Water buybacks
What are they and what do they mean for rivers and communities?
The term ‘water buybacks’ refers to the purchase of water entitlements from willing sellers by the Federal Government to permanently return that water to the environment. The water entitlements that are purchased are then managed by the Commonwealth Environmental Water Holder with that water is delivered each year to rivers and wetlands to improve environmental outcomes.
We support water buybacks as an effective and efficient way to recover water for the environment. We also note that water buybacks are not the only way to recover water, and that rule changes and regulatory approaches can also deliver positive outcomes and increased water for the environment and in some cases these approaches could be more direct or more suited to particular situations.
There has been some controversy about water buybacks and there is sometimes incorrect information used in these discussions.The impacts of ‘buybacks’ and the Basin Plan are often conflated with broader economic trends and impacts of the water market. There are trends occurring across regional Australia, including but not limited to the Basin. Across Australia, small regional towns have been shrinking for decades, resulting in school closures and loss of social sports clubs etc. This is not specific to the Basin and it is not because of water recovery. Instead, it is part of broader economic and population trends in regional areas influenced by a range of factors, including the increased mechanisation and corporatisation of farming resulting in fewer employment opportunities. Water buybacks have been used as a scapegoat for these broader changes that are understandably challenging for regional communities.
Here are a few facts to keep in mind
- Basin Plan water reforms have had relatively minor impacts on regional economies and the Basin economy has continued to grow
The 2025 Basin Plan Evaluation Report (Murray-Darling Basin Authority 2025a) demonstrates that, even with water recovery, the Basin economy has continued to grow during the Basin Plan’s implementation. While noting that it is challenging to isolate the contribution of water recovery from other drivers of change, the report suggests that Basin Plan water reforms have had relatively minor impacts on regional economies and that changes in regional economic conditions are largely determined by other influences.
In real terms, Gross Regional Product is estimated to have grown from just under $210 billion in 2011 to just over $230 billion in 2021, an increase of 11.5%. Sales revenue from business activity increased from around $170 billion in 2002 to $350 billion in 2022, with the fastest growth during this period being from 2012 to 2022, averaging 6.2% growth per year in real terms. The gross value of agricultural production has continued to grow in the Basin, increasing by 49% from 2007 to 2025. In real terms, the gross value of agricultural production (GVAP) in the Basin in 2020–21 was about $35.1 billion, compared with $27.8 billion in 2012–13 and $23.6 billion in 2007–08. This represents an increase of 26% since the Basin Plan was adopted in 2012.
2. Water buybacks are efficient and effective
Water buybacks have proven to be the most efficient and cost effective method for recovering water for the environment (see Grafton and Wheeler 2018, Productivity Commission 2020, Wheeler 2024, Wheeler et. al. 2024). By comparison, irrigation efficiency programs (an alternative method for recovering water for the environment), have proven to be costly and produce more negative environmental externality impacts than water buybacks (Wheeler 2024). Irrigation efficiency programs can also have the unintended consequence of increasing water consumption due to increased water use by existing crops, a switch to more water-intensive crops or an expansion of irrigated areas, combined with reduced ‘return flows’ – a reduction in non-consumed water that is returned to the landscape (Grafton et. al. 2018). The difference in costs has been $2100 per ML permanently recovered via buybacks, and $6500 per ML permanently recovered from irrigation efficiency programs (Wheeler 2024).
- Criticism of water buybacks often ignores benefits for farmers
Claims that water buybacks have negative impacts on Basin communities often downplay or ignore the benefits that buybacks bring for farmers and communities. Irrigators often have surplus water entitlements and buybacks give them flexibility in how they use funds after selling their water entitlements. They can use that money to reduce debt, invest in farm assets or in other ways, either on or off farm. Reducing debt can be a significant positive outcome for farmers, increasing their flexibility and building resilience.
