— 13 IREC Farmers' Newsletter No. 200 — Spring 2018 Table 2. A comparison of the pros and cons of different sources and water Water source Pros Cons High security Reliable allocation Capital growth High capital cost No carry over Fixed costs General security Lower capital cost per allocated ML Capital growth Capital cost Variable allocations Fixed costs Supplementary Lower capital cost Episodic events Timing cannot be controlled and is often announced when demand is low Need on-farm storage to best use Groundwater Reliable allocation Capital growth Can pump and/or carryover 200% in any year Expensive infrastructure High energy costs Infrastructure is a depreciating asset Extraction limits (annual and daily) Limited suitable bore locations Lease No capital investment Operational expense No capital gain Allocation risk Value subject to allocation Temporary purchase and forward water No capital investment Buying deliverable water Operational expense No capital gain Volatile market In addition to water purchase costs, riparian irrigators have energy and infrastructure renewal costs. Considering the options If general security entitlement is purchased at $2200/ML, for example, then the interest cost (at 5% p.a.) is $110/ML. If there is a 50% allocation the interest cost will be $220/ML. If high security entitlement is purchased at $5000/ML, for example, at 95% allocation the interest cost (at 5% p.a.) will be $263/ML. Water purchase costs in the irrigation areas include charges for delivery entitlements. Riparian irrigators will have energy and infrastructure renewal costs. Leasing general security entitlements at 5% of the capital value is the same cost as the interest cost (if buying) with the same allocation risk. Leasing high security entitlements at 5% of the capital value resolves allocation risk but increases the cost per ML. — 13 IREC Farmers' Newsletter No. 200 — Spring 2018 Water products