How can you describe market conditions in a way that is relative, intuitive and on one chart? An index is one tool, and an important tool that I think has been missing from Australian water entitlement markets.
The Aither Southern Murray-Darling Basin Entitlement Index tracks changes in capital value of a group of major water entitlement types across the southern Murray-Darling Basin. The Index provides a simple overall snapshot of the performance of the southern-connected entitlement market in a way that is simple and intuitive, improves market transparency and allows market participants to make more confident decisions.
Australian water market reporting is fragmented and the costs to participants of collecting information can be high. Updated monthly, irrigators, investors, banks, and other owners of water entitlement portfolios can use the Index to cut through this fragmentation and benchmark the performance of their own portfolios across time.
At the start of May 2017, the nominal Index was at 137.24 points, overtaking the previous high of 136.90 in April 2016. The historical high is particularly noteworthy given the wet conditions across much of the southern Murray-Darling Basin over the last 12 months.
The Aither Southern Murray-Darling Basin Entitlement Index is published at Aither's website and updated at the start of every month. The Index is also published in my monthly Southern MDB Water Market Updates commissioned and published by H2OX.