This article provides the background to the water reform program in Australia's Murray-Darling Basin, with the aim of informing international policy practitioners. We focus specifically on the most recent efforts of government to redistribute water from agricultural users to an environmental water manager. The effectiveness of market-based approaches is assessed in this context, and generalized policy lessons are distilled. We conclude that water buybacks deliver positive outcomes, with farmers readily adapting to the opportunities afforded by this program. Accordingly, we conclude that agrienvironmental objectives can be enhanced by the use of market-based approaches of this form, at least in this context.