Staying competitive for water
Marsden Jacob Associates
Economics | Markets | Public Policy | Regulation | Strategy
Market insights and strategies for the Australian wine industry
Australia’s wine industry is under increasing pressure to secure reliable, cost-effective water supplies. Remaining competitive and sustainable in the long-term – both globally and domestically – requires a clear understanding of the challenges and opportunities, as well as proactive water market engagement.
In this article, Marsden Jacob resource economist Stuart Maclachlan explores findings from his recent presentation at the Australian Wine Industry Technical Conference in Adelaide, which included the multifaceted nature of water competition, and offers insights into enhancing competitiveness and long-term sustainability in a rapidly evolving global marketplace.
What does being 'competitive for water' really mean?
For water-dependent industries, being competitive involves:
Securing enough water at the right time for critical growth stages.
Paying a sustainable price compared to competing crops.
Maximising quality and yield from each megalitre (ML).
Adapting to price and availability risks in a changing climate.
Competitiveness challenges
A rapidly changing climate: Climate change is leading to hotter, drier conditions, which means less water availability and more competition for the water there is – all of which creates higher risk for grape growers.
Not all water is equal: The source, reliability, quality and cost of water all impact vineyard performance. Grapes rely on diverse water sources, and cost differences between them can be significant. Understanding your water mix is essential to reducing risk and protecting returns.
Competition from other crops: In regions such as the Murray-Darling Basin where water markets facilitate the movement of water, other crop producers (such as almonds, cotton, and dairy) may be able to pay more per ML for available water. This competition is often region-specific, and the pressure on wine producers varies depending on local conditions.
Water markets – tools to manage cost and risk
In the southern Murray-Darling Basin, water rights are tradable, and water markets provide risk management options.
By using tools such as online platform Waterflow™ to monitor water market information such as entitlement and allocation prices, allocation determinations and climate cycles – all of which affect prices – you can manage cost exposure while maintaining supply security.
Shaping your water future wisely
Competitiveness for water depends on where you are, what you grow, and how you manage your resources. Not all water is equal – and neither are the strategies to secure it.
To stay competitive for water, producers who are exposed to markets need to be well-informed. You can do this by:
Staying up to date through Marsden Jacob Associates’ Waterflow™, Australia’s largest water market aggregator, which offers the latest, independent water market data in one free and easy-to-use platform.
Maintaining a water balance to identify shortfalls early – this will help to reduce the risk of being exposed to markets when prices are elevated.
Exploring the use of secondary market products to diversify supply – products such as carryover parking, forwards and entitlement leases provide opportunities for producers to reduce risk and secure water supply.
Want to ensure you’re supported to stay competitive for water? The Marsden Jacob team helps producers, industry bodies and policymakers adapt to changing conditions, improve competitiveness and develop practical, data-driven water strategies that balance cost, reliability and long-term sustainability.
Learn more: www.marsdenjacob.com.au