Water shortages in the Murray-Darling Basin are placing considerable stress on many environmental assets in the Basin. From the 1950s to the 1990s, the share of available surface and groundwater diverted for consumptive uses, such as irrigation and domestic use, increased, leaving less water for the environment, even in normal conditions. A decade-long drought has further limited the amount available for the environment, and climate change is expected to exacerbate these problems in the future.

There is widespread recognition that some of the Basin’s water resources need to be redirected to the environment. But questions remain about how much water should be recovered and from where, how it should be recovered, and how it should be used to achieve the best outcomes for the Australian community.

There are three main ways governments can recover water for the environment: purchase it from those who hold the property rights to use it now; invest in more efficient delivery systems and redirect the water savings to the environment; and/or change the rules regarding the sharing of water between competing end uses. While this study is predominantly about market mechanisms for obtaining water, all of these methods are currently in use in the Basin and the interactions between them are complex.