Sensitivity of agricultural outcomes to water allocation scenarios under changing climate in the Murray-Darling Basin, Australia

Water managers in the Murray-Darling Basin (MDB) face increasing challenges in balancing agricultural productivity, environmental sustainability, and economic efficiency amid climate uncertainty. While prior studies have explored water allocation mechanisms, limited research has systematically assessed the sensitivity of agricultural outcomes to different allocation scenarios under changing climate conditions. This study addresses this gap using a hydro-economic optimization model for the Macquarie catchment of the MDB. The model integrates climate projections, agricultural water demand, and economic factors to evaluate six climate scenarios: Historical, Just Wet, Just Dry, Hot and Wet, Just Hot, and Hot and Dry. It also examines three water allocation policies: Baseline, Increased Environmental Flows, and Increased Irrigation Flows. Incorporating detailed data on crop water needs, seasonal variability, and economic returns across four economic zones, the model assesses both seasonal adaptations and annual shifts in agricultural practices. The results demonstrate the sensitivity of agricultural performance to both climate conditions and adaptation policies. Irrigation-focused water reallocation consistently leads to better outcomes compared to the baseline under the same climate scenarios, with all water allocation scenarios showing increases in agricultural outcomes under wetter climate conditions and decreases under drier conditions. Significant spatial and temporal variations are observed, with high-value horticultural areas exhibiting greater resilience than broadacre farming regions. This study provides a robust framework for evaluating trade-offs between agricultural productivity, economic efficiency, and environmental sustainability under climate change. It offers critical insights for policymakers in the MDB and has broader applications for other agricultural basins globally. • The study assesses how water allocation scenarios and climate conditions affect irrigated agriculture in the Macquarie catchment. • Drier climates may reduce crop output by up to 65 %, while wetter conditions could boost it by up to 30 %. • Adaptation strategies in water management, like water sales, help reduce economic impacts under moderate climate stress. • Localized adaptation strategies are essential due to varying responses across economic zones.