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This study reports an analysis of the economics of options for strategic land-use change to attain future catchment level target combinations of salt load and water yield. Farm level survey information on land use, productivity, prices and costs of production were integrated with spatially specific soil, rainfall, topography, hydrology and salinity results of the simulation model CAT (Catchment Analysis Tool). This information was used to populate a two stage economic optimization model in which subcatchment economic results were combined for catchment level analyses. This study is the first to exploit CAT results in an economic framework and the first in which economic results are mapped using CAT. The 64,000 ha Bet Bet Catchment in Victoria, Australia, once deemed among the highest priority areas in the Murray Darling Basin for dryland salinity reduction, is the focus of this study. The calculated current net present value (NPV) of agricultural production in the catchment is AU$ 78 million 3 while providing 42 GL of water yield 4 annually for use downstream with a salt load of 22,600 t. Results show that salt loads may be reduced to 18,600 t (reduction of 4000 t) through expansion of tree plantations and lucerne production, reducing water yield to 31 GL (11 GL reduction) and NPV to AU$ 63 million (AU$ 15 million reduction). Water yields could be increased from current levels by 2 GL while maintaining current salt loads. Alternatively, catchment NPV could be increased by approximately AU$ 7 million with little or no reduction in water yield; but there may be reasons (small farm size) why this is unlikely. For this catchment, the maximum reduction in salt load appears insufficient to justify public investment in tree planting and perennial pasture establishment, particularly when the reduced NPV and reduced water yields are taken into account. The results for this catchment do not support regulation of land use for the sake of lowering river salinity. However, the capacity of tree plantations to reduce water yields may support a regulation requiring purchase of water entitlements from downstream entitlement holders for new plantations. Despite millions of dollars of past public investment, it is now clear that Bet Bet Catchment was never one where land-use changes could benefit downstream water users. The approach described in this paper enables catchment management authorities to weigh costs of land-use change against downstream benefits and natural resource management (NRM) options elsewhere
