Units & timing
1 ML = 1,000 m³ = 1,000,000 litres. Entitlement and allocation prices both use $/ML but represent different assets. Values are nominal USD, not converted from local currencies. Cash flows occur at initial purchase and year-end.
Entitlement calculation
New allocation = reference ML × allocation percentage. Opening usable carry = last year’s carry × (1 − carry loss). Sold volume = (new allocation + usable carry) × sales percentage. Carryout is the smaller of unsold water and the reference-volume carry cap; the rest expires. No combined account limit, spill rule or intra-year allocation change is simulated.
Operating cash = sold ML × allocation price − brokerage − fixed administration − per-ML holding costs − interest. Initial equity = purchase cost + acquisition costs + diligence − debt. Exit equity = appreciated entitlement sale value less exit costs and outstanding principal. Unsold water at exit has zero additional value. Fixed costs do not inflate.
Valuation & debt
NPV discounts cash at the selected annual rate. IRR solves discounted cash flows for zero and is shown only when one root is found by the numerical search. Multiple or absent roots are unavailable. The search uses annual log-rate bounds −9.21 to 13.82 and scans 900 intervals for multiple sign changes; it is not proof that all mathematical roots exist within the bounds. MOIC counts all negative cash flows as contributions, including later deficits. Interest-only debt has no amortisation, refinancing, covenant or default simulation; negative exit equity remains payable.
Operational use
Raw extraction is capped by available authorised volume, infrastructure capacity and demand adjusted for losses. Delivered water equals raw extraction less losses. Unmet demand is purchased at the alternative price. Annual savings compare all-alternative supply against source costs plus backup. Capital is deducted initially with zero terminal value; licence resale and farm or business revenues are excluded.
Investor layer
Annual vehicle fee = original entitlement purchase cost × fee percentage. Each year-end flow, including the final year, is reduced by the fee before applying the ownership share. Initial contribution and terminal cash are pro rata. Negative flows imply cash calls; no limited-liability floor is imposed.
Scope & limitations
Tax, inflation, FX, replacement capital, approval delay, insurance, water-quality failure, default, detailed allocation priority and legal cancellation are not automated. Add them to transaction-specific work. Regional examples are selective, not exhaustive legal coverage. Primary sources were reviewed 6 October 2026. Images are conceptual AI illustrations, not evidence of an offered asset.
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