Water buy-back has long been advocated as the most efficient solution to the over-allocation problem in the Basin, but it has been left as the last resort in favour of other workarounds (Quiggin 2008). The lagging resolve meant that opportunities for acquiring low-value entitlements early on have been missed. During the current drought, prices for permanent licences have reached as high as $2000/ML, which is a far cry from 2006 prices of $400/ML. However, even at the likely long-term prices for permanent entitlements around $1000/ML, $500 million would suffice to recover 500GL — which could be achieved over five years at $100 million/yr (Quiggin 2008). Even at the observed premium of $1400–1700/ML in the current buy-back — indicating an endowment effect — $850 million is enough to meet Living Murray obligations. This is but a fraction of the ‘Addressing Over-Allocation’ component of Water for the Future.

Suppose the total expenditure on natural-resource management, of $21 billion, had been put towards buy-backs since 1992, price unadjusted. At $1000/ML, at least 21 000GL could have been acquired permanently. Even at $2000/ML — a significant mark-up compared to prices only just two years ago — at least 10 500GL could have been recovered. This is far beyond the recommended 4000 GL/year required for good improvements in the health of the Murray-Darling (WGCS 2008). This also suggests that only one-third to one-fifth of the total expenditure was required to achieve a high level of environmental improvement. Given the delay, and the urgency of the situation that has evolved in the Coorong and Lower Lakes, it may now take up to $8.9 billion to recover the 4000GL needed to secure the long-term health of the rivers (WGCS 2008).