The Value Of Water And The Options If The Temporary Price Rockets

GRDC - Rob Rendell (‘Fellow’ with RM Consulting Group Bendigo)

Type: Research Paper
Knowledge level: Advanced

Farm Table says:

The authors of this paper note in the conclusion: “Over the long term there are strategic decisions around do I stay farming, do I expand land, purchase water or undertake infrastructure development. All of these require a good knowledge of cost of operating (tax returns and some simple data of water use are all you need) and your profit. Also need to factor in purchasing entitlement or temporary pricing. The table provided (Table 7) gives a good basis for these numbers”.   Please access the full paper via the link below if this research interests you.

The take home messages from this GRDC funded research are below. Please access the full paper via the link below for methodology, references, acknowledgements and discussion.

Take home messages from the paper include:

  • NSW General Security (GS) allocations determine water prices.
  • It is what you do in the low water price years that counts.
  • Determine your buy, sit and sell water price which is unique to your system.
  • Short term decisions based on finishing what you have started, seasonal decisions based upon gross margin comparison with selling/buying water, and strategic decisions about infrastructure development and water ownership are based on longer term farm financial performance.

2018 - Australia - GRDC - Rob Rendell (‘Fellow’ with RM Consulting Group Bendigo)
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