Issue
The Australian Government has invested significant
resources to implement water reforms in the Murray–Darling Basin (MDB) through
the Basin
Plan 2012 (Basin Plan). The reforms aim to achieve a healthy and
resilient river system that supports communities, industries and ecosystems.
Key elements of the Basin Plan include water resource
planning, First Nations water interests, monitoring and compliance, and water
markets and trade. However, ‘[a]t
its heart’, the plan sets the amount of water that can be taken from the
Basin each year, while leaving enough to ensure a healthy environment.
Central to this are several water recovery targets to ‘reset
the balance’ between consumptive use and environmental water. However,
significant progress is needed to reach the targets and risks remain to full
implementation of the plan.
Key points
- The
Basin Plan aims to recover 3,200 gigalitres per year (GL/y) of surface
water and 38.45 GL/y of groundwater for environmental use through
several targets.
- In
August 2023, the Australian and most Basin governments (NSW, Qld, SA and the
ACT; excluding Vic) agreed to deliver the plan in full.
- The
Australian Parliament passed amendments in December 2023 to increase water
recovery options and extend timeframes, with full implementation due by the
end of 2027. The government also re-prioritised voluntary water purchases.
- During
the 48th Parliament, the first Basin Plan Review will be completed and
decisions are likely on future management, programs and funding.
Context
The MDB
is Australia’s largest river system (Figure 1), home
to 2.4 million people and more
than 50 First Nations. The Basin provides drinking water to over
3.4 million people and supports multiple industries, including nearly
half of Australia’s irrigated agricultural production and a valuable
tourism industry. It also sustains diverse ecosystems, including
internationally
significant wetlands.
However, the MDB is one of the world’s driest river
systems, with variable rainfall and high evaporation. It is extensively
modified and managed to ensure year-round water availability, particularly
in the southern
Basin. This has led to water overuse and declining
river system health, which is compounded during drought.
Figure 1 Murray–Darling
Basin map
Source: Basin location, Murray–Darling Basin Authority
Canberra, 2025, https://www.mdba.gov.au/basin/basin-location.
CC BY 4.0
The Basin Plan and Restoring our Rivers amendments
The Water Act 2007
and Basin Plan
provide the legal framework for sustainable water use in the interests of the MDB
as a whole. The plan is designed to address fundamental challenges, including
declining water quality and ecosystem health, inefficient water use and
over-allocation.
It aims to recover the equivalent of 3,200 GL/y of
surface water for environmental use through several targets (Figure
2). This includes the 2,075 GL/y bridging the gap target, as well as an
additional 450 GL/y to achieve enhanced environmental outcomes. To reach these
targets, the Australian Government must recover water entitlements from
existing users. Additional water recovery targets are to be met through
infrastructure projects and enhanced water management implemented by the Basin
governments.
However, recovery
has been challenged by competing social, economic and environmental
interests.
In July 2023, the MDB Authority (MDBA) advised that
‘full implementation of the Basin Plan will not be possible by [the original statutory
deadline of] 30 June 2024 under the current settings’ (p. 2). In response, the
Australian and Basin governments (excluding Victoria) signed the Agreement
to Deliver the Basin Plan in Full. In December 2023, the Water
Amendment (Restoring Our Rivers) Act 2023 (RoR Act) was enacted,
giving effect to the agreement by increasing options for water recovery and extending
timeframes for delivering the plan to December 2027. However, ‘risks to full
Basin Plan implementation remain’ (p. 2), including significant
progress still required to reach the targets (Figure 3).
Figure 2 Basin
Plan surface water recovery targets
Source: Adapted from Figure 1, Productivity Commission
(PC), Murray–Darling
Basin Plan: implementation review 2023, Inquiry report, 103,
(Canberra: PC, 2023), 4.
Figure 3 Progress
and remaining recovery of Basin Plan surface water recovery targets
Sources: Department of Climate Change, Energy, the Environment
and Water (DCCEEW), Surface
water recovery required under the Basin Plan including the Sustainable
Diversion Limit Adjustment Mechanism and 450 GL for enhanced environmental
outcomes as at 31 March 2025, (DCCEEW, n.d.); MDBA, Sustainable
Diversion Limit Adjustment Mechanism: 2023 assurance report, (Canberra:
MDBA, July 2023), 36; Adapted from Figure 3, PC, Murray–Darling
Basin Plan: implementation review 2023, 8.
Water recovery targets
Bridging the gap targets
To ‘bridge the gap’ from historical to sustainable water use,
the Basin Plan set sustainable diversion limits (SDLs). As pre-Basin
Plan use exceeded the SDLs, water recovery is required. The current surface
water recovery target is 2,075 GL/y, with a groundwater target of
38.45 GL/y (Figure 2).
Two main mechanisms are used to meet these targets:
voluntary water entitlement purchases (‘buybacks’) and irrigation
infrastructure investment. Evidence suggests
water purchases are ‘by far the quickest and most cost-effective way’ to
recover water (p. 92). However, reduced water consumption can have negative
socio-economic impacts in some communities, particularly those that are
small, remote, and reliant on irrigated agriculture (pp. 22, 43). Some irrigators,
regional
communities, and the NSW
and Victorian
governments strongly oppose water purchases.
Key developments
In February 2023, the Australian Government released
its framework
for recovering the remaining bridging the gap target, primarily through water
purchases ‘in
the absence of technically feasible, viable and value for money
infrastructure projects’ (p. 1). It also announced
the first water purchasing open
tender since 2015, followed by a second
tender in 2024 and recovery
of the full target in the ACT.
This was in contrast to the previous government’s 2020 commitment
to no further water purchasing, and was enabled by the RoR Act (by repealing a 2015
cap on
Commonwealth surface water purchases).
Additional 450 GL target
The Water Act 2007 and Basin Plan aim to recover an additional
450 GL/y for enhanced environmental outcomes, through the
$1.775 billion Water for
the Environment Special Account (WESA), established in 2014.
Key developments and expectations
Before the RoR Act, options for recovering this target were
constrained to efficiency measures with strict socio-economic
criteria. However, to the end of June 2024, only 26 GL/y
were recovered through the WESA. The RoR Act expanded recovery options and
enabled significant changes in the water recovery strategy. It also extended
the 450 GL target deadline to 31 December 2027.
Released
in July 2024, the Restoring
our rivers framework established the government’s intent to achieve
the 450 GL target by also pursuing water purchases, land and water
partnerships and reallocating over-recoveries (pp. 11–13). It includes
a community adjustment assistance program
to minimise socio‑economic impacts.
In 2024, the government opened the first water purchase
open
tender for the additional 450 GL target, followed by 2 expressions
of interest. The Minister for Water also reallocated
78.2 GL/y of over-recoveries to the target in February 2025
(p. 1).
The Australian Government plans
to recover around half of the remaining target by the end of 2025,
primarily through water purchases. However, this approach could create
‘significant disruption to water markets’ (p. 82), with the magnitude of expected
impacts on water prices and production value correlated with recovery
volumes.
In June 2024, the Government released an addendum
to the 2012 Basin Plan Regulation Impact Statement, noting positive and
negative socio-economic implications for different communities (p. 5). ABARES also released reports
assessing the impacts
of further water recovery in the southern Basin, and Basin
communities’ vulnerability and adaptive capacity to water availability changes.
The cost of recovering the full 450 GL is expected to
exceed the existing WESA budget (p. 69). The third statutory WESA
review, assessing recovery progress and feasibility, is due by
30 September 2025.
Sustainable Diversion Limit Adjustment Mechanism
supply measures
The Basin Plan includes a mechanism to adjust the bridging
the gap target (Sustainable Diversion Limit Adjustment Mechanism (SDLAM)).
In 2018, the SDLAM was enacted to
reduce the target by 605 GL/y in the southern Basin, provided
Basin governments implement approved supply measures. The
current bridging the gap surface water recovery target relies on these supply
measures being completed.
Key developments and expectations
The RoR Act extended the deadline for completion of supply
measures to 31 December 2026.
To date, 13 supply measures are complete,
contributing an estimated 290 GL/y of the full 605 GL/y SDLAM
adjustment (pp. 36–42). Another 10 are likely
to be completed, with the remaining 12 unlikely to be fully delivered
by the new deadline (p. 2). The RoR Act also enabled Basin governments to
propose new supply measures. In June 2025, 3 new supply measures were agreed
to be progressed. Until 30 June 2026, the Australian Government may withdraw
measures it considers no longer viable.
The MDBA must reconcile
the full SDLAM adjustment and actual outcomes of implemented supply measures by
31 December 2026 (p. 3). If measures are not completed, additional water
must be recovered. A significant shortfall at SDLAM reconciliation is
considered a ‘strong
possibility’ (p. 82).
Northern Basin toolkit measures
In 2018, the Basin Plan was amended to
reduce the bridging the gap target in the northern
Basin by 70 GL/y. Informed by the Northern Basin
review, the MDBA recommended
this on the basis that ‘toolkit measures’ would be implemented.
In August 2019, Basin governments agreed
to deliver 6 toolkit
measures (pp. 31–36), including 11 infrastructure
projects relating to environmental works and constraints removal.
Unlike SDLAM supply measures, toolkit measures do not
require equivalent environmental outcomes or reconciliation under the Basin
Plan. However, they are still ‘essential’ to
resetting the balance (p. 4).
Key developments and expectations
Basin governments have agreed
to extend the deadline for completion of toolkit infrastructure projects to
31 December 2026.
In October 2024, the Inspector-General of Water
Compliance announced
an inquiry
into the toolkit, noting ‘little substantive progress in the last six years on
implementing several of the Toolkit measures, particularly those involving
critical infrastructure works’. The inquiry report is expected in mid-2025.
Constraints measures
The implementation of constraints measures is
critical to achieving the enhanced environmental outcomes of the additional
450 GL, and the SDLAM and toolkit measures.
Basin governments have agreed to implement 7 constraints
measures (5 are supply
measures requiring SDLAM reconciliation and one is a toolkit
measure). These are complex projects
(pp. 15, 27), with significant
challenges around social licence and landholder agreement (pp. 88–89).
Key developments and expectations
In December 2024, the MDBA published the Constraints
relaxation implementation roadmap, which noted little chance of
completing constraints measures by the new deadlines. It advocated for a new
Basin-wide 10-year constraints relaxation program (pp. 27–30), as
recommended by the Productivity
Commission (p. 88) and SDLAM
measures independent review (p. 3).
Conclusion
Over the next 3 years, several reviews will be
finalised and significant decisions are expected on future MDB management,
funding and programs.
In 2026, the MDBA will deliver the first statutory Basin
Plan Review, which may prompt amendments
to the plan. Several
key reports informing the review will be published in 2025.
Currently, most federal funding for MDB water reform
terminates in 2027–28. In addition to water recovery programs, this includes
other important aspects of Basin Plan implementation.
This Parliament will likely need to consider the next steps
for water policy and management in the Basin, building on significant past
reforms, investment and efforts to achieve a healthy and resilient MDB system.