The Big Dry and Australia's Water Markets

Abstract

This case is used in Darden's first-year course Global Economies and 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 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 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 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 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. . . .