Sales of Base Annual Production Rights
Generally, the volume of Base Annual Production rights traded is small, with spikes in volume driven by the occasional large transaction. Activity was especially low in the first half of 2016, when a total of 85 AF were traded—compared to 525 AF in the first half of 2015 and 844 AF in the first half of 2014. The second half of 2015 saw 3,615 AF trade, but the spike in volume was driven by a single large transaction.
After generally trending upward since the inception of the market, prices continue to sit around $5,000/AF, where they have been for the past few years.
Leases of Free Production Allowances and Carryover
The volume of leases of FPA and carryover water in the Alto Subarea tends to fluctuate: high in the first half of the year and low in the second half. Because the Mojave Basin Watermaster operates on a fiscal year, the short-term transfers approved in the first half of the calendar year may reflect efforts to prepare for the new watermaster year.
Leases totaled 17,785 AF in the first half of 2016—compared to 18,721 AF in the first half of 2015 and 22,488 in the first half of 2014. The second half of 2015 saw 2,355 AF leased.
The average prices for leases of FPA trended upward from the inception of the market through the second half of 2014, when they reached a peak of $368/AF. During 2015, prices eased—dropping to $360/AF in the first half of the year and to $340/AF in the second half. In the first half of 2016, prices resumed their upward trend reaching $367/AF.
With no known pressures on the market, will activity and prices remain the same?
Written by Marta L. Weismann