WATER prices are set to remain low across the southern Murray-Darling Basin in the coming financial year.
The Australian Bureau of Agricultural and Resource Economics and Sciences water market outlook found prices had fallen sharply in 2020-21 from the highs experienced in 2019-20.
ABARES senior economist Mihir Gupta said the recent La Nina event had led to the more favourable seasonal conditions and irrigation water supply.
"This has allowed allocations across all major catchments and securities in the southern MDB to reach levels above the historic average," Mr Gupta said.
"The average water price across the the southern Murray-Darling during 2020-21 is currently $154 per megalitre, much lower than the annual average of $587 per megalitre experienced in 2019-20."
The Water Market Outlook provides a range of possible allocation prices for 2021-22 under wet, average, dry and extreme dry seasonal conditions.
In the wet and average scenarios, prices are likely to fall in response to improvements in water supply, with ABARES estimating average annual prices of $57/ML and $114/ML respectively.
"The volume of water carried over into 2021-22 is likely to be high, based on the volume of water that has been allocated but not used so far in 2020-21," Mr Gupta said.
"The additional water carried over will help keep prices below 2019-20 levels, even in a dry or extreme dry scenario, where prices are forecast to reach $284 per ML and $323 per ML respectively."