance for risk. Producers who may be expanding or contracting production drive market activity, as do market participants who hold large portfolios of entitlements such as investors or large agricultural enterprises. Purchases of water on behalf of the environment have also driven market activity in the past. 

ALLOCATION MARKETS

Purpose, use and operation

The allocation market provides the ability to trade physical water between parties for use, further trade, or carryover. Allocation trade can generally only occur between parties who are in trading zones that are hydrologically connected such that water can be delivered (or substituted by other water from a shared storage).

The water allocation market is mainly used by irrigated agricultural producers (including rice, dairy, horticulture, cotton and others), and environmental water managers. Irrigators use the market to sell water excess to requirements or buy additional water for use during dry periods or when temporarily expanding production. Environmental water holders may similarly buy or sell when they have short-term surpluses or deficits.

Similar to entitlement markets, state government regulators determine annual allocations based on entitlement characteristics (that determine priority and how much water is allocated to individuals), and market rules to manage issues such as connectivity between systems and transmission losses. State governments, either directly or via their water utilities, play a key role in facilitating allocation trade, including ensuring compliance with rules and regulations, and by approving and processing trades. Parties seeking to trade allocations may utilise intermediaries such as water exchanges and brokers.

Key drivers of market outcomes

The volume of water allocated to entitlement holders each year is a key driver of allocation market outcomes (including prices and volumes traded) because it strongly influences the total volume of water available for use or trade. When allocations are low, water is scarce and prices are high. The opposite is true when allocations are high. Allocation levels reflect broader water availability, including rainfall and inflows in relevant catchments, and volumes held in storages. Other key drivers in allocation markets include conditions in markets for irrigated agricultural products, and conditions in substitute input markets.

 

Notes

Please see the PDF copy for full notes section.

• Data sources
• State water register trade data and volume weighted average prices
• Data cleaning method
• Irrigation corporation trade data
• Carryover estimates
• Entitlement on issue data
• Rounding errors
• Ricardo Entitlement Index
• Table Notes
• Figure Notes