Crescent Wealth diversifies with water rights investments

Oksana Patron

15 September 2022

Australia’s Islamic compliant super fund, Crescent Wealth has diversified its socially and environmentally responsible investment options by offering members with access to investments in Australian water rights.

Water rights, which provides the agricultural sector the right to access a certain volume of water in a year, were a great fit for Crescent’s principles and its range of alternative investment options, according to Crescent Wealth Head of Investments Mas Harris.

“The market is well established and regulated which gives us assurance as investors that we are entering a market with good governance, stability and transparency,” he said.

“Australia is one of the driest contents in the world in terms of water assets and we see this as a great potential investment over the longer term as the market develops and matures further.”

Harris added that water right investment would be a particularly attractive option for members who wanted to reduce volatility in their portfolios because returns were uncorrelated to traditional asset classes.

Crescent Wealth would be able to invest in water rights through funds managed by Riparian Capital Partners which invested in perpetual water right entitlements and was then able to sell or lease annual water allocations available under these entitlements.

The vast majority of water rights traded in Australia are located in the Murray-Darling Basin area which contains approximately 66% of Australia’s irrigated farmland. Since 2008, water rights have generated an average yield of above 4%.

Riparian Capital Partners Managing Partner, Nick Waters, said the major long-term drivers of water entitlement value were factors that influenced irrigators’ capacity to pay for water, including productivity gains farmers were able to achieve on their operations and through moves to higher value cropping systems which enable farms to produce more value per megalitre of water.

“We are also seeing some pretty clear long term trends playing out around climate change with lower rainfall patterns and higher temperatures which are relatively supportive of water values going forward,” Waters said.