Australia, a country which suffers from recurrent droughts, is currently experiencing a shift in climate. It is often classified as the driest inhabited continent due to the extremely low annual average rainfall (465 mm) and associated low annual average runoff (57 mm). This has required a regular revision of Australia’s water policy to align with the needs of its society. Several changes in water policy have been formulated in recent times with the objective of striking a balance between the consumptive and environmental components of flows in Australian catchments. Some of the developments that affect irrigated agriculture include: (i) the Council of Australian Government’s water reforms; (ii) the Murray–Darling Basin Commission cap (the volume of water that could be diverted under 1993–94 levels of development); (iii) environmental flow rules; and (iv) the National Water Initiative.

At a strategic level global climate change threatens the viability of irrigated agriculture and other industries. Under the present water reforms, longer-term water security is not guaranteed because these reforms do not explicitly take into account threats to water quantity and quality due to enhanced climate variability and change. At an operational level, current water allocation systems do not take into account state-of-the-art climate forecasting methods. Therefore, it is often not until after the irrigation season is well underway that irrigators have a reasonable knowledge of how much water will be available. Thus, there is considerable risk associated with planting and crop establishment decisions, resulting in a need for climate forecasting tools aimed at risk management. There is also a need for Australian water legislation and policy to be revisited to incorporate climate change and adaptive management options.