The estimated total value of water entitlements fell by 5.9 per cent to $30.4 billion in 2023/34, advisory firm Aither found in an annual markets report.
A dry start to the financial year and forecast Super El Nino lit a match under allocation prices, before above average rainfall in mid-spring and summer dampened water demand.
"Annual croppers were buoyed by high water availability and the prospect of great growing conditions," Aither's Ben Williams said.
"Allocation sellers thought prices would rise with an El Nino and held their water.
"As a result prices rose to a point incongruous with water availability, but rains in early October saw markets fall quickly."
Dry conditions returned in autumn, and by the end of June inflows to the Murray reached their lowest point in five years.
The report noted average allocation prices of $76 per megalitre improved on the year before, but were significantly below the long-term average of $166 per megalitre.
Aither expected low prices to continue in the 2024/25 year due to strong early allocations and healthy water storage levels.
A return to Commonwealth water buybacks was cushioning allocation price declines, as the federal government worked towards its 450 gigalitre environmental water target.
"Last month, the opening of the Commonwealth's 70 gigalitre southern Murray-Darling Basin water tender saw prices in most affected entitlement markets rise between two per cent and seven per cent," Mr Williams said.
The Murray Darling Basin Plan aims to return 3200 gigalitres of water to the river system each year, and has so far achieved annual returns of about 2200 gigalitres.
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