Cotton growers in Murray-Darling Basin offer A$100m of water entitlements for sale

A group of cotton growers in the Barwon-Darling region of north-west New South Wales have placed more than 30,000 ML of water entitlements up for sale, a portfolio that could be worth around A$100 million ($69.6 million; €61.3 million).

The entitlements have been offered for sale by several unidentified farming families, most of whom are principally cotton growers.

The portfolio comprises just under 35 percent of the available B-class, and less than 1 percent of the available A and C-class water entitlements, in the Barwon-Darling Unregulated River Water Source Zone.

CBRE Agribusiness has been appointed to manage the sale and director Danny Thomas told Agri Investor that the group wanted to engage with potential buyers who might want to return the water to the environment.

He said the vendors had been monitoring public sentiment around water and irrigated agriculture in the Murray-Darling Basin and were offering the portfolio up voluntarily.

“It’s very much about providing the government, the community and conservation groups the opportunity to reallocate that water to the environment or to local communities as they see fit,” he said.

“We’re saying, ‘It’s available.’ Here’s an opportunity for people who think water should be returned to the river to write a check, and they can do what they like with it. They just have to give the growers a sum of money that incentivizes them not to irrigate their land.”

Thomas said the portfolio is most likely to appeal to government agencies or conservation groups, rather than water funds, and that in the absence of interest from those two groups the portfolio could even appeal to a high-net-worth individual wanting to make a contribution to the community through a water buyback.

Conservation groups have begun to do bigger deals in Australia recently. US-headquartered non-profit organization The Nature Conservancy partnered with Victoria-based Tiverton Agriculture to acquire two cattle stations in NSW for A$55 million earlier this year in a move billed as one of the highest-value land-for-conservation deals in Australian history.

TNC and Tiverton pledged to protect the land purchased in that deal, which has 55km of frontage to the Murrumbidgee River, from irrigated cropping and employ sustainable practices throughout.

The Barwon-Darling river system where the cotton growers’ entitlements are located covers around 13 percent of the Murray-Darling Basin and feeds into the Menindee Lakes, which made headlines earlier this year thanks to a large fish kill that was blamed, in part, on too much water being taken out of the system for irrigation.

A report from the Australian Academy of Sciences in February said: “The root cause of the fish kills is that there is not enough water in the Darling system to avoid catastrophic decline of condition through dry periods.”

It said the cause of the lack of water was a combination of a “severe (but not unprecedented) drought and, more significantly, excess upstream diversion of water for irrigation.”

A Royal Commission in South Australia earlier that month recommended taking water back from irrigators for environmental purposes.

Despite the ongoing dry conditions and high water entitlement prices, the Australian Competition and Consumer Commission found this week in its annual Water Monitoring Report that there were only relatively minor changes to average water bills for irrigators in the majority of networks.