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The average prices of CBT units continued to rise during the fourth quarter. Monthly average prices ranged from $24,500/unit to $25,000/unit, and the overall average for the quarter reached about $24,850/unit, up from about $24,300/unit in the third quarter this year. This price level is nearly 30% higher than the fourth quarter 2013—and is three times higher than prices were just three years ago.
The volume traded dipped again during the fourth quarter—with 129 units trading. Monthly volumes ranged from 14 units to 93 units. In the third quarter, 653 units traded, with monthly volumes ranging from 10 units to 355 units, and in the fourth quarter last year, the volume was 764, with monthly volumes ranging from 102 units to 455 units.
Each unit represents 1/310,000 of the project’s supply—but the quantity of water represented by a unit varies each year according to the annual quota set by the Northern Water board of directors. The annual quota, which encompasses all quota decisions made during the year, has a historic average of 74% (0.74 AF/unit). The 2015 initial quota, which became effective on November 1st, is 50% (0.5 AF/unit).
Local water brokers see a pick-up in development and a shift in the demographics of who owns CBT units as the primary drivers behind the price run-up. Agricultural users now own only about 1/3 of the CBT units, compared to 85% of the units when the project began operating in 1957. In addition, there are now fewer and larger agricultural operations—so the supply is limited to stronger hands that generally do not sell, except for estate settlements and retirement.
If the local water brokers are right, then expect to see the market continue to tighten and prices continue to rise.
Written by Marta Weismann
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