The East Coast of Australia has endured 2 consecutive La Niña weather pattern events bringing large volumes of rainfall to the states, watering crops and causing dam storages to reach full capacity.
Now the Bureau of Meteorology has officially declared a 3rd successive La Niña event, only the 4th time since the 1900’s.
So, with this 3rd straight La Niña weather pattern expected to remain until early 2023, what will it mean for irrigators and the water market?
Impact to Irrigators
On one hand, another La Niña will bring joy to irrigators, as this will naturally water any crops, rejuvenate the pasture and top-up any on-farm storages, allowing them to possibly maximise their yearly yield. If they do need additional water, it is highly likely that it could be purchased at a cheaper-than-average price due to a high volume being supplied to the market.
However, this could also cause issues for those wishing to grow summer crops such as maize, soybeans, cotton and peanuts as the land is too moist to begin the cultivation process. This 3rd La Niña could too delay or potentially ruin the harvest of commodities, such as wine grapes if there is persistent and heavy rain.
Impact to the Water Market
Naturally, if there is more rainfall, irrigators are using less water and therefore have the capacity to sell the unused portion of their allocation. This increases the volume of water supplied to the market, and this in conjunction with lower demand causes prices to decrease in the temporary market. This affect was seen in the 2021/22 season, where temporary prices below the choke fell from $170/ML to $18/ML (as pictured below).
There could also be wider impacts to the markets, with dam storages already near capacity and irrigators using minimal amounts of water from these storages it could cause more releases, recharging aquifers and streams towards the south of the country.
For example, Hume Dam has been over 90% full since May 2022 and constant levels of releases have occurred since. As of writing, Hume Dam is at 96% capacity (pictured below), with almost 32GL being released daily in order to manage the high volume of inflows.
Overall, this third straight La Niña will bring more rainfall to the eastern states of Australia, causing some irrigators relief and dramatically reducing the price of water on the temporary market due to an over-supply and under demand for the commodity.