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The paper reviews the $12.9 billion Water for the Future package in the Murray-Darling Basin from the perspective of cost-effectiveness and assesses the possible losses to irrigators from reduced diversions to achieve desired environmental-flow regimes. It argues that combining the $3.1 billion allocated to buying water entitlements with the $5.8 billion targeted by Water for the Future for water infrastructure subsidies into a purchase of water entitlements from willing sellers would maximise the water acquired for the environment per dollar of expenditure, provide greater assistance to holders of water entitlements, and reduce the expected gap between average water diversions for agriculture and sustainable diversion limits.

How to Increase the Cost-effectiveness of Water Reform and Environmental Flows in the Murray-Darling Basin