The Big Dry and Australia's Water Markets

13 Pages Posted: 30 May 2017

See all articles by Peter Debaere

Peter Debaere

University of Virginia - Darden School of Business; Centre for Economic Policy Research (CEPR)

Date Written: May 28, 2015

Abstract

This case is used in Darden's first-year course "Global Economies and Markets" and taught at the University of Virginia's School of Architecture, though it is also appropriate for courses in environmental sustainability. A technical note titled "Water Markets from an Economic Point of View" (UVA-GEM-0110) was developed to accompany this case or other cases addressing the topic of global water supply. In 2010, Australian funds were looking for foreign investors in the country's water market. Funds advertised water as "blue gold." Australian Causeway Asset Management, for example, expected high future returns because of the "chronic supply/demand imbalance for Australian water, which will result in higher water prices. Owning Australian Water Entitlements provides investors with direct exposure to water prices." There was quite a story to be told about water on this continent of notably variable weather, especially since the "Big Dry," also known as the Millennium Drought. More than anything, the drought had supported water markets as a central tool in Australian water management. As the drought receded, the floods of 2009, 2010, and 2011 took its place, so water prices were low and potentially attractive for buyers abroad.

Excerpt

UVA-GEM-0109

Rev. May 28, 2015

The Big Dry and Australia's Water Markets

Introduction

In 2010, Australian funds were looking for foreign investors in the country's water market. Funds advertised water as “blue gold.” Australian Causeway Asset Management, for example, expected high future returns because of the “chronic supply/demand imbalance for Australian water, which will result in higher water prices. Owning Australian Water Entitlements provides investors with direct exposure to water prices.” There was quite a story to be told about water on this continent of notably variable weather, especially since the “Big Dry,” also known as the Millennium Drought. More than anything, the drought had supported water markets as a central tool in Australian water management. As the drought receded, the floods of 2009, 2010, and 2011 took its place, so water prices were low and potentially attractive for buyers abroad.

. . .

Keywords: water, Australia, drought

Suggested Citation

Debaere, Peter, The Big Dry and Australia's Water Markets (May 28, 2015). Darden Case No. UVA-GEM-0109, Available at SSRN: https://ssrn.com/abstract=2974622 or http://dx.doi.org/10.2139/ssrn.2974622

Peter Debaere (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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