After falling to near zero during the last few months of the past financial year on the back of record inflows into the southern Murray Darling Basin, water allocation prices have surged to between $75 and $135 a megalitre as farmers stock up ahead of a prolonged El Niño dry spell.

“Farmers are willing to buy water at those prices just to take risk off the table,” explained Ben Williams, principal at water market consultants Aither.