The benefits of local knowledge and engagement mean that regionally based catchment management organisations have the potential to make valuable contributions to environmental water management in the Murray–Darling Basin. Their capacity to contribute is assessed based on eight governance criteria. Their capacities are found to be highly variable across the criteria, with the main areas of weakness being clarity of roles, evidence-based decision-making and data integration. Nevertheless, there would be benefits from involvement in several capacities: provision of local information for the asset prioritisation process, consultation with local stakeholders and preliminary filtering of environmental assets prior to more detailed analysis for prioritisation. Modifications to institutional arrangements are needed, supported by new systems including training and support, systems to facilitate information flows between the different organisational levels, and a nationally agreed process for initial filtering of environmental assets, consistent with Benefit-Cost Analysis principles.